difficulties accessing food and other essential goods, price shocks affecting the economy, and disruptions to wages.<sup>6</sup> Hallegatte, Rentschler, and Rozenberg (2019) estimate that direct damages to power generation and transport in low- and middle-income countries cost US$18 billion a year. But these direct repair costs swell to much higher levels when considering the costs to firms and households associated with disrupted and unreliable service.<sup>7</sup> The authors estimate that, altogether, disruptions caused by natural hazards coupled with poor maintenance and mismanagement, cost households and firms reach US$390 billion each year in low- and middle-income countries. These include costs associated with direct impacts (e.g., greater congestion, time losses due to extended travel, and higher fuel costs); coping costs; and indirect impacts on public health, gender equality, as well as limitations on productivity and innovation.

Oblensky et al (2019) estimate that between 0.1% and 0.2% of GDP is lost each year due to unreliable electricity, water and transport infrastructure, due to adverse effects on firms and households. At the household level, infrastructure disruptions cause short-term missed work and education opportunities, costly inconveniences, and negative impacts on health. Households also experience long-term costs associated with mitigating the impact of disruptions or foregoing opportunities and valued activities due to lack of reliable service. These disruption costs are often underestimated, as they do not fully account for environmental costs and health impacts.<sup>8</sup> Similarly, firms suffer significant productivity and utilization losses due to poor or unreliable service. Infrastructure provision is not enough to foster productivity unless it is reliable. Disruptions have significant adverse effects on firms due to disrupted supply chains, underutilization of production capacity, and costly adaptation measures.<sup>9</sup> In the transport sector, assets are typically exposed to multiple hazards that compound the risks of asset failure and service disruption. In a global study of road and rail networks, Koks et al (2019) found that 27% of road and railway assets are exposed to at least one natural hazard and that 7.5% are exposed to a major hundred-year flood event. Expected annual damages to roads and rail due to natural hazards range from US$3.1 billion to US$22 billion, with most damages (73%) due to flooding. While the global annual expected damages are minimal with respect to annual maintenance costs, for countries with higher exposure levels to major floods – including Small Island Developing States – damages can reach catastrophic levels. In these countries, increased flood protection would have positive returns on about 60% of exposed roads and improved flood resistance is likely to be a low-regret investment in the context of climate change.<sup>10</sup> Limao and Venebles (2001) estimate that poor maintenance and unreliable transport service accounts for 40% of transport cost for coastal countries and up to 60% for landlocked countries. Increased costs have significant impacts on the real costs of trade, often limiting a country's ability to participate fully in the global economy.<sup>11</sup> The monetary costs of infrastructure disruptions results in estimated utilization losses

> 6 Obolensky, M., Erman, A., Rozenberg, J., Rentschler, J., Avner, P., & Hallegatte, S. (2019). Infrastructure disruptions: how instability breeds household vulnerability. Global Facility for Disaster Reduction and Recovery, World Bank, Washington DC.

> 7 Hallegatte, S., Rentschler, J., & Rozenberg, J. (2019). Lifelines: The Resilient Infrastructure Opportunity. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/31805

> 8 Obolensky, M., Erman, A., Rozenberg, J., Rentschler, J., Avner, P., & Hallegatte, S. (2019). Infrastructure disruptions: how instability breeds household vulnerability. Global Facility for Disaster Reduction and Recovery, World Bank, Washington DC.

> 9 Braese, J., Rentschler, J., & Hallegatte, S. (forthcoming, 2019). Resilient infrastructure for thriving firms: A review of the evidence. Global Facility for Disaster Reduction and Recovery. World Bank, Washington DC.

> 10 Koks, E., Rozenberg, J., Zorn, C., Tariverdi, M., Vousdoukas, M.,Fraser, S., Hall, J., & Hallegatte, S. (forthcoming, 2019). A global multi-hazard risk analysis of road and railway infrastructure assets

> 11 Limao, N., & Venables, A. J. (2001). Infrastructure, geographical disadvantage, transport costs, and trade. The World Bank Economic Review, 15(3), 451-479.

4