# **II. WBG Contributions to SDG Costing**

_The WBG has contributed significantly to efforts to estimate the investment needed to achieve the SDGs—and, previously, to costing the MDGs. The institution has been at the forefront of the push to broaden the mobilization of development financing beyond official sources. In recent years, the WBG has leveraged technical and country-specific knowledge of its staff to produce studies estimating investment needs at the global, regional, and sectoral levels—in particular, infrastructure investment needs. In view of the drawbacks of providing point estimates of investment needs, the WBG has transitioned to generating cost estimates within ranges, using a variety of scenarios and policy options. Understanding the size of the SDG financing gap is key for developing strategies to achieve the goals._ The WBG has a long record of contributions to the costing of development goals. The WBG’s earliest estimates of development goal costing, of $35 billion to $75 billion per year, measured the official development assistance (ODA) needed to meet the MDGs (Devarajan, Miller, and Swanson 2002). Since then, the WBG has conducted numerous costing exercises. Over time, the WBG’s focus has shifted from estimates of ODA needs to estimates of broader investment needs.

Recent SDG costing studies by the WBG have addressed the drawbacks of previous studies in several ways. Operation and maintenance costs have been included in a number of SDG costing exercises. Recent studies have produced costs estimates with ranges, based on policy choices— including choices related to spending efficiency. The WBG’s most comprehensive SDG costing study uses a battery of models to optimize the supply of infrastructure and explore policy options in the context of given targets or objectives.

Understanding the size of the SDG financing gap is key for ultimately achieving the goals. Without a full understanding of the size of the SDG financing gap, policy makers, donors, and international organizations will have difficulty developing financing strategies to support the SDGs. However, while a reliable SDG financing framework is needed, it is insufficient to ensure that the SDGs are met. Policy makers must also ensure that a supportive policy environment is in place.

## **A. Global estimates of investment needs**

The WBG’s most comprehensive costing study, _Beyond the Gap_ , estimates that meeting the infrastructure-related SDGs, plus infrastructure-related climate change mitigation, will require investment equivalent to 4.5–8.2 percent of low- and middle-income countries’ aggregate GDP per year during 2015–30.<sup>5</sup> In individual countries, however, especially low-income countries, investment needs can represent a substantially larger share of GDP. The study covers five sectors: electricity, transport, water and sanitation, flood protection, and irrigation. These sectors are a subset of the SDGs. The largest investment needs are for infrastructure related to electricity and

> 5 The findings of Rozenberg and Fay (2019) are backed by the first consistently-estimated stocktaking of _past_ infrastructure investment in low- and middle-income countries (Fay et al. 2019). These estimates include a lowerbound estimate of 3.4 percent of these countries’ aggregate GDP, a central estimate of around 4 percent, and an upperbound estimate of 5 percent for 2011, with the corresponding absolute amounts of $0.8 trillion, $1.0 trillion, and $1.2 trillion, respectively. The technical appendix of Rozenberg and Fay (2019) provides information on the low- and middle-income country sample used in the study.

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