Monday, September 14, 2009

A post in Charter Cities about a particular type of risk in infrastructure investment:

The risk that a future government will breach the terms of an agreement is called political risk. An investment in a piece of infrastructure such as a power plant or an airport requires a large initial outlay and pays returns for decades. An investor who contemplates an infrastructure investment in a country with political risk has to take account of the chance that after the initial outlay, the local government will deprive it of a chance to earn the return.

From this perspective, wind and solar power generators with localized storage can be a good solution for the developing countries because they don't require massive one-time investments (cf to nuclear, coal, and hydro power).

:: infrastructure, niche construction, greatest, problem, solution

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