Investment Needs to Achieve the Sustainable Development Goals: Understanding the Billions and Trillions
Guido Schmidt-Traub
Sustainable Development Solutions Network (SDSN) Working Paper
Version 2
12 November 2015 :: 137 pages
Pdf: http://unsdsn.org/wp-content/uploads/2015/09/151112-SDG-Financing-Needs.pdf
Abstract
In September 2015, governments adopted the Sustainable Development Goals (SDGs) to be achieved by 2030 in order to guide international cooperation in pursuit of ambitious quantitative goals. This paper reviews the role that global needs assessments play in supporting the SDGs and discusses common criticisms. The paper proposes an analytical framework for SDG needs assessments that translates the 17 SDGs into eight investment areas. It also integrates investment needs for climate change adaptation and mitigation with the development needs for each investment area and introduces a preliminary score to assess the quality and suitability of needs assessment studies. Using this framework, published sector needs assessments are harmonized and consolidated, paying careful attention to differences in methodologies and assumptions. The share of private financing is estimated for each investment area, and overall investment needs are aggregated.

The paper then explores the implications of economy-wide studies on synergies and trade-offs in financing the SDGs and outlines priorities and directions for future research. This preliminary analysis of available sector studies shows that incremental spending needs in low- and lower-middle-income countries may amount to at least $20131.4 trillion per year ($343-360 billion for low-income countries and $900-944 billion for lower-middle-income countries). Over the period this corresponds to some 4% of these countries’ GDP measured in $ PPP and 11.5% of GDP in US dollars at market exchange rates. Approximately half of these investments in the SDGs can be privately financed. Domestic resource mobilization can increase significantly leaving an external financing gap of perhaps $152-163 billion per year (equivalent to 0.22-0.26% of high-income countries’ GDP) that must be met through international public finance, including Official Development Assistance.

Globally an incremental 1.5-2.5% of world GDP needs to be invested each year by the public and private sectors to achieve the SDGs in every country. These results are preliminary and meant for discussion and improvement.

Comments on this revised draft are welcomed and should be addressed to info@unsdsn.org. The SDSN may issue periodic updates of this analysis.