Aligning social, environmental, and economic externalities of critical infrastructures with utilities’ resilience and public interest

Zherdev, Nikolay; Mateeva, LilianaORCID: https://orcid.org/0009-0008-3540-022X; Klein, Olivier; Nam, Christine; Bouwer, Laurens Menno; Siegel, Yoel and Kimmich, ChristianORCID: https://orcid.org/0000-0001-8638-8808 (2025) Aligning social, environmental, and economic externalities of critical infrastructures with utilities’ resilience and public interest. , 23 p. https://doi.org/10.2139/ssrn.5548368

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Abstract

Critical infrastructures (CIs) provide essential services, such as energy and water supply, that support the core functions of the economy and society. These services generate positive external effects, like well-being and economic performance, and negative external effects, like service interruptions or pollution, which are not always reflected in their price. These effects vary in scale across market and non-market interactions, highlighting the public good and common-pool resource nature of CIs.This article examines how CIs in the energy and water sectors account for public costs and benefits when adopting innovative technologies to enhance resilience and service sustainability. A social, economic, and environmental impact assessment was conducted to analyze how CI operators consider and implement international regulations related to services with public good characteristics. Based on qualitative interviews and surveys, the study identifies misalignments and opportunities regarding CIs’ strategic and operational practices and existing policies.Based on this analysis, we recommend: i) the development of multi-level “public interest” indicators, ii) balancing public and private responsibility for service resilience costs, iii) fostering collaboration across governance levels, and iv) aligning national and EU policies. Full market internalization of external costs or benefits may be limited due to varying societal spillover effects. Regulation of utilities and public financial support for the provision of services may be justified or needed in such a case. Addressing collective and individual needs, along with collaboration between public and private actors, is essential for developing measures that deal with broader spillover and cascading effects of CIs’ service provision.

Item Type: Discussion/ Working Paper (Unspecified)
Keywords: public goods, impact assessment, utilities resilience
Funders: EU Horizon Europe
Research Units: Business Cycles, Growth and Public Finances
Date Deposited: 30 Sep 2025 09:03
Last Modified: 30 Sep 2025 09:03
DOI: 10.2139/ssrn.5548368
URI: https://irihs.ihs.ac.at/id/eprint/7306

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