Grand Cayman’s infrastructure has struggled to keep up with the pace of population growth over the past five decades.
The island’s road network, landfill site, cargo port and prison are at or past capacity.
Demand for school space continues to grow, the sewer system covers only a small fraction of the island, and the power grid is at the very beginning of a transition from fossil fuels to renewable energy.
COVID-19 ended plans for developments at the cruise port but could also lead to additional requirements at the recently renovated airport.
Rapid changes in technology and the desire to create a ‘smart island’ that can support new and existing businesses is also driving demand for telecoms upgrades.
Meanwhile, the ever-present threat of climate change and the potential for coastal erosion, flooding of low-lying areas and more devastating hurricanes, creates existential concerns about the resilience of Cayman’s core infrastructure.
Even if the islands’ population were expected to remain stagnant, investment in some or all of these areas would likely be necessary.
Yet, despite a recent exodus of overseas workers due to the coronavirus crisis, there is a sense of confidence about the long-term economic future of the islands.
Our analysis suggests that if and when the impact of the pandemic subsides, there will be a return of investors, businesses and labour to the islands.
While that is broadly seen as a good thing for the economy, it will also add to the pressure on infrastructure, with more cars, more waste, more energy consumption, more internet users, more cargo, more sewage, more school-age children, more travellers and, most likely, more prisoners.
Time to plan
The temporary pause in Cayman’s growth could be a good time to plan for the future, says Simon Townend, head of advisory for KPMG’s Islands Group, which covers Bermuda, the Cayman Islands, the Bahamas, British Virgin Islands, Jamaica, Trinidad and Tobago, Barbados, Isle of Man, the Channel Islands and Malta.
KPMG has provided support to governments on structuring and implementing infrastructure projects in all of those jurisdictions.
Townend, who is based in the Bahamas, says Cayman’s sound economic policies and ‘robust’ procurement model mean it is in a better position to attract investment than many other islands in the region.
He believes rolling out shovel-ready infrastructure projects will help support employment in Cayman during the COVID crisis while preparing the country for the post-pandemic future.
The impact of coronavirus, the longer-term threat of climate change and the influence of population dynamics are all factors that should be considered, he believes.
“In many ways, it would be perfect timing for a country like Cayman to think about a strategic infrastructure plan for the next 20-50 years,” he says. “What can happen if there is a lot of residential and commercial development going on, and you don’t have a national plan in place for infrastructure, is that you can find yourself behind the 8-ball.”
To some extent, that is what has happened in Cayman over several decades of rapid population growth.
Government has moved to address that through the first update to the islands’ development plan in more than 25 years.
The initial overarching document for the Plan Cayman project, which is in progress, includes a section on long-term infrastructure planning. It recommends a five-year capital-improvement programme is formulated and updated annually.
More than building
Infrastructure is not just about building, says Sam Story, head of corporate finance at KPMG in Cayman.
He highlights the Integrated Solid Waste Management Strategy, designed to reduce the footprint and environmental impacts of the landfill site, as an example of how policy can work alongside new development.
With that project, the aim is to divert waste to be converted to energy to power people’s homes, lessening the need for extensive landfill space. It also includes initiatives to encourage the community to recycle and to reduce the amount of waste that they produce.
The same approach could be taken with energy and roads infrastructure, he believes.
Retrofitting homes and commercial buildings with energy-saving solutions and solar panels could lead to less overall demand – even with a higher number of people on island. It will also reduce the need to burn diesel, which is both costly and environmentally harmful, he says.
Similarly, enhancing public transport and providing better and safer infrastructure for pedestrians and cyclists could be an alternative to extensive new road building as a way to manage traffic.
“Infrastructure planning is not simply about building things,” says Story.
“It is about delivering appropriate and environmentally-conscious services to the population of the future.”
Sustainable development goals
Any infrastructure plan in the Caribbean needs to consider climate change and should also factor in the United Nations Sustainable Development Goals, says Townend.
He believes demonstrating sustainability and environmental responsibility is becoming increasingly important to investors.
It also matters in terms of ensuring new power plants, roads, schools, sewers and other public utilities are ‘future proof’ and can withstand both one-off natural disasters and the incremental impacts of climate change.
Though the capacity is limited for Caribbean nations to make a significant difference in the battle against global warming, Townend believes that countries like the Bahamas and Cayman, which are amongst the most vulnerable countries in the world to the effects of sea-level rise and increasing ocean temperatures, can lead by example in the way they operate.
“There is an opportunity for Cayman to establish itself as a leader in the development of sustainable, smart infrastructure that is aligned with the sustainable development goals outlined by the United Nations,” he says.
Those goals also include ensuring access to affordable and clean energy, reducing inequality and guaranteeing good healthcare and well-being for citizens. Townend says few countries have successfully incorporated the Sustainable Development Goals into national plans.
But he believes Cayman, because of its manageable size and strong economy, is better placed than most to lead the way.
Cayman in strong position
Even with the battering that the islands’ finances have taken, and continue to take, because of the collapse of the tourism industry due to COVID, Cayman is in a relatively strong fiscal position.
It may be wise economic policy, says Townend, to invest in well-planned infrastructure now – in order to stimulate employment.
That could also enable the islands to catch up in areas where infrastructure has fallen behind population growth.
Government has embraced that strategy in part, by accelerating work at the airport, continuing the John Gray High School development project, and continuing the expansion of the road network.
Some of those projects have attracted controversy for significant cost over-runs, however.
Like all countries, the islands will face significant shortfalls in revenue as a result of COVID-19, says Townend.
The burden on public finances can be alleviated by partnerships with the private sector, he says, similar to what is proposed for waste management and what was envisaged for the port.
That is easier to achieve when there is an income stream attached.
With social infrastructure, like schools and hospitals, it is more difficult, he acknowledges, although private investment in independent schools is expected to play a large part in meeting future demand for education on the islands.
“Cayman is not alone in terms of asking these questions about population growth, climate change, and advances in technology. Across the region, all these issues are coming to the fore right now,” he added.
“It is good timing for Cayman and other countries in the region to reflect on their current infrastructure and start looking at a vision for the future taking these factors into account.”