Greenhouse Gas Emissions and the Financing of Infrastructure Public–Private Partnerships in Emerging and Developing Economies

Resilient infrastructure is an integral component of the sustainable development agenda. In EDCs, governments have adopted Public–Private Partnerships as a mechanism to address the infrastructure deficiencies. However, GHG-induced climate-related pressures are changing not only the risk profile of infrastructure projects but also credit market conditions. This study investigates whether Greenhouse gas emissions are associated with PPP investment flows across 55 EDCs between the years 2000 and 2024. The Cross-Sectionally Augmented Autoregressive Distributed Lag model [MG] was used to examine the impact of GHG-induced climate-related pressures on PPP finance. The study finds that methane (CH4) emissions are significantly and negatively associated with PPP financing in EDCs, while carbon dioxide (CO2) and nitrous oxide (N2O) show the same negative direction but are not statistically significant, suggesting a proxy-dependent association. The findings imply that, on average, as GHG-induced climate-related pressures worsen, private investment in social and economic infrastructure declines. This suggests that PPP frameworks should incorporate GHG-induced climate-related pressures into the design, appraisal, and contracting processes to mitigate potential PPP distress throughout the project’s life cycle. Furthermore, PPP financing is significantly determined by the size of the economy and access to domestic credit, while institutional quality and foreign direct investment show positive but statistically insignificant associations.