The Resilience Opportunity Unlocking Climate Resilience through Public Private Collaboration 2025

CASE STUDY 1 SMART Tunnel – bundling climate resilience with revenue-generating infrastructure Overview of the project To address frequent floods in Kuala Lumpur’s central business district and worsening traffic congestion, Malaysia built the SMART Tunnel. Opened in 2007, the 9.7km tunnel diverts monsoonal runoff from the Klang-Ampang River confluence while also serving as a 3km double-deck motorway to ease traffic into the city. Project description The SMART Tunnel operates through four distinct modes driven by river flow rates and storm severity: two modes in dry conditions (mode 1: open for traffic, and mode 2: half open for motorways) and two modes in flood mode (mode 3: closed for major storms, and mode 4: dedicated water passage). The Supervisory Control and Data Acquisition (SCADA) system will detect water level, and the flood sensors will control the operations of automated flood control gates. Post-flood, the tunnel is cleared within 48 hours, returning to normal traffic use. By pairing flood diversion with a tolled motorway, SMART creates a revenue model for climate resilience infrastructure. Furthermore, traffic tolls generate income during dry periods, offsetting CapEx and operational costs. In flood mode, the motorway converts seamlessly into a water conduit to deliver its flood resilience function. Private-sector engagement and public-sector support The project was delivered through a joint venture between Gamuda Berhad and the Malaysian Mining Corporation (MMC) Berhad, under the oversight of two government agencies, the Department of Irrigation and Drainage (DID) Malaysia and the Malaysian Highway Authority. The project was financed through a traditional PPP model, with a total capital cost of approximately $510 million – of which the private sector contributed $170 million to finance the development, operation and long-term maintenance of the toll expressway and its supporting systems. The private consortium recoups its investment primarily through toll revenue, collected from vehicles via electronic systems using the 3km motorway during dry conditions (modes 1 and 2). Although tolling is suspended during flood- mode operations (modes 3 and 4), the overall revenue model is robust due to consistent urban traffic demand and the tunnel’s role as a high-capacity southern gateway to the city. In parallel, public-sector responsibility remains in place for the flood control system. The DID under the Ministry of Environment and Water prepares an annual operational and maintenance budget for the tunnel’s stormwater management components. This division of responsibility ensures long-term functionality while keeping critical resilience infrastructure publicly supported and financially sustainable. Impact delivered –Frequency of activation: Since opening, the tunnel has entered some form of flood-control mode over 600 times, with 11 major activations in mode 4 (exclusive drainage mode). This includes a significant event in December 2021, when it diverted 5 million cubic metres (m³) of floodwater during a single 22-hour operation. –Damage prevention: DID estimates indicate that the tunnel has prevented approximately $337 million in flood damage since 2007, representing around $24 million annually. –Flood mitigation efficacy: In a 2022 event where total flood losses reached RM 6.1 billion (Malaysian ringgit), the SMART Tunnel alone was estimated to mitigate 45% of potential flood damage in the Klang Valley, preventing extensive traffic and infrastructure disruptions. Key takeaways and implications The SMART Tunnel provides a replicable blueprint for how cities can rethink infrastructure to address climate risk and urban development simultaneously. It offers a powerful demonstration of how large-scale climate resilience infrastructure can be made commercially viable, harnessing multiple archetypes and key design levers introduced in this paper: –Bundling climate resilience with revenue-generating infrastructure creates a compelling investment case. By integrating flood control benefits with an urban toll road, the project defines a clear revenue stream from the stormwater management system, which is usually a public good. –Clearly defined roles and revenue pathways enable effective risk sharing for different stakeholders. The PPP structure clearly delineates public and private responsibilities. Toll operations and maintenance were handled by the private sector, while the government retained ownership of flood control infrastructure. This aligns with the third lever (manage risk-return expectations) and highlights how thoughtful contract design can facilitate private engagement in resilience systems. In addition, the continuous value tracking validates the importance of measurable outcomes in attracting commercial capital and scaling future public- private climate resilience efforts. The SMART Tunnel demonstrates how archetype 4 can generate revenue streams from climate resilience infrastructure through monetization of its co-benefits. The Resilience Opportunity: Unlocking Climate Resilience through Public-Private Collaboration 19