CG/LA Infrastructure's InfraBlog
By Brian Chappatta – Mar 19, 2013 12:01 AM ET
Investment planned through 2020 on U.S. infrastructure, including roads, schools and airports, will fall $1.6 trillion short of what’s needed to maintain existing facilities, the American Society of Civil Engineers says.
About 80 percent more, or $3.6 trillion, needs to be spent to put the nation’s critical systems in a state of good repair, according to a report today from the group. Without higher spending, the costs of travel delays, power and water outages will reach $1.8 trillion by 2020, including $1.2 trillion borne by businesses and $611 billion for households, the group said.
“We’re investing in infrastructure, we’re just not investing enough,” Greg DiLoreto, president of the organization, said in a telephone interview. “We’re treading water, and we need to improve.”
President Barack Obama called for a “fix it first” approach to infrastructure projects during his annual speech last month to Congress as it begins the year. Republican opponents have blocked his proposal to create a national infrastructure bank. Obama has also called for a new debt program, called America Fast Forward Bonds, which would boost state and local government spending on public works.
For some Americans, the Interstate 35W bridge collapse in Minneapolis in August 2007 put in stark relief the costs cited by the civil engineer group. The structural failure killed 13 people and injured 145, while the Minneapolis-St. Paul economy lost an estimated $60 million. The region’s busiest bridge was replaced for almost $234 million, reopening in September 2008.
For most in the nation, the costs of rundown roads, weakened bridges and aged airport facilities is more mundane, coming in the form of traffic jams and flight delays.
Plans call for $91 billion to be spent annually on the nation’s urban highways, where motorists already waste $101 billion a year in time and fuel because of congestion, according to the engineer group’s report. To significantly improve conditions, the amount needed would be $170 billion, or 87 percent more than planned, the group said, citing Federal Highway Administration estimates.
Airport congestion cost the nation’s economy about $22 billion in 2012 and that figure will rise 55 percent to $34 billion by 2020 if current federal funding levels for airport improvements are maintained with no increase, the group said. The costs of delays will surge almost three-fold to $63 billion by 2040 without an increase in current spending levels, it said, citing Federal Aviation Administration estimates.
“Investing in infrastructure is an engine for long-term economic growth, increasing GDP, employment, household income, and exports,” the engineer’s society said in its report. “The reverse is also true — without investing, infrastructure can become a drag on the economy.”
The nation is doing better now than four years ago, when the group last reported on the state of U.S. infrastructure and the amount of money being spent on it. In 2009, the five-year funding gap was projected to be $2.2 trillion, according to DiLoreto, who is also chief executive officer of the Tualatin Valley Water District in Beaverton, Oregon. In June, he said he would “be hard-pressed to believe” the situation would improve.
Today’s report reflects the effects of the Build America Bonds program, part of Obama’s 2009 economic-stimulus plan. State and local governments took advantage of the subsidized borrowing rates it created, helping to boost municipal-debt offerings to $408 billion in 2010, the most in a year since at least 2004, data compiled by Bloomberg show.
The civil engineers group in January released a report saying that unless the rate of infrastructure investment changes, the U.S. economy will have lost 3.5 million jobs and $3.1 trillion in gross domestic product by 2020. Spending an extra $157 billion a year would avert those losses, according to the civil engineer group.
The U.S. Chamber of Commerce is among groups that have helped the engineer society raise awareness of the nation’s infrastructure needs. The chamber this year joined with the National Association of Water Companies to create a website that urges business leaders to stop neglecting such investments.
Plans call for spending $877 billion on surface transport through 2020, or about 51 percent of the $1.7 trillion needed, according to the engineer group’s report. While spending has increased on railroads, if other elements don’t receive similar attention, it won’t be enough to curb economic losses, according to DiLoreto, the organization’s president.
“The infrastructure system works together, and so often we’ll just fix the one that’s in the worst condition or the one that needs the most funding,” DiLoreto said. “It goes hand-in- hand. You fix rail, but if you can’t get trucks from the local distribution point in your city to the rail, it doesn’t work.”