Investing in U.S. Infrastructure for Maximum Dividends

The Environmental and Energy Study Institute (EESI) and the National Association of State Energy Officials (NASEO) held a briefing on America's infrastructure needs and the business case for investing in long-term reliability and sustainability. Electric power outages, failing bridges, congested airports, deficient mass transit… all have substantial economic costs. A critical 2016 American Society of Civil Engineers (ASCE) report, Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future, found that failing to fix and improve our nation's infrastructure will result in $3.9 trillion in lost GDP by 2025, and 2.5 million lost jobs. There are also significant health and safety risks—Flint, MI, is just one example of the tragic consequences of neglected infrastructure.

Both political parties have floated plans to spend $1 trillion to upgrade U.S. infrastructure, with different ideas on how to pay for it. What could $1 trillion buy for the country? How can policymakers help set priorities and ensure smart investments that produce the best outcomes possible? In this briefing, infrastructure experts helped answer these and other questions and discussed the value of building for resilience.
 

Highlights

Tom Smith, Executive Director, American Society of Civil Engineers (ASCE)

• Smith discussed the challenges facing America's built infrastructure across all sectors. He highlighted the work of the American Society of Civil Engineers and their quadrennial report card on the state of America's infrastructure. The ASCE's 2017 report includes evaluations of infrastructure capacity, condition, funding, future need, operation, maintenance, and safety.
• The cumulative grade for the United States has not moved past a "D" since the report was first published in 1998. U.S. infrastructure today does not even rank in the top 10 internationally.
• The 2017 report card shows slight increases across seven categories, but the nation still grades poorly overall. Rail freight was the highest scoring sector and only merited a "B" grade. Solid waste, transit, and parks and recreation all declined. Passenger rail and transit face particularly imposing challenges.
• A large maintenance backlog and a significant investment gap affect the overall portfolio. An estimated $2 trillion over a 10-year period is needed to close this gap. By 2025, 2.5 million jobs could be lost if these infrastructure investments are not made. In addition, a "hidden tax" results from poor infrastructure in the form of vehicle wear, delays, and other impacts.
• Smith called for dedicated project funding at the local, state, and federal levels, maintained through trust funds. He also suggested raising the federal motor fuel tax, which has gone untouched since 1993 and needs to be adjusted for today's economic conditions. Mr. Smith also recommended moving to a more proactive and streamlined project permitting process, without sacrificing environmental protections.

John Stanton, CEO and President, Institute for Sustainable Infrastructure

• Stanton discussed the need to make infrastructure investments more resilient, more energy efficient, and less resource intensive. He noted infrastructure can have a wide-ranging set of impacts on public health, the economy, and quality of life.
• He showcased the Institute for Sustainable Infrastructure's Envision rating system. Envision serves as a decision-making guide for all civil infrastructure and is designed to keep up with the rapidly changing field of sustainability. Envision includes 60 credits across five categories—quality of life, leadership, resource allocation, the natural world, and climate and risk.
• The Envision program has been used to train about 6,000 engineering professionals to date.
• Envision is being used for La Guardia Airport in New York and on Florida's I-4 Corridor. Envision is also part of a new "portfolio-wide" pilot project with the cities of New York and Los Angeles. The pilot will provide an assessment tool for an entire suite of assets in a city, allowing for the comparison of infrastructure projects across state lines.
• Stanton said maintenance and operation costs of existing infrastructure are often overlooked and that these investments must also be smarter going forward.

Mariana Silva, Associate, Infrastructure Planning & Finance, Nathan Associates Inc.

• Silva discussed the key role of financing in delivering infrastructure projects. The cost of inadequate infrastructure can add up in the form of power outages, delays from congested roads, and water main breaks. The freight industry alone goes through $2.7 billion in extra costs due to the poor quality of U.S. roads.
• Planners need to think about how to leverage private capital, since the infrastructure proposals coming out of the public sector have been insufficient. Maintenance should also be prominent in conversations about funding, since the focus is often on up-front capital costs. Silva emphasized that an infrastructure project needs to be effective over its entire lifetime in order to deliver the most benefits to society.
• Resilient infrastructure should be integrated into the planning process.
• Currently, there are not enough projects suitable for private financing. Silva called out the mismatch between the interests of policymakers and financiers. There is a need to create benchmarks and successes in this area to help move future funding forward, while also giving the private sector ample time to adjust to the direction the government is headed.

Jeremy Marcus, Deputy Chief of Staff and Legislative Director, Rep. Matt Cartwright (D-PA)

• Marcus highlighted the "PREPARE Act," sponsored by Rep. Matt Cartwright (D-PA) and Rep. Leonard Lance (R-NJ), which will soon be reintroduced in the new Congress. The bill would establish a coordination process requiring federal agencies to implement government-wide resilience, preparedness, and risk management priorities.
• The bill would also equip local and state planners to identify regional issues and develop solutions to resilience challenges, while sharing best practices.
• Marcus stated that the PREPARE Act is supported by nearly 60 organizations; it is bipartisan and adds no cost.

Every four years, ASCE releases an Infrastructure Report Card assessing the state of the nation's infrastructure in 16 major categories and assigning a letter grade to each one and to America's infrastructure as a whole. In the recently released 2017 report, the overall grade is a D+, just barely above failing. Transit infrastructure came out particularly poorly in ASCE's report, with a grade of D-, the lowest of any category. Eleven categories—more than two thirds—got a D rating: Aviation, Dams, Drinking Water, Energy, Hazardous Waste, Inland Waterways, Levees, Roads, Schools, Transit, and Waste Water. Four categories eked out a C (Bridges, Ports, Public Parks, and Solid Waste), and just one, Rail, earned a B. No category was awarded an A.

Energy infrastructure received a D+. According to ASCE, much of the U.S. energy system predates the turn of the last century, and most electric transmission and distribution lines went up in the 1950s and 60s with a 50-year life expectancy. We are now paying the price for deferred maintenance and upgrades: “As a result of aging infrastructure, severe weather events, and attacks and vandalism, in 2015 Americans experienced a reported 3,571 total outages, with an average duration of 49 minutes.”