Infrastructure Maintenance - An Economic Opportunity

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Courtesy of ASTM International

Public safety and the cost of doing business are deeply impacted when infrastructure is neglected. Here’s a look at the high cost of low maintenance and what can be done about it.

A Bridge Too Far

There are over 607,000 bridges in the United States. According to the 2013 Report Card for America’s Infrastructure,1 published by the American Society of Civil Engineers, the average age of the American bridge is 42 years, and in 2012 one of every nine was considered structurally deficient in some way; that’s more than 67,000 bridges.

The ASCE uses the report card format familiar to all school children and their parents to provide an easy-to-grasp snapshot of the condition of 16 different categories of infrastructure: aviation, bridges, dams, drinking water, energy, hazardous waste, inland waterways, levees, ports, public parks and recreation, rail, roads, schools, solid waste, transit and wastewater. These categories were evaluated on the basis of capacity, condition, funding, future need, operation and maintenance, public safety, resilience and innovation.

At C+, bridges are one of only five categories to receive a grade above D; the other four are ports (C), public parks and recreation (C-), rail (C+) and solid waste (B-). The overall grade for 2013: D+, which is actually a slight improvement over the D grade given in the 2009 report card.

Why are these grades so low? As with many things, money — or the lack thereof — is a key factor. A May 2013 article in The Washington Post2 notes that the 2008 economic downturn and balanced-budget requirements in some states led to dramatic decreases in state expenditures for transportation infrastructure. (One example: California, where transportation spending declined by 31 percent between 2007 and 2009.) These decreases have been particularly damaging because, according to the Congressional Budget Office,3 “State and local governments account for about 75 percent of total public spending on transportation and water infrastructure — even after subtracting from their gross spending the value of grants and loan subsidies that the federal government provides for such purposes — and the federal government accounts for the other 25 percent.”

The feds have not stepped in to help fill the state-level shortfalls in any meaningful way. Appearing on a recent segment of the CBS News program 60 Minutes4 that focused on infrastructure problems in America, Representative Earl Blumenauer, a Democrat from Oregon, pointed out that the last time Congress passed a major six-year transportation bill was 1997; since then, there have been 21 short-term extensions.

Ray LaHood, secretary of transportation during the Obama administration’s first term, was also interviewed in that program. He noted that public spending on infrastructure had fallen to its lowest level since 1947 and that 1993 was the last time the federal gas tax — currently 18 cents/gallon — was raised. The gas tax is the primary source of revenue for the Highway Trust Fund, which, in LaHood’s words, is “the pot of money that over the last 50 years helped us create the best interstate system in the world, which is now falling apart.”

Overall Washington gridlock and the unwillingness of politicians to risk their future re-election prospects by voting for new funding mechanisms, such as an increase in the federal gas tax, have had a negative effect on the ability of the federal government to work with the states to begin to address the overwhelming backlog of transportation-related infrastructure projects. And transportation is only one element, albeit a key one, of the overall infrastructure problem.

Minding the Gap

While it’s instructive, and enormously important, to evaluate each infrastructure category individually in order to assess its current status and future prospects, one must consider the interdependence of the different categories to get a more complete picture of the overall economic effect of aging physical structures and deferred maintenance.

To cite one example, dredging the nation’s ports is crucial to overseas trade, both incoming and outgoing; only two of the 14 major East Coast ports are deep enough to accommodate the new generation of super-sized cargo ships. But if the highways and bridges on which goods are transported from the docks to their final destinations are in disrepair, travel times increase, costs to business rise and the positive economic impact of modernized port facilities is undermined.

For another example, listen to Greg DiLoreto, who served as ASCE president in 2012-2013 and is the former CEO of the Tualatin Valley Water District in metropolitan Portland, Oregon. “Wastewater treatment plants are one of the largest users of electricity. You can have a great wastewater system, but it won’t perform up to expectations without a great electrical grid,” he says. Speaking more broadly of infrastructure in general, DiLoreto points out that “While each area has its own needs, this thing works as one big unit. You have to look at the total picture.”

According to “Failure to Act: The Impact of Current Infrastructure Investment on America’s Economic Future”5 (another ASCE document, also published in 2013), “it is clear that there is an interactive effect between different infrastructure sectors and a cumulative impact of an ongoing investment gap in multiple infrastructure systems.”

How big is this gap? ASCE estimates that cumulative infrastructure investment needs will grow to $2.7 trillion by 2020. Based on current trends, it is expected that funding of approximately $1.7 trillion — or only about 60 percent of the necessary expenditures — will be available over the rest of this decade. Project further out to 2040, and ASCE estimates that the cumulative infrastructure investment needed will nearly quadruple, to $10 trillion, while available funding struggles to catch up, at $5.3 trillion.

In terms of the shortfall, these numbers translate to a $1 trillion gap in 2020 and a $4.7 trillion gap in 2040.

The Price of Neglect

The August 2007 collapse of the I-35W bridge in Minneapolis, Minnesota, was a dramatic example of what can happen when infrastructure maintenance is deferred. Though the bridge was of relatively recent vintage — completed in 1967 — it was deemed structurally deficient by the U.S. Department of Transportation in 1990 due to corrosion in its bearings. Later inspections revealed additional problems, some of which related to the bridge’s original design; in 2005 it was again rated structurally deficient and in possible need of replacement (according to the U.S. DOT National Bridge Inventory). However, the roadwork underway in August 2007 was not focused on structural issues.

As heartbreaking as this tragedy was, its effects were limited to the Minneapolis metro area. But the continued neglect of key infrastructure is having a profound impact on every business in America and, by extension, the nation’s overall economy.

Building America’s Future Educational Fund is an organization dedicated specifically to “bringing about a new era of U.S. investment in infrastructure that enhances our prosperity and quality of life.” It is co-chaired by LaHood, former New York City mayor Michael Bloomberg and former governors Edward 'Ed' Rendell (Pennsylvania) and Arnold Schwarzenegger (California).

BAF Ed Fund’s Transportation Infrastructure Report 2012,6 subtitled “Falling Apart and Falling Behind,” takes a look at the economic effects of inadequate transportation infrastructure (encompassing highways, roads and bridges; transit systems; railroads; ports and waterways; and airports and aviation). Here are two of the report’s findings:

  • In 2010, Americans wasted 4.8 billion hours sitting in traffic, at a cost of $101 billion and 1.9 billion gallons of wasted fuel.
  • Money spent by American business on logistics (the cost of moving, storing and distributing goods), fell during the 1980s and ’90s but has been rising over the past decade as a percentage of gross domestic product.

Freight bottlenecks and other types of congestion in the American rail system cost about $200 billion, or 1.6 percent of GDP, annually. One final sobering statistic: The World Economic Forum’s “The Global Competitiveness Report 2012-13”7 ranks the United States 14th in the area of infrastructure.

Hope for the Future

The facts and figures cited in this article paint a somewhat bleak picture of the state of America’s infrastructure and the ability of the political system to address it. There can hardly be any doubt that the situation is serious and that strong measures are called for.

And yet, there are hopeful developments in terms of addressing substandard infrastructure. The ASCE report card cites two or three encouraging success stories in every one of the 50 states.

  • In Georgia, robotic technology that can automatically detect and repair damaged roads is well on the way to implementation. Developed through a partnership between the Georgia Department of Transportation and Georgia Institute of Technology, the so-called “roadbot” has the potential to save money through preemptive maintenance, money that can be channeled to other necessary infrastructure improvements.
  • In Pennsylvania, the Philadelphia Water Department built a biogas cogeneration facility to convert waste into energy, saving more than $600,000 in energy costs after just the first winter season and providing 5.6 MW of power for on-site use.
  • In Washington, the Freight Action Strategy for the Everett-Seattle-Tacoma Corridor (FAST Corridor) has brought together 26 local, regional and federal entities to work on coordinated solutions to the challenges of efficiently moving freight from the area’s two major ports to the surrounding interstate highway system.
  • In Maryland, the Port of Baltimore is in the process of improving its container-handling infrastructure at the Seagirt Marine Terminal. A new berth and the addition of four new cranes will enable the port to handle the larger ships that will begin arriving on completion of the Panama Canal expansion project. The project has created 5,700 new jobs and is expected to generate $16 million in additional state revenue.1

For a look at the beneficial effects of increased infrastructure investment on a national level, the National Association of Manufacturers released a report this past September titled “Catching Up: Greater Focus Needed to Achieve a More Competitive Infrastructure,”8 which projects the economic benefits of a targeted, long-term increase in such investment over the next 15 years:

  • Nearly 1.3 million additional jobs (at the onset of an initial jump in spending);
  • Real GDP growth of 1.3 percent by 2020 and 2.9 percent by 2030;
  • A progressively more productive economy that will benefit from a $3 return on investment of every $1 spent by 2030; and
  • Increased take-home pay (after taxes) — a net gain of $1,300 per household by 2020 and $4.400 per household by 2030 (measured in 2009 dollars).

These numbers are compelling. It’s hard to find anyone who disagrees with the basic premise that increased investment in infrastructure will create positive effects that reverberate throughout the economy. Yet, despite many successes, much remains to be done, and the kind of bold, innovative thinking needed to create a truly comprehensive national infrastructure strategy seems to be in short supply.

On that note, let’s give former ASCE president Greg DiLoreto the floor for a final comment. He believes the key to creating a genuine mandate for infrastructure improvements is to increase public awareness of the problems we face, and support for sufficient funding to address them. “We must do an even better job of informing people about how important infrastructure is to our economic prosperity and quality of life. After all, when we turn on the tap, we expect water to come out.”

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