The Condition of America's Infrastructure
Pat Natale, P.E., CAE, F.ASCE, Executive Director, American Society of Civil Engineers
TME: The American Society of Civil Engineers (ASCE) has been publishing its Report Card for America’s Infrastructure for some years now. What impact has the publication had?
NATALE: The Report Card has seen tremendous success. Local and state leaders, members of Congress, and even President Obama use the Report Card as the basis for talking about the immense need for infrastructure investment across the country. The Report Card is quoted by representatives on both sides of the aisle because it is a concise and objective way to explain complicated data related to the conditions of 16 categories of our infrastructure.
Over the last few years we have seen progress. The passage of the federal surface transportation bill in 2012 was an encouraging sign. More recently, the fact that there were only three votes against the Water Resources Reform and Development Act (WRRDA) in the House of Representatives shows that infrastructure is truly a bipartisan issue. And, at the state level, we are seeing leadership with states like Wyoming raising their gas taxes and Oklahoma creating comprehensive plans to address their deficient bridges. At the ballot box, the public is getting involved. Election Day this past November saw voters in four states consider seven different transit-related ballot measures. Overall, six of the transit measures passed easily. Often, when faced with the choice of whether to invest, the public resoundingly chooses to do so.
The concept of a report card to grade the nation’s infrastructure originated in 1988 with the congressionally chartered National Council on Public Works Improvement report, Fragile Foundations: A Report on America’s Public Works. When the federal government indicated they would not be updating the report after a decade, ASCE adopted the approach and methodology to publish the first Report Card in 1998. With each new report in 2001, 2005, 2009, and now 2013, the methodology has been rigorously assessed so as to take into consideration all of the changing elements that affect America’s infrastructure.
In 1988, when Fragile Foundations was released, our infrastructure earned a “C”— representing an average grade based on the performance and capacity of existing public works. Among the problems identified by Fragile Foundations were increasing congestion and deferred maintenance and age of the system. The authors of the report worried that fiscal investment was inadequate to meet the current operations costs and future demands on the system. Since 1998, ASCE has released five Report Cards and found each time that these same problems persist. So, while we see progress, the fact that we keep returning to the same issues year after year should tell our elected leaders that we still have much work to do.
TME: Public-private partnerships (P3s) are being promoted as one of the ways to provide more funding for infrastructure. How do you view the opportunities in the area of P3s for the nation’s infrastructure?
NATALE: Public-private partnerships are an important tool to finance infrastructure improvements. With budgets constrained, many cities and state transportation departments have found fresh ways to work with the private sector to get projects done. Innovative financing can greatly accelerate infrastructure development and be a powerful economic stimulus compared to conventional methods. However, it must be recognized that innovative financing is not a replacement for new funding. ASCE supports innovative financing programs and the use of public-private partnerships. We advocate making programs available to all states where appropriate and the 2013 Report Card highlighted a number of successful P3 projects. It should be noted, though, that ASCE supports the use of the P3 method only when the public interest is protected and the following criteria are met.
- Any public revenue derived from P3s must be dedicated exclusively to comparable infrastructure facilities in the state or locality where the project is based.
- The P3 should develop an ongoing revenue stream that provides future funding for the government entity participating in the contract.
- P3 contracts must include performance criteria that address long-term viability, life-cycle costs, return on public and private investment, takeover and turnback, and residual value.
- Transparency must be a key element in all aspects of contract development, including all terms and conditions in the contract. There should be public participation and compliance with all applicable planning and design standards and environmental requirements.
- The selection of professional engineers as prime consultants and sub-consultants should be based solely on the qualifications of the engineering firm.
Additionally, the federal government should make every effort to develop new programs. These types of programs include the Transportation Infrastructure Finance and Innovation Act, National and State Infrastructure Banks, and Grant Anticipation Revenue Vehicles.
TME: What legislation is needed to improve infrastructure funding?
NATALE: Investing in America’s infrastructure is essential to support healthy, vibrant communities. Infrastructure also is critical for long-term economic growth, increasing GDP, employment, income and exports.
ASCE’s 2013 Report Card estimates total investment needs at $3.6 trillion by 2020 across 16 sectors. That leaves a funding shortfall of $1.6 trillion based on current funding levels. With such dire needs, there is no quick fix or one single piece of legislation that can re-build America’s ailing infrastructure. However, the passage of the WRRDA bill is a major step forward and the first significant piece of legislation in six years to begin rebuilding the nation’s ports, inland waterways, dams and levees.
When signed into law, WRRDA will drastically reduce the time it takes for project approvals by consolidating or eliminating duplicative studies, permitting concurrent reviews, and streamlining environmental reviews. The reforms in the law are not at the expense of environmental quality and will allow for a stronger, safer national water resources infrastructure. It also will incrementally increase expenditures out of the Harbor Maintenance Trust Fund so that our nation’s ports can remain competitive on a global level.
Another sector greatly in need of investment is surface transportation. Currently, 32 percent of America’s major roads are in poor or mediocre condition. This costs U.S. motorists traveling on deficient pavement $67 billion a year, or $324 per motorist, in additional repairs and operating costs. While the nation has seen some improvements in pavement conditions due to a short surge of funding from the American Recovery and Reinvestment Act, these were not sustained, long-term investments.
The passage of the Moving Ahead for Progress in the 21st Century Act in 2012 was important because it sustained current investment levels for our nation’s highway system, yet the legislation will expire this fall. Any follow up legislation must identify sustainable and reliable revenue sources that will increase investment levels over the course of the next two decades. Federal transportation loan programs and innovative financing mechanisms play a critical role in funding the nation’s highways—but these programs cannot supplement dedicated federal revenue.
Since the creation of the Interstate Highway System in 1956, the Highway Trust Fund has been supported by revenue collected from road users. This “pay-as-you-go” system has served America well. However, the highway use tax rates have not changed in 20 years and user-based revenue streams have fallen far short of what is needed. If current revenue and spending rates remain unchanged, the shortfall would exceed $100 billion by 2023.
A long-term revenue solution for the Highway Trust Fund will help grow the economy, create jobs and improve quality of life, while contributing to deficit reduction. ASCE has been working with fellow transportation stakeholders to educate Congress about the upcoming transportation fiscal cliff that will occur in 2015 if the Highway Trust Fund is not fixed.
TME: What can the United States learn from other countries on infrastructure funding strategies?
NATALE: Comparing U.S. infrastructure to other nations is difficult in that no two countries share the same history, or the same challenges. The real, first-generation of America’s national infrastructure was built after World War II. These investments of the 20th century spurred our economic boom and made us a global power. Today, quite simply, that tab is coming due.
The United States ranks 14th in the World Economic Forum infrastructure index, which is a measure of quality. Moreover, as the organization Building America’s Future explains, “Even as the global recession has forced cutbacks in government spending, other countries are investing significantly more than us to expand and update their transportation networks.”
When comparing the United States to other nations, though, many have been around far longer and have much different political and economic climates for possible spending.
One area where we see great leadership by other nations is in regard to public/private partnerships, or P3s. According to the Brookings Institution, from 1985 to 2011, there were 377 P3s in the United States, a meager 9 percent of the total amount of infrastructure P3s across the globe. Brookings found that no fewer than 31 countries have a dedicated P3 unit through various governmental agencies to expand and assist P3s. Of course, the United States does not have a dedicated P3 unit, though rhetoric on both sides of the aisle suggests P3s will become a larger part of our nation’s infrastructure conversation in the future.
The biggest lesson we can learn from other nations—and even from our recent past—is that we must have a strategic, long-term vision. Our infrastructure problem is too large for one solution or one piece of legislation to fix. We need a long-term plan if we are going to raise America’s infrastructure grades.
TME: What impact do you see sustainable practices having on the future of infrastructure investments?
NATALE: Clearly, we need to be making significant investments in redeveloping our infrastructure across all sectors. The decisions we make and the approaches we use to develop that infrastructure will determine our energy use, our resource investment and how our communities function for the next 50 years or longer.
It’s really incumbent on today’s engineers to provide leadership to make sure that the infrastructure we put in place today will support sustainable communities in the future—and not just environmentally but also economically and socially. That’s not easy to do, since it involves in some cases a major shift in how we plan and finance these projects.
One critical issue is to focus on life-cycle cost. If we can move away from “first cost” thinking and consider the long-term costs of a project, including operations and decommissioning, we have a better basis to help policy makers and the public make sound decisions. In fact, when we look at projects from that perspective, sustainable practices are often more cost-effective in the long-term. That alters the traditional financing models, especially in terms of the return period for private investment. So we all need to be educated about these approaches to encourage their adoption.
Another key aspect of sustainable practices is resiliency. If we can build infrastructure that can be put back into service soon after major events, we avoid disruptions to business and commerce and keep our economy healthy. That value of infrastructure investment is difficult to account for, because the benefits of resiliency are shared by all, not necessarily the project owner directly. So the question is: How do we compensate or incentivize the project owner for building more resilient infrastructure that may be incrementally more expensive to construct because we all benefit?
Finally, in adopting sustainable practices for infrastructure, one challenge is measuring the costs and benefits across many different sectors that are not easy to compare. To help community leaders and project owners, ASCE along with the American Council of Engineering Companies and American Public Works Association founded the Institute for Sustainable Infrastructure (ISI). ISI’s Envision rating system can be applied to projects across all sectors. It’s a valuable tool to help make infrastructure systems more sustainable and more accountable regarding return on investment.
Ensuring that our infrastructure delivers on the “triple bottom line” of sustainability—environmental, economic and social benefits—is not a choice. The challenge is to adapt the necessary approaches to planning and financing to fully realize the benefits.
[article first published in the March-April 2014 issue of TME]
Patrick J. Natale, P.E., CAE, F.ASCE, became Executive Director of the American Society of Civil Engineers in November 2002. He previously had served as Executive Director of the National Society of Professional Engineers and before that held a series of increasingly senior positions with the Public Service Electric and Gas Company of New Jersey. Natale graduated from Newark College of Engineering with a bachelor’s degree in Civil Engineering and also holds a master’s degree in Engineering Management from the New Jersey Institute of Technology.