Dinges is the Senior Managing Director at American Society of Civil Engineers. ASCE is the preeminent organization representation the civil engineering organization. Around since 1852, ASCE represents 146k members of the civil engineering profession.
American Infrastructure: The 2017 Infrastructure Report Card by ASCE gave America’s infrastructure a D+—the same as in 2013. Were you surprised that not much changed?
Casey Dinges: While we’ve made some progress, reversing the trajectory of decades of underinvestment in infrastructure requires transformative action from Congress, states, infrastructure owners, and the American people.
In the last four years, while there have been some encouraging signs – some states, for example, have stepped up and increased investments at the state level – if you look at it as a whole, the country has moved sideways and I think that’s why the grade didn’t change. And the challenge is still significant; we still talk about a funding gap of $2 trillion over ten years. However, it’s a solvable challenge. Over 10 years, it’s a $200 billion a year gap number, and that’s for all 16 categories. We have to think that through strategic and sustained investments, good leadership, comprehensive planning, and careful thought to the future as we think about sustainability and resiliency, we still think that the infrastructure can be improved and restored.
When you think of that $200 billion a year gap, while it is a sizeable number, if you think about the size of the US GDP, $19 trillion, and if you think about the importance of all these infrastructure systems to business, if not life itself, the $200 billion seems more approachable. That’s why I prefer to talk about $200 billion a year gap as opposed to $2 trillion over 10 years. It’ll take time to work itself out, it won’t just happen at once. Even if the President/Congress comes together quickly, it’s going to take months.
AI: Seven sections improved from 2013, what do you attribute their improvement to? Can any of that be leveraged to help the areas that saw little to no improvement?
Dinges: Areas that improved, hazardous waste, inland waterways, levees, ports, rail, schools, and wastewater, benefitted from good, vocal leadership, thoughtful policy making, and investments that garnered results. A good example out of that group would be looking at the rail sector, the freight rail sector, a very private sector driven system. That sector is interesting because they used the economic downturn in 2008/9, low interest rates, borrowing costs, readily accessible labor, to get projects moving. That sector made huge investments in their infrastructure and continued to do so. The rail industry invested $27 billion in the year 2015 alone in its infrastructure. We’ve seen some highlights there where if you step up and make investments good things can happen. In this case for rail, they are the only category with a B in the entire report card. The rail sector gets at the nimbleness of the private sector. They can act a little more quickly than government can. They’re looking at the condition of the economy, borrowing costs are low, but also demands in their own system were a little less =because the economy had slackened off a bit. They were able to move quickly, turn quickly to an investment approach and take some action. If anything maybe there is a little less in there for government to realize that just because it is government doesn’t mean it can’t react quickly and decisively to issue and sometimes it does require investment to do that. The rail story is a good one.
In terms of these other categories, waterways and levees, part of the story there is that you saw Congress pass two water resource development bills over a fairly short period. Typically, Congress likes to get into a ‘every-other-year’ pattern of passing water resource development bills and seems to be back in that pattern. I might add parenthetically that those water resource development bills, sometimes called WRDA bills, are authorization bills so, not to get too wonky, that authorizes congress to do something, to get funding and appropriations as a separate legislative manner and Congress certainly needs to do more on that front. But having the authorizations in the first place is good because then you can move on to appropriations.
The port sector: Ports are adapting to an environment with this new Panama Canal, the expansion allows much bigger freight ships to go through. In some cases, those ships can now carry 2-3 times the amount of cargo that ships were previously able to put through the canal. You are seeing US ports reacting to some of those changes and making investments. Not all of them, but the ones that want to play in that space with the big ships that are called post-panamax ships, that’s a bit of a game changer, too.
AI: Lack of funding is a major reason as to why our nation’s infrastructure is not moving forward. What does the ASCE recommend? Is it as easy as increasing the gas tax and partnering with private parties?
Dinges: Funding can happen in a lot of ways. In reference to the gas tax, we’re talking about the transportation space and that is a lot of the focus. I mentioned the $2 trillion funding gap over 10 years for all infrastructure, surface transportation covers just half of that, roads bridges and mass transit systems, just three categories cover $1 trillion of that $2 trillion gap. We heard the President mention the gas tax last week (early May) which is interesting. You don’t often hear US presidents talk that openly about what some politicians perceive as a very difficult political issue. But members of Congress need to look no further than their legislative brethren at the state level. Since 2013, 21 states including D.C., has raised their gas tax for infrastructure. Related to that I saw another study about how risky a political vote is that. I see the reelect rate for state legislature over the last several years is 95 percent, those legislators that voted for increase infrastructure investments. So it not need be a political death spiral, if anything it can be used to show leadership and a reason to get reelected. The gas tax is certainly one of the things congress can be looking at, particularly in the transportation space, and that’s where the tax should be linked, to surface transportation projects. Congress hasn’t touched it since 1993, it has lost 40 percent of its purchasing power because it was never indexed to inflation. Going forward if it is raised, it should be indexed. The part and the pun is the gas tax would only be a bridge to the near future. In the long run, Congress and states, eventually will migrate to a VMT, vehicle miles traveled approach. In other words, since cars aren’t going to be powered by just gasoline anymore, there’s electricity, fuel cells and other technologies that coupled with the increased fuel efficiency of vehicles makes the gas tax in the long, long run not a viable method into the distant future. You see a lot of the experts look at this VMT approach, and when you think about it, it’s hard to come up with a more fair system than to actually charge for the miles you drive, regardless of how you power the vehicle you drive. Maybe people can get into issues of weight, heavier vehicles, and trucks already do pay more, there could be some adjustment for that, but VMT does seem like the fairest way to do this. There have been pilot programs in the state of Oregon, California, and Washington, are looking at this, too.
The other issue you raised with P3s, there’s a lot of talk about that. The US, if you look at maybe Asia, Europe and other parts of the world, historically there seems to of been a little more activity in the triple Ps space than in the US where we have this more traditional, these are public works facilities, we work through government, and the public model to make it happen. I think there will be more of this in the future, it’s just a question of how much. People need to remember that if you’re a member of the public, you’re going to pay either way, whether it’s a new model, public-private partnership where private entities might have fronted the money so a project could get built, but the private entity then retains to collect tolls or whatever the financing mechanism is for that infrastructure that has just been built. The public will pay any way, whether it’s a triple P or the old public model. The public wants to be sure it’s getting the best value for their infrastructure dollars. That’s worthy of a good debate, a good discussion.
When you start thinking of the private sector, what’re the advantages you might have, there are those advocates that will say that the private sector can react more quickly to changes in the market place and different price signals, and historically that’s probably true if you look at the development of private industry in the US and around world. They do react a little more nimbly than government can. Perhaps they can bring levels of innovation to the floor that government can’t. Sometimes government can be constrained in a regulatory or administrative way to doing things the same old way. Private sector can perhaps be more innovative and try new things, particularly if we think in terms of performance based systems and with a long-term view. In other words, if we don’t just think of the lowest upfront cost to building something, but think about the long term lifestyle costs of a facility, would the private sector adapt better if the signal is ‘Look, we don’t care how you keep the traffic moving on this toll road for the next 75 years, that’s your goal, here are the quality standards you have to maintain on the roadway and here’s the performance indicators we’re looking for, but how you get there we’re not going to say, we’re going to let you figure it out.’ I think it’s worthy of a good conversation.
There have been some good examples of triple Ps in the US. One of those being the hot lanes in the northern Virginia belt way in Washington D.C., the 495 hot lanes to Virginia. That project seemed to have been built on time and on budget, with relatively minimal impact on the traveling public, project has been underway for a while, and I think that might be a hopeful sign. That was a project in a fairly affluent region of the US, just outside of Washington. One would hope that it would work here.
People are still warming up to this idea in the US, triple Ps. The other thing to think about is when you look at the 16 categories of infrastructure in the report card, there is varying levels of public or private ownership of the different facilities. Transit systems tend to be mostly public agencies, water and wastewater typically are government, but not always, port facilities often government entities but there is also private entities, the rail sector is as we said is almost all private sector in terms of freight rail, passenger rail you do have AMTRAK a public system, parks and recreation tend to be all public entities, in the energy space that’s often the private sector, so it varies from category to category. When you hear the triple Ps discussion come up, it is focused on the surface transportation space, because that’s the area where in the mind of advocates is the least amount of penetration by P3s and there’s perhaps more potential there to be tapped.
AI: How does the ASCE feel about shovel-ready projects, are they as ideal as people make them out to be?
Dinges: I’m still trying to understand what that term really means. I know the intent when used by people. I think what people are trying to say is ‘we want to help in a way that gets the project that’s hanging in the balance right now, we want to get it moving and get people at work the very next day.’ But people realize that money doesn’t come in one day and work starts the next. Even a so-called shovel-ready project might take time to get off the ground. The focus needs to be in long-term infrastructure needs and preparing infrastructure for the 21st century, rather than focusing on a quick fix or nice soundbite. We’re much more interested in projects that will have a significant impact on the economy and public safety, and getting that moving along, and the jobs will come. Particularly once you get into the construction phase, that’s where most of the employment occurs. The improvements that’ll have the most impact are the most well planned, vetted, with an eye to the future, not just current needs. As I say, I’m still not even sure what shovel-ready really means. It’s a good soundbite. A little thought bubble goes over people’s head ‘oh we’re about to put people to work.’ If we take kind of a longer view, start making the investments necessary, things will just start taking off in an orderly fashion. The other thing is that if national unemployment really has fallen down to 4.4 percent which is a relatively historically low number it’s going to take a little time for things to ramp up anyway.
AI: As it comes together, how can we best prepare now for the infrastructure of tomorrow?
Dinges: All levels of government, the business sector, labor, the nonprofit world like ASCE – all these groups and stakeholders that have an interest in the projects – need to come together to ensure the investments are spent wisely. Prioritizing projects with critical benefits to the economy, public safety, and quality of life, while also planning for the cost of building, operating, and maintaining the infrastructure for its entire lifespan.
Again there, I’m kind of getting at this longer-term view of the lifecycle cost of a project. Don’t just focus on the lowest, upfront capital cost of building a project. Think: “Hey, we’re going to have this project for 50, 75, 100 years, is there something we can do upfront in the initial planning, design, and construction that would lower the lifetime operating and maintenance cost of this facility.” If there was a way to pay a little more upfront for better performance down the road and better value for the public, that’s something we should look at and have conversations with citizens. I think people would welcome that. People take out 30-year mortgages on their house, they’re able to think long-term about things. If you can show people you’re delivering better value in the long run, it may even excite people. We’re not doing things the same old way, we’re looking for new ways.
Beyond planning for how investments should be spent, we also need to consider how to utilize new approaches, materials, and technologies to ensure our infrastructure is more resilient and quicker to recover from significant weather or other hazard events in order to reduce impact on the economy, quality of life, and the environment. Resiliency gets at the ability of the infrastructure to perform after the storm has passed or after the event. We certainly saw with Katrina and Sandy some pretty major impacts on infrastructure and people calling into question the resiliency on some of those systems.
AI: So, in a nutshell, build more sustainably and for resiliently?
Dinges: Sustainability, for ASCE and a growing number of people interested in sustainability issues, is when a given project is economically sustainable, environmentally sustainable, and socially sustainable. Do the economics work? Does it make economic sense to do a project? The second is the environment: have we avoided, reduced, or mitigated the impacts on the environment that this project may pose? And thirdly, the social aspect: is there social support? Does the community support this project? Looking at sustainability as a three-legged stool.
The resiliency piece is the ability to withstand the forces of nature and to perform after the storm has passed. So when we hear political leaders talk about building for the future and modernizing our infrastructure, that’s what we mean by it. More sustainable and more resilient. We’re not doing things the same old way. There is a new view.
AI: Any additional comments?
Dinges: The only thing I would say is: It’s an interesting environment now with a President who has made this one of his top three priorities, and a Congress where you have Democrats very interested in this issue and some Republicans. And the fact that you have seen so much going on in the state level. Bill Clinton talked about the infrastructure, but not as forcibly as President Trump has. In my 35 years here this is the most I’ve heard from a President talking about the US infrastructure and the need to do something. Now it’s not really clear how the Administration wants to go about this. I think when the President says he’s open to talking about a gas tax increase, he’s still thinking about things. But that would be a very politically courageous thing to do. ASCE has a public position to support a 25 cent a gallon increase in the gas tax to support infrastructure. Even if that were to be enacted, the price of energy in the US is still at a historic low compared to some of those high points in the 1980s. I still think it’s a doable way to go.