Cutting some of the red tape could help those who are already tackling our infrastructure crisis
By Genevieve Smith
The data has been out for three years now and everybody’s heard: the American Society of Civil Engineers (ASCE) gave America’s infrastructure a cumulative grade of D+ in 2013. Their estimate of $3.6 trillion needed in infrastructure investment by 2020 has at least catalyzed a national conversation. Even Trump is aware of the magnitude of our infrastructure crisis at this point. In fact, it’s about the only thing the candidates can agree on: the condition of our infrastructure is unacceptable. What we as a nation seem unable to do is come to a consensus on what exactly needs to be done to remedy the situation.
What are the options? Therein lies the issue. While we talk about “infrastructure” as a whole, the concept is really made up of so many smaller parts. What’s more, those parts don’t all function or find funding the same way. Most of us think of roads and bridges when we think of infrastructure, but the quadrennial report card from the ASCE now includes 16 seperate categories.
Robert Puentes, director of the Metropolitan Infrastructure Initiative at the Brookings Institution, was recently quoted by U.S. News: “Policy discussions are complicated by the fact that infrastructure is such a broad subject to tackle, and that some facets probably shouldn’t be discussed at the federal level at all.”
Take for instance the fact that federal share of spending on water and transportation projects together is only 27 percent. The other 73 percent comes from the private sector, public sector, and partnerships between public and private (PPPs).
Also consider that federal spending in most other areas of infrastructure comes in at much less than 27 percent. It’s safe to say the strategy for regaining our position as a global leader in infrastructure competitiveness has to come at a state and local—even private—level (we now rank 16th in the world, according to the Global Competitiveness Report for 2014-2015).
The money is there. And what’s more, investors want to spend it on infrastructure. More and more, investment in infrastructure is viewed as more stable than traditional private equity. Goldman Sachs states on its website that it has raised more than $10 billion in investments for infrastructure since 2006. According to figures released by Preqin, the number of unlisted infrastructure funds marketed to investors at the start of 2016 was at a record 181; these funds total a combined $125 billion.
In March, a water summit held by the White House saw the commitment of $4 billion in private capital for U.S. water infrastructure. The first of its kind, the summit’s mission to “shine a spotlight on the importance of cross-cutting, creative solutions to solving the water problems of today,” is a great step in the right direction and the financial support found there shows money isn’t the issue.
Rather than money, Philip K. Howard, chair and founder of Common Good, a nonpartisan reform coalition, warns that all of the red tape involved with the American infrastructure funding system is to blame for the continued deterioration of our roads and bridges. “The problem is that we have so much process, ironically, so much environmental review that we can’t do projects that are good for [us],” he says. “We need to get our act together.”
The ASCE estimates we’ll lose $3.1 trillion in GDP by not investing properly in infrastructure by 2020. By streamlining the funding process, we could protect against that deficit, eliminate the major drag on economic growth that underinvesting in infrastructure causes, and ensure the use of funds for infrastructure investments in the U.S. One caveat of most private infrastructure funds: they’re global. And if we don’t make it as painless as possible to spend money here, like any good business knows, investors will just take their money elsewhere.
At the release of the report card in 2013, the ASCE also released a three-pronged plan to improve our report card: increase leadership in infrastructure renewal, promote sustainability and resilience, and develop and fund plans to maintain and enhance America’s infrastructure. We’ve found the funds, what we can do at this point to fulfill those missions is tear-down of some of the red tape that impairs our ability to access said funds and enable our climb back to the top of the list of the world’s leaders in infrastructure.
Genevieve Smith is an Assistant Editor for American Infrastructure magazine. She may be reached at email@example.com.