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ASCE: Failing Infrastructure Hurts Economy

Thursday, May 12, 2016

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America’s failure to invest adequately in infrastructure updates comes at a substantial cost to individuals, according to a new report issued by the American Society of Civil Engineers.

Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future asserts that over the next decade, U.S. families will lose an average of $3,400 per year because of inefficiencies that could be remedied with updates to infrastructure.

Road work in Oregon
By Oregon Department of Transportation [CC BY 2.0], via Wikimedia Commons

The report notes that when road infrastructure is lacking, business-related travel and transport times increase.

ASCE suggests an additional investment of $144 billion per year, which translates to $3 per American household each day, to address the country’s infrastructure problems. That’s about $1,100 per year in investment per household.

The report analyzes infrastructure investments in 10 sectors, reduced to five general categories: surface transportation; water and wastewater; electricity; airports; and inland waterways and marine ports. It looks at two specific types of needs: updates to old infrastructure, and construction of new infrastructure.

Costs Passed Along

In the report, ASCE argues that the cost of underperforming infrastructure makes its way to individuals and families in a number of ways. When road, airport and waterway infrastructure are lacking, business-related travel and transport times increase, making businesses less efficient and increasing the costs of products. Failing infrastructure also adds to the price of doing business in form of increasing water and electricity bills, and costs associated with power outages.

“As costs rise, business productivity falls, causing GDP to drop, cutting employment, and ultimately reducing personal income,” the report states.

There are also direct household effects, ASCE says. Water and electric bills rise, leaving less money for spending elsewhere. The cost of travel goes up, leading Americans to travel less, which means fewer jobs with airlines and other travel-related businesses.

"Because of the compounding effects of inefficient infrastructure, the economic effects are extraordinary," said Steven Landau, vice president of the Economic Development Research Group, Inc., which prepared the report for ASCE.

Pipeline construction
By btr - Own work, CC BY-SA 2.5, via Wikimedia Commons

The report analyzes infrastructure investments in five categories: surface transportation; water and wastewater; electricity; airports; and inland waterways and marine ports.

Over the next decade, ASCE estimates the U.S. will require about $3.3 trillion in infrastructure investment, but at the current rate will only fund about $1.9 trillion. That leaves a $1.4 trillion investment funding gap.

“If none of these infrastructure gaps are addressed, the U.S. is expected to lose nearly $4 trillion in GDP by 2025,” the study says.

The report projects needs and expected funding levels all the way to 2040, and predicts a hit of $18 trillion to the country’s GDP over the next 25 years. ASCE notes that the projected numbers don't take into account potential catastrophic events, like natural disasters, that could effect infrastructure and spending, but can't be predicted.

Recent Investment Not Enough

The new report is a follow-up to previous Failure to Act reports, issued in 2011 and 2012. The projected numbers in this edition show the investment gaps aren’t narrowing, ASCE says, though recent investment is a bright spot.

“The 2016 Failure to Act analysis indicates that the overall infrastructure gap has grown relative to the initial reports. However, recent federal, state and local investments are stabilizing the gap and moderating the potential economic losses from growing more significantly,” the report says.

"The continued underinvestment into our transportation, energy, and water systems is hurting families and businesses,” said Greg DiLoreto, chair of ASCE’s Committee for America’s Infrastructure. “While there has been some recent legislative success, it unfortunately has not been nearly enough to modernize our aging infrastructure."

ASCE, founded in 1852, counts as its members more than 150,000 civil engineers in 177 countries.


Tagged categories: American Society of Civil Engineers (ASCE); Economy; Engineers; Funding; Infrastructure; North America; Program/Project Management

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