In This Issue
Summer Bridge: A Vision for the Future of America’s Infrastructure
June 15, 2018 Volume 48 Issue 2
The articles in this issue, by academic and industry experts, focus on what’s needed to prepare US infrastructure systems for the coming decades.

Editor's Note: A Vision for the Future of America’s Infrastructure

Thursday, June 14, 2018

Author: Piotr Moncarz and Michael Lepech

In today’s political climate, there are few issues that generate broad agreement. One that does is the importance of long-term investment in core national infrastructure systems—roads, bridges, seaports, airports, railroads, water systems, power systems, and telecommunication networks. Thoughtful, deliberate preparation is needed as the challenges of tomorrow remain highly uncertain but without doubt will require a collaborative national effort to solve. The articles in this issue, by academic and industry experts, focus on what’s needed to prepare US infrastructure systems for the coming decades.

Infrastructure Investment: Benefits and Gaps

The economic benefits of national infrastructure investment have been extensively studied (e.g., Aschauer 1989; Gramlich 1994; Munnell 1990a,b). The specific returns on public investment in infrastructure systems are debated among economists but, according to a recent Congressional Research Service report, there is evidence that the capacity-building nature of infrastructure investment is associated with higher aggregate demand, lower unemployment, and increased productivity and gross domestic product in the long run -(Stupak 2018).

Infrastructure investment must also be viewed as a core component of sustainable development. Because such investment occurs in multidecadal cycles, it is necessary to establish a trajectory toward comprehensive sustainability now.

Today’s investments in surface transportation will result in less time spent on congested roadways and more discretionary time for motorists (ASCE 2017). Today’s investments in renewable energy production will lower the carbon emissions of the nation’s electricity supply (Hertwich 2015). And today’s investments in electric automobiles will enable centralized emission controls during power generation rather than decentralized emission controls at the tailpipe (Hawkins et al. 2013). These are just a few examples of how infrastructure investment can directly deliver social, environmental, and economic benefits and enable achievement of long-term sustainable development goals.

Yet there remain large funding shortages in infrastructure investment: a gap of nearly $1.5 trillion is predicted through 2025 (ASCE 2017). This breaks down into estimated shortfalls for the following types of infrastructure: $1.1 trillion for surface transportation, $105 billion for water and wastewater, $177 billion for electricity, $42 million for airports, and $15 billion for waterways and seaports (ASCE 2017). The sources of these investments are not clear.

Yet circumstances are not as dire as they may seem. As noted by others, “there is plenty of money, especially in the private sector. There is currently an oversupply of private capital. In particular, there is also an unprecedented appetite for infrastructure assets from the private investment community—in part because the asset class has performed consistently well in recent years” (Kim 2016, p. 3). Infrastructure is increasingly seen as an up-and-coming fixed-income asset that provides attractive risk-adjusted returns and cash flows for investors (Kim 2016).

Why, then, does the funding gap still exist? Unfortunately, many core infrastructure projects are unattractive to financing because of a number of challenges:

  • lack of clear revenue sources over the decades-long lifecycle of infrastructure
  • lack of reliable models for long-term economic cost, social benefit, and environmental impact predictions (e.g., maintenance, replacement, operation)
  • lack of robust decision-making tools and frameworks that incorporate real-world performance data and can consider innovative new technologies
  • institutional barriers that prohibit sharing of information, experiences, and funding sources
  • significant governance challenges in the management of projects that involve both public and private entities.

The difficulties range from the fundamental (e.g., the need to develop new technologies that reduce the environmental footprint of core infrastructure systems) to the practical (e.g., the need to break down institutional barriers that separate funding sources). They also span numerous academic disciplines and fields of practice, increasing the difficulty for focused researchers to address them and siloed practitioners to solve them. As one illustration, important questions of equity in infrastructure access, tax burdens, and benefits must be thoughtfully considered by policymakers, economists, user groups, and many other stakeholders in order to inform responsible and effective regulatory oversight of private investment in core infrastructure systems.

The Way Ahead

Interdisciplinary thinking and collaboration are -needed to address these complex challenges that involve not only engineering but also business, management science, industrial ecology, environmental studies, -sociology, and public administration, among potentially many others. The collective ability of academia, government, and industry to effectively reach across traditional working boundaries and address these challenges will be a major factor in the capacity to address the looming infrastructure crisis.

Much of the infrastructure investment in the coming decades will undoubtedly be to support “smart” systems that integrate purpose-built sensor networks (e.g., -traffic loops, structure-mounted accelerometers, thermo-couples) and native sensor networks (e.g., smartphone geolocation, IoT technologies, infrastructure travel cards, ridesharing data), while leveraging new artificial intelligence and machine learning technologies to make better sense of massive streams of data.

Smart infrastructure systems will enable innovative business models, advanced performance tracking and prediction, and robust decision-making support. Core infrastructure systems that will benefit include bridges, roads, seaport and airport facilities, buildings, social infrastructure (schools, health care, civic facilities), water/wastewater treatment and supply, solid waste/environmental management, IT/telecommunications, and power/energy utilities. When deployed at national scale, these smart infrastructure systems will constitute an unparalleled competitive advantage for US businesses and industries for decades to come, comparable to the country’s investments in the railroad network in the late 19th century and in the highway network in the mid-20th century.

Smart infrastructure systems will also enhance risk diversification through data-driven portfolio management and asset allocation in the public and private infrastructure finance sectors. To more effectively bridge these two sectors, smart infrastructure systems will enable fundamentally sound methods to manage and diversify financial risks by assessing lifecycle cost volatility for a portfolio of infrastructure systems juxtaposed against revenue and overall fiscal volatility. This is one example of the tight integration made possible by coordination of infrastructure design, performance, financing, and governance.

To facilitate collaborative, interdisciplinary discussion, the articles in this issue present the insights of academics and practitioners into the challenges and opportunities associated with core US infrastructure systems:

  • sustainable infrastructure – Michael Lepech
  • smart and resilient cities – Reginald DesRoches and John Taylor
  • water and sewer – Theodore Hromadka II and -Prasada Rao
  • bridges – Andrzej Nowak and Olga Iatsko
  • electric power – Theodore Marston
  • container terminal infrastructure and technology – Omar Jaradat
  • infrastructure for automated vehicles – Ryan -Harrington, Carmine Senatore, John Scanlon, and Ryan Yee

Given the great challenges associated with the US infrastructure systems, time is of the essence. We invite readers to consider these articles as a launching point for the design, construction, operation, and management of infrastructure systems that are economically sound, environmentally responsible, and socially equitable.

Conclusion

Bold national leadership and action are needed to plan, finance, build, operate, and maintain infrastructure systems that will be robust, resilient, and sustainable in light of rapidly changing economic, social, and environmental conditions. The nation’s infrastructure systems must be adapted for a changing climate, accelerated technological advancement, increased urbanization, and changing work patterns. Engineers, planners, policymakers, owners, operators, users, and other stakeholders must work together to address the national infrastructure crisis for today and for generations to come. We envision this collection of contributions as an early statement of that resolve.

Acknowledgments

The articles in this issue were reviewed for content and relevance by us and by Dr. Pedram Mokrian, lecturer in civil and environmental engineering at Stanford University. We appreciate Dr. Mokrian’s time and effort. They were edited by Cameron Fletcher, whose efforts enhanced the clarity, accessibility, focus, and concision of all the articles. The authors graciously thank -Cameron for her thoughtful insights, great help, and dedicated efforts.

References

ASCE [American Society of Civil Engineers]. 2017. Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future. Washington.

Aschauer DA. 1989. Is public expenditure productive? Journal of Monetary Economics 23:177–200.

Button KJ. 1998. Infrastructure investment, endogenous growth, and economic convergence. Annals of Regional Science 32:145–162.

Gramlich EM. 1994. Infrastructure investment: A review essay. Journal of Economic Literature 32:1176–1196.

Hawkins TR, Singh B, Majeau-Bettez G, Strømman AH. 2013. Comparative environmental life cycle assessment of conventional and electric vehicles. Journal of Industrial Ecology 17:53–64.

Hertwich EG, Gibon T, Bouman EA, Arvesen A, Suh S, Heath GA, Bergesen JD, Ramirez A, Vega MI, Shi L. 2015. Integrated life-cycle assessment of electricity-supply scenarios confirms global environmental benefit of low--carbon technologies. Proceedings of the National Academy of Sciences 112(20):6277–6282.

Kim J. 2016. Handbook on Urban Infrastructure Finance. -Québec: NewCities Foundation.

Munnell AH. 1990a. Why has productivity growth declined? Productivity and public investment. New England Economic Review (January/February):2–22.

Munnell AH. 1990b. How does public infrastructure affect regional economic performance? New England Economic Review (September/October):11–32.

Pfähler W, Hofmann U, Bönte W. 1996. Does extra public infrastructure capital matter? An appraisal of empirical literature. FinanzArchiv/Public Finance Analysis 53:68–112.

Stupak JM. 2018. Economic Impact of Infrastructure Investment (Report R44896). Washington: Congressional Research Service.

 

About the Author:Piotr Moncarz (NAE) is a principal engineer with Exponent Failure Analysis Associates, Menlo Park, CA. Michael Lepech is an associate professor of civil and environmental engineering and senior fellow at the Woods Institute for the Environment at Stanford University.