Friday, January 30, 2009

D Grade for US infrastructure

The American Society of Civil Engineers (ASCE) in its annual Report Card for 2009 has given a D (poor) grade for America's public infrastructure, another indicator of the widespread refrain that it is crumbling. The Report Card, an assessment by professional engineers of the nation's status in 15 categories of infrastructure, point to "an infrastructure that is poorly maintained, unable to meet current and future demands, and in some cases, unsafe". The Report estimates an investment requirement of $2.2 trillion over the next five years. A few salient features are as follows:

1. Of the 15 sectors, there are 4 C's and 11 D's. Bridges, solid waste and rail get C, whereas roads, aviation, school, energy, dams, public transit and even drinking water gets D.
2. The Eisenhower Interstate Highway System is more than 50 years old and is badly in need of both repairs and new investments. Poor road conditions cost motorists $67 billion a year in repairs and operating costs, and cost 14,000 Americans their lives. One-third of America's major roads are in poor or mediocre condition and 36% of major urban highways are congested.
3. The national power grid has seen 25% more demand since 1990, with little meaningful upgrade in its overall capacity, and peak deficits are reaching alarming levels. Without a projected electric utility investment of $1.5 trillion by 2030, brownouts and even blackouts will be routine occurrences.
4. More than 26%, or one in four, of the nation's bridges are either structurally deficient or functionally obsolete
5. Aging pipeline and treatment facilities that are near the end of their useful life means that an estimated seven billion gallons of clean drinking water is lost every day.

The report also lists out its suggestion for improving the infrastructure. One of the most important of the five suggestions is leadership by the Federal Government. The poor state of American public infrastructure is in many ways an indictment of the ideology that the development (and even maintenance) of public infrastructure can be left largely to the workings of the market and the private sector. This belief, is clearly at odds with all standard economic principles which define many of these infrastructure facilities as public goods, which the market will invariably under-supply and therefore requires the government to step in.

David Leonhardt draws attention to the relative spending on capital investment and research by the public and private sectors over the years. He finds that instead of increasing and occupying a much larger share, the private sector spending has remained constant at about 17% of GDP over the past 50 years. This itself is bad enough, but is compounded by the fact that spending by the government — federal, state and local — has dropped from about 7% of GDP in the 1950s to about 4% now.

No comments: