Thursday, May 25, 2017

America's Deteriorating Infrastructure - A Growing Problem

The American Society of Civil Engineers (ASCE) has released the 2017 version of its Infrastructure Report Card and the state of America's infrastructure continues to receive a failing grade.  Here is a summary of their findings and how decades of neglect means that the condition of key ++++

Let's start by looking at an overall summary of the shortfall in infrastructure funding.  As shown on this table, in total, the funding gap between what is required to upgrade America's deteriorating infrastructure and the estimated actual government funding totals $2.064 trillion:

To meet the infrastructure spending needs, all levels of government and the private sector will have to increase the level of infrastructure investment from 2.5 percent to 3.5 percent of U.S. GDP by 2025.  Failure to close this funding gap will result in the following economic consequences by 2025:

1.) $3.9 trillion in losses to GDP

2.) $7 trillion in lost business sales

3.) 2.5 million lost American jobs

4.) a $3400 loss in disposable income by American families

Let's look at a summary of the grades for three major types of infrastructure and what investment is required to rehabilitate the current situation:

1.) Aviation - Grade - D - America's 3,345 airports, of which 514 offer commercial services, serve more than 2.25 million passengers daily and there are roughly 7,000 aircraft in American airspace at any given time.  In 2015, there were 786 million enplanements, up from 728 million in 2011 and is projected to rise to 1.24 billion by 2036.  Congestion at major airports is becoming problematic with 24 out of 30 of the nation's largest airports projected to experience Thanksgiving-style passenger volumes at least once a week.  America's airports need $157 billion in infrastructure funding over the next decade and the funding gap is expected to range from $4.2 billion to $4.6 billion annually.  This investment shortfall is expected to cause the loss of nearly 257,000 jobs and $337 billion in lost GDP by 20205.

2.) Bridges - Grade - C+ - American has a total of 614,387 bridges with an average age of 43 years.  Of the total, 39 percent or 245,755 are 50 years or older and an additional 15 percent are between the ages of 40 and 49 years as shown here:

Most bridges are designed for a 50 year life so it is clear that the problem of bridge rehabilitation is likely to increase.  Of the total number of bridges, 9.1 percent or 56,007 were considered to be structurally deficient in 2016 down from 12. 3 percent in 2007; on average, there were 188 million crossings of structurally deficient bridges each day.  Here is a graphic showing the top and bottom states by number and percent of structurally deficient bridges:

Federal investing in bridge rehabilitation and rebuilding was boosted in 2009 and 2010 thanks to the American Recovery and Reinvestment Act with spending peaking at $18 billion in 2010.  Nonetheless, a recent federal estimate calculates that the backlog of spending on the nation's bridges totals $123 billion. 

3.) Roads - Grade - D - According to the Bureau of Transportation Statistics, in 2013, there was 4.071 million miles of roads with 2.678 million miles being paved and 1.394 million miles being unpaved; in 2015, total distance driven on these roads reached 3.13 trillion miles, up from 2.989 trillion a decade earlier.   More than 40 percent of America's urban interstate highways are congested and 20 percent of highway pavement is in poor condition with 32 percent of urban roads in poor condition compared to 14 percent of rural roads.  As we all know, driving on potholed roads can be expensive; in 2014, driving on roads in need of repair cost American motorists $112 billion in extra vehicle repairs.  Not only is increased vehicle repair costs an issue, traffic congestion is also costly as shown here:

One added benefit to improving the road infrastructure would be an increase in safety.  While road fatalities dropped over the past decade, they rose by 7 percent between 2014 and 2015 and by 8 percent in the first nine months of 2016.  This suggests that the current road infrastructure is under growing stress.

Governments, particularly the federal government, have been underfunding the American highway system for many years which has resulted in a $420 billion needed to repair existing highways, $167 billion for systems expansion and $126 billion for system enhancements including safety enhancements, operational improvements and environmental projects.  Here is a graph showing the declining level of public spending on America's highway infrastructure:

While governments seem to find endless ways to waste taxpayers' money, it is clear that they could receive a big payout from increasing investments in America's failing infrastructure, a move that will lead to greater economic strength that will benefit everyone.  Kicking the infrastructure funding "can" further down the road is only going to make it more expensive to fix in the future and result in reduced economic growth now.

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