U.S. Infrastructure in Danger

Sept. 25, 2007
A lack of investment in airport facilities is an emerging crisis that will compromise the ability of the nation's cities to compete globally, according to a new report from the Urban Land Institute and Ernst & Young

The United States' relatively low investment in virtually all aspects of mobility-related infrastructure - airports, public transit, railway systems, roads, and bridges - is an "emerging crisis" that will compromise the ability of the nation's cities to compete globally, according to a new report co-published by the DC-based Urban Land Institute (ULI) and NY-based Ernst & Young.

Infrastructure 2007: A Global Perspective offers a comprehensive look at the status of current and planned infrastructure investment and development in a variety of categories in countries worldwide, with a particular focus on the United States, China, Japan, India, and Europe. The first of its kind, the report discusses the evolving infrastructure market, including private and combination public-private systems for funding, construction, operations, and management.

The report compares our investment with that of other countries. Japan, for instance, has 2,000 kilometers of high-speed rail and is building about 300 more kilometers by 2020; China is planning to build more than 2,500 kilometers of high-speed rail by 2020; the United States has about 300 kilometers, but is building none.

Similarly, as of 2000, there were more than 750 cars per 1,000 people in the United States; by contrast, in the U.K., there were just over 500 cars per 1,000 people; in China, less than 50 per 1,000 (although this number is rising, it still is far less than in the United States).

Does the United States make infrastructure an imperative? China is boldly building new infrastructure to support future generations. Spurred by a growing economy, India is trying to keep pace and replace third-world transport systems with state-of-the art networks. Australia, the United Kingdom, other countries in Western Europe, and Canada are working hard to find private financing structures to fund improvements. But in America, a "yawning" budget gap swallows initiatives to fund maintenance. Prevalent sprawl, poor planning and car dependence pose ever greater challenges in meeting future needs. Retrofits and changing public behavior are "wrenchingly" difficult.

In short, the U.S. infrastructure systems are failing. A ULI survey of 30 state transportation planning directors found that 83 percent said that the nation's transportation infrastructure is not capable of meeting the nation's needs over the next 10 years. Respondents warned that 97 percent of roads, bridges and tunnels and 88 percent of transit/rail systems will require at least moderate improvement in the years ahead. An estimated $185 billion in additional funding will be required for road systems over the next 5 years alone.

The report points to privatization, already widely used in Europe and Australia, as gaining traction in the United States, particularly in the construction, management, and operation of toll roads, bridges, and tunnels. Investment funds, sponsored by global investment banks, private equity firms, and institutional money managers are becoming a rapidly expanding source of private funding.

"The global investment pipeline, flush with cash, eagerly shifts some flows to the United States as Americans begin to realize the scope of future infrastructure requirements and the size of funding shortfalls," the report says, noting that 28 states have passed legislation enabling private market investment in infrastructure. Still, skepticism over how much control should be shifted to the private sector has, so far, kept private investment in check, the report notes. For instance, the survey of transportation planners found that while 37 percent predicted privatization would be a likely source of future funding, 44 percent said it would be unlikely. Seventy-three (73) percent predicted higher user fees as a funding source, and 63 percent predicted higher taxes.

The report concludes that solving the mobility problems in the United States will require more than a greater commitment to infrastructure repair and construction. In addition to revamping funding mechanisms for construction and operations, long-term solutions must include rethinking land planning models so they are far less auto-dependent and offer plenty of options for getting from on place to another. If driving continues to be the only practical transportation option in many metropolitan areas, no amount of infrastructure investment will be adequate, the report contends.

More information on this report is available at (www.uli.org/reports/i18).

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