If it’s true that the global economy will invest $94 Trillion USD in infrastructure projects over the next 20 years, we need to redefine what a good infrastructure project looks like in the 21st Century.
On paper infrastructure spending almost always looks good. Economists tout the immediate stimulus it brings to the economy with job creation and multiplier effects. But the centralized model for financing and building infrastructure projects in the U.S. has historically led to huge future obligations for cities, with carrying costs that rarely ever pencil out for the tax base. It’s gotten to the point where the tax bases of inner-city neighborhoods have ended up subsidizing suburban sprawl, and not by choice.
As we watch critical infrastructure crumble in the face of climate change, almost everyone supports infrastructure spending as a bipartisan fix-all for the economy. But the federal system relies on a top down approach that doesn’t take into account the real needs of local communities and uses accounting standards that often don’t reveal the long term costs of these projects. If we learned anything post-pandemic, it’s that centralized systems don’t work anymore.
Decades of top-down infrastructure development has made cities poorer and has disproportionately impacted vulnerable communities. The antithesis to this would be a measured, private investment approach that engages the local community in ways the current legacy system does not. By combining cutting edge technology, a financing model that pays for itself, and municipal oversight that encourages innovation, cities can identify, design, and build key infrastructure based on the best use for the community. All while improving the community’s balance sheet.
One place to start would be on local water projects. U.S. development patterns over the past 7 decades have brought vast amounts of paved streets, sidewalks, and parking lots which are unintended contributors of huge volumes of stormwater runoff that floods our neighborhoods and pollutes our clean waterways. Simply put, stormwater should be soaking back into the ground naturally to replenish aquifers.
Unfortunately, as the most developed nation in the world, the U.S. has a serious aversion to trying new things. We tend to just build bigger versions of old things, and in terms of water infrastructure that has meant building bigger tanks and tunnels that paradoxically make our cities more environmentally and economically fragile. The worst part is that the innovation lag and bad allocation of capital has harmed poor communities the most.
There is, however, a silver lining. The opportunity for highly localized and privately financed green infrastructure has come of age. New technologies are already being developed that can make better use of existing infrastructure and increase the revenues generated by water and utility systems without adding any new liabilities. Infrastructure that pays for itself makes the private financing model possible.