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Infrastructure Technology Institute

State of Good Repair, Intergenerational Transfers and Cheap Transportation

The immense backlog in projects to renew and improve surface transportation is not news. Way back in 2009 the American Society of Civil Engineers estimated that spending on highways and bridges needed to be increased by 45 percent; the transit situation was worse, with the needed funding increase around 153 percent. These are huge numbers but not really hard numbers. Some of these funds would go beyond the basic objective of keeping systems in a state of good repair (SGR) to investing in capacity expansions that might improve service quality, reduce congestion, and enhance accessibility. Some of those investments are important, but we should not be confused between wishes and needs.

Focusing only on SGR, the need is still very large, and the manifestations many. Roadway congestion and crowding on urban transit systems are obvious symptoms. More subtle events have pervaded the news lately. A series of underground pipeline failures across the country have resulted in many deaths and substantial damage. These can be attributed, at least in part, to aging and poorly maintained infrastructure. The breakdowns in transit services due to heavy snow storms – recently in New York, Washington, DC, and Chicago – are the result of natural forces, but we need these systems most under adverse weather conditions, and their failure under these circumstances is a reflection of lack of resilience and preparation.

Even more subtle are those little component failures that mean a lot to individual travelers. Consider escalators and elevators – at this writing, 11% of the escalators on Washington Metro are out of service. (The picture is probably similar on some other rail systems, but the data are not so readily available.) Slow zones, load restrictions, and deteriorating pavements restrict mobility and increase user costs and pollution emissions. The freight sector does not escape this infrastructure challenge. Disruptions due to extreme weather affect freight as well as passengers, load limits constrain truck routing, and bottlenecks due to facility condition and congestion affect reliability and safety.

All of these failures increase costs in time, money, and reliability of travel. Narrow cost accounting is at the root of this problem. For example, the delays and disruptions experienced by travellers and carriers do not show up on the accounts of transportation agencies; importantly, remedying those delays costs money but the benefits felt by transportation customers do not come directly back to the agencies in the form of revenue streams that will pay the bills. This is a problem of cost accounting and allocation – who benefits and who pays. Although rehabilitating a bridge may save user operating costs, those savings do not find their way directly back to pay for the rehabilitation: they do not generate an immediate and allocatable cash flow.

But almost anything that affects transportation costs influences economic competitiveness, and that means jobs. While economic development, and especially now, economic recovery, are paramount goals, limited ability to account for the value of these connections makes it hard to justify some investments to put our transportation infrastructure in a state of good repair. Leadership at all levels of government is concerned about controlling and reducing expenditures, but achieving our other goals will cost money, and we need to spend to achieve. It’s a conundrum without a simple solution.

At the Infrastructure Technology Institute, we sometimes see this manifested in investment and policy decisions. For example, offered the opportunity to replace a bridge with an advanced material with a lower life cycle cost but a marginally more expensive initial cost, agency decision makers commonly focus only on initial costs and elect to build a bridge with a higher life cycle cost. Managers are responsible for today’s budget and its constraints, not for the long term cost implications of an investment choice. Of course a part of the problem lies in uncertainty about future performance and costs of new materials and technologies. It (usually) seems responsible to take a conservative approach to risk management, and that often means not deviating from a long standing design code or specification, or not banking on a future cost savings when one can gain an immediate (and apparent) savings. But such conservative decisions may also mean not benefiting from innovation, and not achieving long term cost savings.

That leads to intergenerational cost transfers, a long phrase that means letting the next generation, our children and grandchildren, pay the increased cost that comes from foregoing long term savings. They won’t know the difference because they won’t have a vision of what costs might have been. In the face of immediate budget pressures, the voice for long term viability and costs for our infrastructure is often silent.

Arguably, that is one reason why we are where we are today, facing massive backlogs to achieve SGR for transportation infrastructure, because we failed to understand the future costs of plodding along with failing infrastructure and the pig-in-the-python effect of rebuilding a large fraction of the infrastructure in a short period of time.

There is at least one more factor involved here. The United States has benefited from relatively cheap transportation because we have not been paying the full costs of travel. User fees have been kept below the level necessary to account for the fact that we have been using up transportation infrastructure over time and intensive use. Facilities wear out, and logically we should be putting aside some resources, a sinking fund, to cover the costs of repair, rehabilitation, and reconstruction. Instead, we have largely been consuming that infrastructure.

The expansion plan of the Autoridad del Canal de Panamá, the Panama Canal Authority, offers an interesting counter-example. The $5.25 billion plan to expand the capacity of the canal - to maintain its global competitiveness - is to be paid for by tolls, which have been systematically increased for the past 8 years. The result is the ability to pay for 60 percent of the expansion costs from retained revenues and the rest from borrowing secured by a growing future revenue stream. The Authority has been careful to engage its customers in pricing discussions so that users can understand both the benefits as well as the costs of price escalation.

How can we ensure the future of the nation’s transportation infrastructure? Here are a few ideas:

• Remember, it’s all about employment – job creation – and economic competitiveness, but not just today: we need to produce long term benefits. As the recent monograph by published by the Bipartisan Policy Center suggests, to promote long-term economic development, transportation investments must be targeted to real increases in connectivity and reliability, rather than being spread across the landscape. We need to make the right transportation investments, not just any investments.

• When budgets are tight, the need is great, and times are tough, the value of information goes up. Now more than ever we need to drive decisions with objective information on the condition of infrastructure components, the role and utilization of those components, and the costs to fix problems. Information on condition means measuring the real condition, not simply the recorded age. This requires development and deployment of real-time structural health monitoring systems, a key part of the work of ITI. The role of infrastructure elements defines their importance to the economy and society, and thus can help set priorities for reinvestment. And the view of costs should expand to include life cycle costs, to leave a legacy for the next generation.

• We need to be more open to innovations that can give better performance and/or reduce costs. This includes materials and technologies that facilitate rapid (minimum disruption) repair, and that deliver more cost-effective service over their lives. The barriers to innovation are many, as described in the results of the 2009 TRB Spotlight Conference on Infrastructure Preservation and Renewal.

Among those barriers is the rigidity of codes and standards developed long ago, which make it difficult to move new ideas into practice. In some cases – as shown by the ITI-supported research of Northwestern’s Prof. Zdeněk Bažant – using old design codes can lead not only to adverse performance and cost, but also to long-term life safety risks.

Methods and models for rapid testing and evaluation of new materials and methods will help deliver the confidence that designers and decision makers need to implement new ideas in the field.

• We must give more serious consideration to the performance and costs likely to be experienced by future generations. This means estimating - and conveying to decision makers and the public - the life cycle costs and performance of proposed infrastructure actions – and inactions. This task includes communicating both outcomes and uncertainties to ensure that infrastructure investment decisions are founded on the best possible information.

Finally, we need to be more realistic about the benefits and costs of safe, reliable, and resilient transportation in the long term, and to convey that to the public and our leaders, so that we have the resources to assure the best transportation system for the future.