US needs $2.2tn of infrastructure spending over next five years

The American Society of Civil Engineers (ASCE) today released its 2009 Report Card for America’s Infrastructure, again assigning a cumulative grade of D to the nation’s infrastructure and estimating that $2.2 trillion would be needed to restore it to acceptable levels.

The ranking grades the condition of 15 infrastructure categories such as roads, levees and waste. The grade is same as it was in 2005, 2001 and 1998 – the first year that ASCE performed the study.

While the ranking has stayed the same, the estimated spending needed to restore US infrastructure to acceptable levels in the next five years has continued to balloon from $1.3 trillion in 2001 to $1.6 trillion in 2005 to the new high of $2.2 trillion announced today.

“Obviously, this new number is significantly greater than the rate of inflation and what it reflects is that there is a cost for not taking care of your infrastructure systems,” ASCE president Wayne Klotz told InfrastructureInvestor.

The $2.2 trillion figure includes both planned government spending over the next five years as well as spending needed to bring the ASCE’s average grade up from a D to a B. Taking inflation into account, the ASCE is projecting that the US will continue to spend $180.6 billion per year over the next five years on all levels of government, plus $100 billion over the next two years in economic stimulus-related infrastructure spending. That sums up to $1.1 trillion, leaving what Klotz called a “staggering” $1.1 trillion funding gap.

“If we’re going to bridge this gap, there has to be a place for private capital,” Klotz said.

Lawmakers present at the ASCE’s press conference also urged for new approaches to filling the funding gap.

“We have to be innovative. We have to find ways – whether it’s by creating an infrastructure bank or changing and amending TIFIA – to use private capital to be a part of the solution to coming up with the necessary funding,” said Pennsylvania Gov. Ed Rendell, who also called infrastructure “the sexiest word in the English language”.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) – is a tax-exempt Federal credit assistance program for infrastructure projects. Its is authorised to extend $122 million in such credit assistance each year from 2005 through 2009. 

The roads and transit categories in the ASCE's ranking continued their steady decline, going from C-to D- to D and from D+ to D to D-, respectively, between 2001 and 2009. Not surprisingly, roads and bridges also constituted the largest chunk, $930 billion, of the ASCE’s $2.2 trillion estimate of needed spending.

Energy was the only category that moved up in rankings from 2005. That year, the ASCE assigned it a letter grade of D; this year, the nation’s energy sector earned a D+.

“The uptick in this grade is largely due to the anticipated investment and improvements over the next two decades, which began in 2005,” Andrew Hermann, chair of the ASCE’s Report Card Advisory Council, said at the press conference. The council is a group of 28 engineers who advised the letter grades in each of the categories.

Another bright spot was waste, which maintained its C+ ranking – the highest of any category. Klotz credited this to the nation’s concerted effort over the last 20 years to change consumer behavior, regulatory framework and landfill engineering to improve the US’ waste management system. Similar efforts are needed in all other categories, he said. 

The ASCE will publish its full report in March. The group, which represents 146,000 civil engineers nationwide, moved up its announcement of the report card by two months in hopes of better informing the public debate about infrastructure spending, Klotz said.

“A failing infrastructure can't support a healthy economy,” he added

America's infrastructure: failing marks Source: ASCE