Investing in Infrastructure Pays

March 1, 2012

By Michael Hendrix, Research Manager

Associated Equipment Distributors is out with a new report asking, in essence, how much do infrastructure investment pay back in return?

Building a new road, bridge, sewer, or runway is more akin to buying a business asset that generates economic activity and returns revenues to the investor.  For example, our researchers determined that over a 20-year period, generalized public investment generates an accumulated $3.21 of economic activity per dollar spent, which yields $.96 in tax revenues. [emphasis added]

Even in the short term,  ”a dollar spent on infrastructure construction produces roughly double the initial spending in ultimate economic output.”

The problem is that efforts to finance these infrastructure investments have consistently fallen short.  What’s the answer?

The U.S. must seek innovative new funding mechanisms that do not burden rising deficits, and likely must stimulate the private sector.  Programs like public-private partnerships [PPPs], individual and corporate contributions to road financing and user fee lanes are potential mechanisms through which public spending on infrastructure can be supplemented beyond the gas tax.

Our own recent research on public-private partnerships in infrastructure investment came to similar conclusions: “The challenge is pursing an investment strategy that can most effectively repair, upgrade, and expand America’s existing systems and, by extension, support the U.S. economy.”  Indeed, “PPPs give cash-strapped governments additional options for pursing projects that otherwise would not be possible.”

Generations of economists have debated the return on government’s investments.  If we ever see a conclusion to these arguments, the one area that we may see the most agreement on is that investing in infrastructure is worth it.  If that’s the case though, why rely solely on the public sector to finance these investments, let alone to pick who wins and loses from it?


Businesses are Proven Partners in Advancing Infrastructure Protection & Resilience

February 16, 2012

By Bill Raisch, Director, International Center for Enterprise Preparedness (InterCEP) at New York University

As public-private partnerships (PPPS) are being increasingly proposed as a vehicle for infrastructure services, some have raised the question:  How can public sector concerns be addressed where the private sector partners may not be inherently focused on the public good?   Essentially, can we trust business to keep our infrastructure protected and resilient?

There is much history and many approaches that suggest the public good can not only continue to be advanced through PPPs but perhaps promoted with greater ingenuity and cost effectiveness.

The private sector has a long history of accommodating the public good in its operations. Incorporating government regulations are just one example. Life safety and other building codes are readily incorporated into the physical design and operation of structures, which in turn address public concerns about emergency management and the protection of human health.  Occupational safety and health requirements are also generally observed in the workplace and forward the public and organizational good.

Contractual stipulations in government agreements with business have often included security and continuity requirements.  We see these especially in contracts with the Departments of Defense and Homeland Security, alongside other related agencies.  In some PPPs, service level agreements or scope of work provisions — the essential architecture for uniting the public and private sectors — can be used to promote specific objectives of resilience and infrastructure protection.

What is more, governmental permitting processes often require incorporating public concerns.  In physical construction, environmental impact studies are a frequent element of real estate development and regularly take into account public concerns about the environmental ramifications of proposed construction activity.

Market forces already play an important role in promoting resilience in some infrastructure-oriented industries whose customers place a high value on reliability and little downtime.  We see this in various elements of the communications and IT industries where resilience has been programmatically adopted on a wide basis.

As an example, arguably one of the longer-term public-private partnerships in critical infrastructure is the “investor owned utility.”  These businesses generally operate infrastructure under the review of a public utility commission.  Electric utilities in this regard are clear examples of a societal good being evolved by private sector organizations.  These privately run utilities typically have a strong emphasis on resilience and reliability in the delivery of power – a focus reinforced both by governmental oversight as well as the media attention that comes after any disruption.

In all of the above cases, when the public objectives are stated as end goals without specific process requirements as to how to achieve those goals, the private sector is empowered to develop innovative approaches which often lead to greater impacts at lower costs.  Indeed, setting clear performance standards allows business’s the flexibility to adjust to new situations or develop a diversity of approaches to achieving the same end.  This can work to both widen the options available to all businesses and ultimately further the achievement of societal goals at the same time.


America’s Not-So-Secret Formula for a Resilient Infrastructure & Global Competitive Advantage

February 6, 2012

By Bill Raisch, Director, International Center for Enterprise Preparedness (InterCEP) at New York University

Given the diversity of risks and our increasingly interdependent society, we must prepare while we repair our critical infrastructure.  That is, we must build in resilience to natural and man-made hazards so that our infrastructure not only protects and serves our people but also supports our productive capacity.

To do this effectively, government and business must partner. Public-private partnerships (PPP) are an American strength – one with a substantial history which we often undervalue as a competitive global advantage.   Indeed, with regard to critical infrastructure, public-private partnerships offer a distinct opportunity to build in resilience from the beginning and, in the process, reduce overall costs, encourage innovation, and provide a safer and more competitive America.

In addressing key elements of risk management, government and business each have distinct and complementary strengths and weaknesses.  Rarely is this clearer than in the key areas of operational focus and time span.

The public sector is often focused more on wider societal priorities, such as protecting citizens, delivering core services, and sustaining the wider economy.  Yet, inter-dependencies between various elements of infrastructure to sustain that economy are also in government’s domain.  This big picture focus is an important role for government.

The private sector, on the other hand, generally focuses on efficiency in day-to-day operations, with an end goal of profitability and return on investment.  So, in the case of infrastructure, business has a clear role in the design phase of a project.  Employing innovations and previously unknown cost economies is a significant operational role for the private sector.

These complementary public and private roles become even clearer when it comes to the time frame for infrastructure.  The public sector generally acknowledges the need for long-lasting infrastructure, but often tends to focus on just the near term construction effort.  Business on the other hand, especially when entering into a long term contract to build and operate a facility, is more likely to consider the threats that might impact the facility over the long run.  After all, disruptions could mean the loss of revenue and profitability.  Investing in resilience helps minimize losses and maintain continuity if the worst occurs.

Given the important role that infrastructure plays in society and the economy, both the public and private perspectives are vital to delivering quality and integrated infrastructure at an affordable cost and with a level of resilience critical in a globalized economy where reliability is a key competitive edge.

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For a well-developed discussion of this issue, see the National Chamber Foundation’s recent report, “Public-Private Partnerships and Infrastructure Resilience.”


Chamber’s Kavinoky on Infrastructure

January 30, 2012

By Janet Kavinoky, Vice President, Americans for Transportation Mobility Coalition, and Executive Director, Transportation & Infrastructure, U.S. Chamber of Commerce

America’s infrastructure is in a sorry state.  More money and more care are needed for our transportation networks, energy systems, sewers, and all of the other frameworks that keep America running, but it’s not happening at the pace and scale needed.  It’s been estimated that more than $2.2 trillion will need to be invested over the next five years if Americans want to see their current infrastructure improved and expanded.  This infrastructure is getting older due to years of under-investment, reaching forty-year highs for the average age of all categories of infrastructure.  As the attacks on 9/11 showed as well, investing in infrastructure is more than a matter of dollars and concrete.  We have to take risks into account, ensuring that, should the worst occur, our nation’s infrastructure can bounce back.  This may seem a tall order in the face of DC’s financial and political traffic jam.   Yet, as a recent study by the National Chamber Foundation (NCF) found, public-private partnerships (PPPs) may be just what’s needed to fund and protect America’s infrastructure for the future.

Federal, state, and local taxpayer dollars are scarce, that much we know.  At present, we only spend 0.6% of our GDP on infrastructure, compared to, say, France at 1.53%.  That funding ratio is due to keep declining.  Yet, we still have to pay for the maintenance and improvement of America’s national transportation infrastructure network.  The maintenance backlog for our nation’s roads and bridges is $624 billion and growing, yet total federal, state, and local capital spending on infrastructure adds up to only $78 billion a year.

America’s inability to improve and expand its infrastructure will directly result in the loss of economic productivity as crumbling highways and aging bridges impede the flow of products to markets at home and abroad.  The World Economic Forum recently dropped America in its ranking of infrastructure competitiveness to 15th in the world this past year.  Just five years ago America was ranked number one.  So, even as our national government cuts spending and reduces the deficit, it is imperative that the United States maintains – at a minimum – the same level of federal investment in infrastructure while exploring new strategies and relationships to address our needs.

One such strategy is linking public sector funds with private sector capital.  These public-private partnerships go beyond just leveraging public funds.  They make infrastructure more efficient and, often, more resilient.  With shared risks and funds come additional sources of oversight and a greater potential for innovation.  On the investment side, PPPs bring market pressures along with private capital, thus making it easier to get projects off the ground and in a cost-efficient way.  On the resilience side, PPPs focus the attention of a broad array of stakeholders on the “long-term sustainability of facilities” since they’re also “responsible for the long-term upkeep.”

The U.S. Chamber’s Let’s Rebuild America initiative, which I am proud to head, cooperated with the National Chamber Foundation last year in the development of an event and original research on this very topic of increasing infrastructure investment and resilience.  The result was a recently released NCF white paper by Eric Boyer on “How PPPs Can Influence More Durable Approaches to U.S. Infrastructure.”  I’d encourage you to read it in full.

The cost imposed by disasters in 2011 — $265 billion — was the highest the world had ever seen.  This cost will only rise as we continue to build and repair infrastructure that is increasingly interdependent.  In the face of rising austerity and global competition, investing in infrastructure that is also more resilient will be one of the great challenges of the 21st century.  It is time that we find solutions to match.  Joining together the resources and efficiency of the private sector with the authority and interests of the public sector may be just the answer.


Infrastructure Resilience

January 23, 2012

By Eric Boyer, Consultant, National Chamber Foundation

Infrastructure resilience is one of the greatest challenges facing our country today.  In the post-disaster world of events like Hurricane Katrina and the near meltdown of the Fukishima Nuclear Power Plant in Japan following last year’s catastrophic earthquake and tsunami, public and private sector leaders have learned the  potential for a single event to disable the foundations of a functioning society.

The traditional approach to addressing resilience involves integrating the efforts of federal, local and state governments; as well as private sector owners of much of the nation’s infrastructure.  The US Department of Homeland Security’s (DHS) Office of Infrastructure Protection (IP) and the Federal Emergency Management Agency (FEMA) lead the charge, coordinating efforts to improve the design standards, disaster planning, and overall coordination of infrastructure facilities.  Much of their work involves engaging state and local governments where facilities are based, and the owners and operators of those facilities – often from the private sector – to arrange joint efforts for preparing roadways, water systems, and energy facilities for the worst that Mother Nature and others can bear.  With more than 20,000 local and municipal governments within the U.S. federal system, aligning federal, state, local, and private interests is anything but easy.

Amidst the existing challenges of engaging public and private stakeholders in infrastructure resilience, many state and local governments are re-shaping the boundaries between public and private sectors by developing innovative public-private partnerships (PPP) to develop, finance and operate critical infrastructure systems.  These innovative, infrastructure-delivery partnerships merge public and private interests and responsibilities for operating major roadways, bridges and other vital transportation arteries.  The integrated responsibilities in PPPs for infrastructure re-define public and private roles in major systems by integrating public managers into private sector approaches to building and financing infrastructure.  The Federal Highway Administration (FHWA) also reports more innovative PPPs for infrastructure delivery since 2005 than any other time in our nation’s history.

The future is not all bleak, however.  A recent report on “Public-Private Partnerships and Infrastructure Resilience” by the National Chamber Foundation, the think tank of the U.S. Chamber of Commerce, suggests that as more governments turn to private financing and related partnerships for developing facilities, many of the planning processes required of co-developing infrastructure with a private entity challenge governments to address a number of issues related to resilience.  Specifically, PPPs for infrastructure force public managers to consider risk assessments, design standards in respect to long-term operating needs, and coordination across public and private sectors in ways they had not done before.  The very involvement of market mechanisms in the infrastructure delivery process introduced through infrastructure PPPs, challenges the public sector to consider long-term planning, including resilience, in new ways.

Coordinating the many public and private sector interests involved in infrastructure resilience will always remain a challenge in the U.S.  As more and more states find themselves strapped for cash and begin to look at innovative approaches for engaging the private sector in what they deliver, it’s long past time that we find out how infrastructure PPPs affect our approaches to building durable and sustainable facilities that we all depend upon.


Leaky Infrastructure

January 6, 2012

By Michael Hendrix, Research Manager

Far underneath America’s major cities, a crisis is brewing.  I speak not of earthquakes or volcanoes, but of sewers and water mains.  Much of the essential infrastructure that keeps our water supply safe and consistent has already reached an expiration date.  In many cases, over a century of wear and tear has taken its toll, and with each year that this critical infrastructure is left derelict it becomes more wasteful and more costly to repair.

At least, that is the conclusion reached by Ashley Halsey III at the Washington Post after chronicling the daily disasters befalling Washington, DC’s water system.  She starts off her article by telling the story of how a pizza-sized hole in DC’s pavement revealed a cavern in a 19th-century sewer line just big enough to swallow a truck.  Though no one was hurt and the problem was caught in record time, sewers all over our nation’s capitol are literally crumbling to pieces.  As Halsey notes, “Emergency crews rush from site to site to tackle an average of 450 breaks a year.”  Even in the newer suburbs of northern Virginia, infrastructure repairs are growing in number and cost.  Across the country, up to 25% of drinking water is lost before it reaches our faucets.

What does this mean?

“Rapidly deteriorating roads and bridges may stifle America’s economy and turn transportation headaches into nightmares, but if the nation’s water and sewer systems begin to fail, life as we know it will too. Without an ample supply of water, people don’t drink, toilets don’t flush, factories don’t operate, offices shut down and fires go unchecked. When sewage systems fail, cities can’t function and epidemics break out.”

NCF recently held an event on our nation’s infrastructure challenges, looking at what we want and what we need to repair and build.  The result of the event and our subsequent research yielded a paper that shows how we can tackle these critical infrastructure issues through innovative partnerships between the public and private sectors.  Halsey rightfully states in the title of her article that “billions [are] needed to upgrade America’s leaky water infrastructure.”  Tighter budgets at all levels of government will not make fixing that infrastructure any easier.  Combining public and private funds and know-how might just yield a way forward.

While the need for infrastructure repair is great, we have solutions at hand.  Some small comfort for the next time you sip from the tap.


Trains, planes, and automobiles: What American runs on

August 8, 2011

By Michael Hendrix, Research Manager

America’s infrastructure just isn’t what it used to be.  That bridge you drove over today on your way to work?  On average it’s nearly a half century old. The water you’re drinking?  It coursed through pipes likely built just after World War II.  Something must give.  The Treasury Department is now saying that we should instead change how we pay for American infrastructure, lest that something be another collapsed bridge or burst pipe.

With this challenge in mind, the National Chamber Foundation, the think tank of the U.S. Chamber of Commerce, held “Infrastructure: What We Want, What We Need.”  The idea was to bring together public sector resilience experts and private sector financiers and builders to figure out how to move American infrastructure forward.  What was the conclusion?  As the panelists noted, “We need to find new ways to talk about infrastructure. There is no complex problem in the world today that one person or group should solve alone. We must collaborate to solve these complex issues.”  With this in mind, how can the past inform our present work to build for the future?

Transportation is the most visible manifestation of American infrastructure.  Four phases to transportation development stand out in American history.  The first is in what I’ll call Agrarian America.  This phase thrived on waterways and pure horsepower and built with the needs of the farmer in mind.  From the moment America declared independence, canal projects were begun that would soon reach far into what was then the American frontier.  Road projects followed this frontier expansion, linking farmers to markets and to new arable land.

The mid-19th century saw the rise of Industrial America and the construction of coast-to-coast railroad networks.  Rail and industry were made for each other: rail requiring vast quantities of metal and machinery and industry needing the hauling power and speed of rail. Postwar America was cemented through the highway system, a project begun at the turn of the 20th century and ramped up with President Eisenhower’s signing of the Federal-Aid Highway Act in 1956. Finally, Globalized America took off with the first jumbo jet and the creation of airways crisscrossing the sky, not to mention the advent of containerized shipping (the first real change in shipping practices since antiquity).

The surprising thing is how differently the first two phases of American infrastructure came about compared to the latter two.  From roughly 1780 to 1930, infrastructure projects were funded through public-private partnerships.  Private investors put up most of the cash, while the public sector used taxpayer funds to directly push key projects and granted land in response to private sector demand (pull projects).  These initiatives were approved at local or county levels.  In deciding what to partner with the private sector on, the central question for government leaders (like in the case of Georgia) was “how can we best facilitate trade and what is the most efficient route to achieving that?”

Transportation financing started to change though once America’s railroads were built.  Infrastructure became a social project by the 1930s – a public good built by the public sector.  With vast unemployment during the Great Depression and the lingering memory of railroad robber barons, perhaps this was not too surprising.  The emphasis turned to pushing projects through state financing.  The building of the interstate highway system solidified the dominant role of the state in infrastructure building.  Revenue sources, like motor vehicle and fuel taxes, were put in place to fill state coffers for this (very expensive) purpose.  At the same time, the private sector’s traditional source of road revenue – tolls – was barred from all interstate highways.

As decades passed and America entered its globalized age, the financial and regulatory straightjackets fitted on the private sector since the 1930s gradually began to fall away.  Airlines, once subject to price controls, were allowed to freely compete for passenger revenue.  Railroads were given more flexibility in pricing and routes too.  And you can thank $1.00 bus fares to New York City on the Bus Regulatory Reform Act of 1982.

Lost somewhere in the shadow of this dawning reform were America’s roads and bridges.  Reform has since come in fits and starts, but the basic state-driven model of the 1930s remains, along with its entire aging infrastructure.  At the same time, government has less of an ability to pay for the projects that are needed, let alone those necessary for the future.

We know which infrastructure projects are needed and the private sector wants to invest for the long term.  That means collaboration between the public and private sectors in funding and building infrastructure projects may be more necessary than ever before.  Moreover, a recent survey by the Rockefeller Foundation found that two-thirds of Americans believe that improving America’s infrastructure is “highly important” and that we need to change the way we invest in infrastructure.  In short, public-private partnerships might just be the way of the future.  In light of American history, such an approach may have more precedent than we realize.


Building Resilience With a Black Swan Toolkit

August 4, 2011

By Michael Hendrix, Research Manager

Critical infrastructures are the veins and arteries carrying the lifeblood of America’s economy and society. This infrastructure encompasses sectors as diverse as energy and health, finance and food, and internet too. Its very ubiquity is its downfall though, as it’s too easy to take its existence for granted. When an unexpected event occurs and disrupts America’s critical infrastructure, as inevitably happens in an uncertain world, we are far too often caught unawares, much to our great cost and chagrin.

In a recent program held by the National Chamber Foundation (NCF), the U.S. Chamber of Commerce’s think tank, Admiral Thad Allen – the hero of post-Katrina/Rita New Orleans – described critical infrastructure as especially susceptible to “Black Swans.” A Black Swan is a high impact, low probability event, something that Nassim Taleb first characterized in his book of the same name. As the world becomes ever more complex and interconnected, we are left with fragile systems susceptible to threats that are only ever clear in hindsight. Just look at any number of recent, unknowable, debilitating events and how they impacted critical infrastructure:

  • In May 2010, the U.S. stock market dropped by over 600 points in 5 minutes, resulting in catastrophic losses for a few perilous moments. An investigative report filed months later “portrayed a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral.”

While we can’t prepare for the unknown event, we can plan for an unknown event to occur at some point. This is where preparedness comes in. As Admiral Allen said at the NCF program, preparedness is about the “ability to be prepared ahead of time so when something happens, you can work through the process/problem and establish a sense of normalcy.”

The goal with critical infrastructure is to minimize the unexpected risk it faces. Of course, countering risk is costly, but so is risk itself. What might constitute a set of best practices – a sort of Black Swan toolkit? First, there must be national-level support for local-level adaptability. When crises occur, as Admiral Allen observed, you want leaders on the ground with the necessary resources and flexibility to parry the unexpected.

Second, you want to conduct constant risk assessments using counterfactual reasoning, challenging assumptions about the state of the world.

Finally, as Admiral Allen noted, when preparing and responding to challenges, the public sector should partner with all key stakeholders, especially the private sector.

What’s so critical about critical infrastructure isn’t so much that it exists, but what our response is when its existence is challenged.


On the Link Between Infrastructure and “Jobs for the Future”

July 29, 2011

By Michael Hendrix, Research Manager

In the midst of the sturm und drang of the debt ceiling debate in Washington, Politico held a morning event this week looking at the “Jobs of the Future.”  With panelists from the Obama administration, Congress, and academia, the event aired all manner of ideas as to how to get America back to work and ready for the future.  That’s a good thing, especially in light of recent articles on reducing hiring prospects for America’s unemployed.

What were some of the conclusions?  As Don Graves, Executive Director of the President’s Council on Jobs and Competitiveness, said, America needs to be focusing on investment.  This is something that all panelists agreed on, none more so than Glenn Hubbard, Dean of Columbia’s business school and former Chairman of President Bush’s Council of Economic Advisors, who pointed to the recent work of Edmund Phelps and argued for the creation of a national innovation bank to finance smart new ideas by entrepreneurs.  Similarly, Senator Jeanne Shaheen of New Hampshire said that if she could wave a magic wand and enact any piece of legislation right now in a bid to create more jobs, she would have Congress create a national infrastructure bank to spur private investment in public infrastructure.  Representative Kevin Brady of Texas, in bipartisan spirit, thought that this was a good idea, though he also said that the government’s initial investment in such a bank should come from cuts made elsewhere in the federal budget.

Whether it be an infrastructure banks or Jared Bernstein’s call later in the program for a Marshall Plan to fix America’s schools, the point came down to something Dr. Hubbard said: “What the American economy is missing now is animal spirits.”  That is, its often heady mix of entrepreneurial dynamism and consumer confidence.  What does that have to do with infrastructure?  Quite a lot, actually.  As Robert Puentes, a Senior Fellow at The Brookings Institution, put it in a recent event hosted by the Council on Foreign Relations, “Infrastructure is central to U.S. prosperity and global competitiveness.”  Investment in infrastructure is key not just to short-term job creation, but for laying down the foundation for future innovation.

The National Chamber Foundation’s recent event on infrastructure echoed the Politico panelists on investing for the future.  I’d invite you to check out what our private sector investors and public sector experts had to say.  Looking at what impacts business and job creation in the future is central to NCF’s mission.  We applaud Politico for furthering the debate on these vitally important issues, especially on infrastructure.


Business, Government Finding the Edges and Opportunities in Transportation Infrastructure

July 21, 2011

By Rich Cooper, Vice President, Research & Emerging Issues

America’s transportation infrastructure is the lifeblood of our economy. The roads, railways, waterways, airways and other transportation methods carrying goods and people around the country are what make our vast economy possible. There was a time when the United States’ transportation infrastructure was the envy of the world.  Times are changing and U.S. infrastructure isn’t. This poses a significant threat to America’s profitability, economic recovery and international competitiveness.

Adm. Thad Allen addressing the group *

Recognizing this, the National Chamber Foundation – the U.S. Chamber of Commerce’s think tank – put on a program in conjunction with the Chamber’s Let’s Rebuild America initiative. Titled “Infrastructure: What We Want, What We Need,” the event featured a keynote address by Adm. Thad Allen (who led the federal response to Hurricanes Katrina and Rita, as well as to the 2010 BP oil spill) and the release of the 2011 update to the Chamber’s Transportation Performance Index (TPI).

Watch the entire program
“Infrastructure:  What We Want, What We Need”
by clicking here.

The TPI is used to quantify how well transportation systems are meeting America’s demands. It shows that transportation infrastructure is a “leading indicator” of economic activity; each 1 point increase in the TPI is correlated with a 0.03 percent increase or decrease in U.S. Gross Domestic Product. In 2009, the TPI reached 56.6, which is the largest improvement in a single year since 1990. The factors contributing to this increase included reduced road congestion, decreased delays on inland waterways, and improvements in freight rail and transit safety.

Yet, this number is somewhat misleading, as it was not America’s infrastructure that improved, but its economy that crashed. The report notes that the TPI peak in 2009 was “due to the economic downturn, rather than strategic policy and regulatory reforms or new investment.”

With less economic activity due to the ongoing recession, the stress on America’s transportation infrastructure haslightened. As we begin the long climb back to prosperity and profitability, our infrastructure must be able to handle the growing volume of people and goods that move throughout the country every day. At present, our infrastructure is hard-pressed to keep up.

Tom Donohue, the Chamber’s president and CEO, noted in the report that “lasting jobs grow where infrastructure is strong.” The challenge then is not simply improving infrastructure for infrastructure’s sake, but is a part of the wider effort to rebuild America. Our nation’s economic recovery is in part dependent on how well we make changes to address the transportation system’s performance needs.

Without a thriving transportation infrastructure, growth in businesses and exports is not possible. It is also essential for travel and tourism, which offers opportunity for the private sector to grow and prosper. Now more than ever, the voice of business needs to speak up to keep infrastructure investment and improvement as a top national priority.

Janet Kavinoky introducing the 2011 Transportation Performance Index *

Moving people and goods is critical to the economy, and for the United States to maintain its competitive advantage, we need to strategically invest in infrastructure – the way many other countries are already doing.

Countries such as China, India and Australia, as well as friends and allies in Europe, are not going to stand idly by until we figure out what we’re going to do with our infrastructure.  We all live and operate in a global economy where everyone is looking for market edge and opportunity.  If you don’t seize those edges and opportunities, someone else will (and will probably take your lunch money too.)

To retain the infrastructure edge and opportunity, the Chamber developed a series of recommendations. Some of these were echoed during the panel discussion that concluded the event.

The first is to orient policy and project decisions around performance criteria; namely, current supply, quality of service and capacity for future growth. Elliot “Lee” G. Sander, Group Chief Executive for Global Transportation at AECOM, noted America’s ability to compete with China, India, Europe and other major markets is at risk. He echoed the concern that the U.S. economy will be hard pressed to fully recover and compete without a robust and resilient transportation system.

In the TPI, the Chamber also recommended a focus on cities or regions with high levels of population growth and development, but with limited access to an already aging infrastructure. Sander said the private sector needs to make clear the challenges occurring now and define for decision makers the implications if the public sector (and to a degree, the private sector) fails to take action.

Al Martinez-Fonts, VP of the U.S. Chamber of Commerce moderates the panel discussion *

States and localities also need to embrace public-private partnerships and private investment.  John A. Flaherty, a Principal at the Carlyle Group, noted the critical importance in how the public and private sectors talk about infrastructure responsibilities and projects. Given our current budget constraints, Congress will likely not provide additional funding for infrastructure projects and improvements, which means state and local leaders, absent necessary funds, must work with the private sector to achieve local infrastructure improvements.  Otherwise, projects that desperately need attention will remain unattended.

Brian Kamoie, the White House’s Senior Director for Preparedness Policy, added that in an emergency, the U.S. government cannot recreate the supply chains that the private sector uses daily to move people and goods around the country. The approach to building strong, resilient communities and transportation infrastructure should therefore incorporate a joint effort by the private and public sectors. Part of this, Kamoie said, will include better information sharing, a sentiment the private sector has been vocal in sharing with the administration.

DHS’ Assistant Secretary for Infrastructure Protection Todd Keil also emphasized the importance of partnerships as a way to collectively build resilience into America’s infrastructure and operations. Yet, while collaboration is critical, so is how we pay for it. With Congress looking for ways to reduce federal spending, Flaherty said that innovative financing is increasingly important. While the funding for needed infrastructure improvements may be lacking, stakeholders on both the public and private sides must look for innovative financial models that address our national financial challenges on the one hand and provide essential infrastructure improvements on the other.

In the end, it all comes down to leadership. Improving and expanding our transportation infrastructure is an economic imperative, though it hasn’t always been considered such by leaders in the public sector or for that matter the public. That must change. Even as Congress looks for ways to cut spending and reduce the deficit, we need to maintain at least the same level of financial investment in infrastructure while exploring new strategies, relationships and concepts to address our requirements. The needs outweigh the capabilities, and we can’t let up now.  If we do, the future of our infrastructure and long-term economy will become something none of us wants – bleaker.

*photo courtesy of Ian Wegreich of the U.S. Chamber of Commerce