Costs of the Infrastructure Deficit
Policy Paper
March 2, 2011
Under-investing in infrastructure carries costs for households, businesses, and the government by increasing maintenance, wasting time, and allocating resources inefficiently. These costs reduce efficiency and impede economic growth.
Quantifying Efficiency Loss
Bottlenecks and traffic delays in our ground and air transportation systems are paralleled by inefficiencies across many modes of infrastructure. According to various estimates from government institutions and non-profits organizations, the efficiency lost because of poor infrastructure is probably in excess of $195 billion per year and would be higher if it included private infrastructure networks, such as freight rail or telecommunications, and infrastructure networks that are regulated largely by states and municipalities, such as ports and inland waterways.
Roads
Americans wasted 4.8 billion hours in traffic in 2009.8 These delays resulted in the waste of 3.9 billion gallons of fuel. Fuel loss alone cost truckers $33 billion, a significant addition to shipping costs for producers. The delays are most acute in the largest metropolitan areas, including Washington, D.C., Chicago, and Los Angeles, where travelers spend an average of 70, 70, and 63 hours per year in traffic at an average cost per passenger of over $1,500.
Congestion has worsened as the expansion of the highway system has failed to keep pace with usage. Since 1980, mileage of U.S. highways increased 4.5% while the number of passenger cars increased 12.7% and the number of trucks increased 56.4%. As a result, the amount of time wasted has increased dramatically over the past few decades rising from 14 hours per driver in 1982 to 34 hours in 2009. The cost of these delays has increased from $24 billion in 1982 to $115 billion in 2009 dollars. Congestion has also slowed truck freight. Truckers experience 243 million hours of bottleneck delay annually at a cost of $32.15 per hour, in addition to general traffic delay.9 Given that oil prices have increased dramatically in recent years, and are likely to remain elevated, the cost of congestion and poor infrastructure are rising.
Aviation
Delays on the ground are matched by delays in the air. In 2009, 21% of flights were delayed, down slightly from the 2007 rate of 24%, the highest rate of flight delays in Federal Aviation Administration (FAA) history.10 According to the Joint Economic Committee, these flight delays cost a cumulative $40.7 billion and wasted 740 million gallons of fuel.11 A slightly more conservative study sponsored by the FAA found that flight delays negatively impact the economy by $32.9 billion per year, at a cost to travelers of $16.7 billion in 2007 alone.12 Although air traffic and flight delays have moderated since 2007, without capacity expansion flight delays will likely rise again as air traffic grows.
Clean Water
Poor infrastructure is costing Americans not only when they travel, but also when they stay at home. America’s water pipes are old, ranging in age from 50 to 100 years.13 In 1980, the Environmental Protection Agency notes that 10% of water pipes were already in “poor, very poor, or life elapsed” condition. The Agency expects this number to increase to 45% of all piping by 2020. Further, as pipes age they begin to deteriorate at an exponential rate. If left unaddressed, the funding gap for clean water and drinking water is projected to increase to $122 billion and $102 billion, respectively. The American Recovery and Reinvestment Act allocated $13.5 billion to water infrastructure, but that is a drop in the metaphorical bucket compared to current needs.14 Water systems lose between 6 and 25 percent of their water through leaks and breaks, wasting over 7 billion gallons of water each day.15
Public Housing
The U.S. Public housing stock also faces a staggering amount of unfunded capital needs. According to the Department of Housing and Urban Development, more than $20 billion is currently needed to rebuild and update America’s public housing portfolio.16 While the American Recovery and Reinvestment Act allocated $4 billion to address this need, that total falls far short of even conservative estimates of needed repairs and renovations.
Public Safety
The broken-down state of America’s infrastructure also has high human costs. The most notable failure was the breaking of the levees during Hurricane Katrina, which contributed to the death of 1,800 people. Greater infrastructure investment would have prevented this tragedy and cost far less than the human and capital cost of the flooding that followed the hurricane. In 1998, there was a comprehensive $14 billion plan to buttress the Southern Louisiana levee system by rebuilding the region’s protective wetlands, but it was scuttled by Congress due to cost concerns. In addition to the staggering loss of life, Hurricane Katrina caused between $150 and $200 billion in damage. These estimates do not include the loss of more than environmental and resource damage caused by flooding, and the far-reaching implications of the loss of the natural wetland barrier.17
Infrastructure affects the safety and well-being of Americans even in the absence of natural disasters. The collapse of the I35W Mississippi River Bridge in Minneapolis, Minnesotta in 2007 had nothing to do with the weather. Although the bridge had been categorized as “structurally deficient” as the result of inspections in 1990 and was considered “in need of replacement” in 2005, investment shortfalls resulted in a decision to wait to replace the bridge until 2020, despite the fact that the bridge carried 140,000 vehicles each day.18 The collapse in 2007 resulted in the death of 13 people and the injury of 145 others.
Aside from bridge collapses, which may seem extraordinary, reports find that poorly maintained roads may contribute up to a third of all highway fatalities, or more than 14,000 deaths every year.19 Poor infrastructure also manifests in less noticeable dangers to public safety. Water contamination due to broken seals, leaking pipes and deteriorating reservoirs have been attributed to outbreaks of salmonella such as the occurrence that killed one person and sickened 442 others in Alamosa, Colorado in 2008.20
Conclusion
The American economy, in aggregate as well as at the individual level, is paying a heavy cost for its aging and deteriorating infrastructure. From wasted fuel to wasted time, lost lives and lost revenue, there is an obvious need to address the economic efficiency gap resulting from poor roads, antiquated air traffic control systems, and other out-of-date infrastructure. Ignoring America’s crumbling infrastructure will only serve to slow an economy that is in the early stages of recovery, and leave the future of American growth on shaky ground.
Notes
1Total Delay Impact Study. The National Center for Excellence for Aviation Operations Research. October, 2010. Available Online. http://www.isr.umd.edu/NEXTOR/pubs/TDI_Report_Final_10_18_10_V3.pdf
2US Department of Transportation. Federal Highway Administration. Corrosion Costs and Preventative Strategies in the United States. 2002. Available Online. http://events.nace.org/publicaffairs/images_cocorr/ccsupp.pdf
3Environmental Protection Agency. Aging Water Infrastructure Research Program. 2007. Available Online. http://www.epa.gov/nrmrl/pubs/600f07015/600f07015.pdf
4United States Department of Energy. ‘Grid 2030’ A National Vision for Electricity’s Second 100 Years. 2003. Available Online. http://www.ferc.gov/eventcalendar/files/20050608125055-grid-2030.pdf
5Environmental Protection Agency. Superfund National Accomplishments Summary Fiscal Year. 2009. Available Online. http://www.epa.gov/superfund/accomp/numbers09.html
6Office of Management and Budget. National Committee on Levee Safety. Recommendations for a National Levee Safety Program. A Report to Congress. 2009
7Urban Mobility Report 2010. Texas Transportation Institute. December 2010. Available Online. http://tti.tamu.edu/documents/mobility_report_2010.pdf
8Ibid.
9An Initial Assessment of Freight Bottlenecks on Highways. U.S. Department of Transportation. Federal Highway Administration. 6.0 Conclusions and Recommendations. October 2005. Available Online. http://www.fhwa.dot.gov/policy/otps/bottlenecks/chap6.htm
10Air Travel Consumer Report. U.S. Department of Transportation. Office of Aviation Enforcement and Proceedings. March 2010. Available Online. http://airconsumer.dot.gov/reports/2010/March/2010MarchATCR.pdf
11Your Flight Has Been Delayed Again. A Report by the Joint Economic Committee Majority Staff. May 2008. Available Online. http://jec.senate.gov/public/?a=Files.Serve&File_id=47e8d8a7-661d-4e6b-ae72-0f1831dd1207
12Total Delay Impact Study. The National Center for Excellence for Aviation Operations Research. October, 2010. Available Online. http://www.isr.umd.edu/NEXTOR/pubs/TDI_Report_Final_10_18_10_V3.pdf
13U.S. Environmental Protection Agency. The Clean Water and Drinking Water Infrastructure Gap Analysis. 2002. Available Online. http://www.epa.gov/ogwdw/gapreport.pdf
14Foley & Lardner LLP. Water Infrastructure Funding in the ARRA. March 23, 2009. Available Online. http://www.foley.com/publications/pub_detail.aspx?pubid=5844
15U.S. Drinking Water Challenges in the Twenty-First Century. Levin, Ronnie B., Paul R. Epstein, Tim E. Ford, Winston Harrington, Erik Olson, and Eric G. Reichard. Environmental Health Perspectives 110 (suppl 1): 43-52. 2002. Available Online. http://www.win-water.org/win_news/021402article.html and
Drinking Water. Report Card for America’s Infrastructure. American Society of Civil Engineers. 2009. Available Online. http://www.infrastructurereportcard.org/fact-sheet/drinking-water
16U.S. Department of Housing and Urban Development. Transforming Rental Assistance. Written testimony of Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development. May 25, 2010. Available Online. http://portal.hud.gov/hudportal/documents/huddoc?id=hud_testimony_5-25-10.pdf
17Patrick Jonsson. Christian Science Monitor. Private Dollars Leading Recovery of New Orleans. June 27, 2007. Available Online. http://www.csmonitor.com/2007/0627/p01s06-usec.html and
Mark L. Hicks & Michael J. Burton. Marshall University: Center for Business and Economic Research. Hurricane Katrina: Preliminary Estimates of Commercial and Public Sector Damages. September, 2005.
18Minnesota Department of Transportation. Downtown Minneapolis Traffic Volumes. 2006. Available Online. http://www.dot.state.mn.us/traffic/data/maps/indexmaps/2006/mplsin.pdf. Retrieved August 7, 2007.
19Thomas J. Donohue. Speech. Rebuilding America- The Time is Now! Irving, Texas. August 10, 2007.
20Colorado Department of Public Health and Environment. Waterborne Salmonella Outbreak in Alamosa, Colorado March and April 2008. Outbreak Identification, Response, and Investigation. November 2009. Available Online. http://www.cdphe.state.co.us/wq/drinkingwater/pdf/AlamosaInvestRpt.pdf and
David Olinger. The Denver Post. Hazards in the Water. March 22, 2009. Available Online. http://www.denverpost.com/news/ci_11968325