The Real Costs of Infrastructure

It’s hard to find trillions of dollars to fix our infrastructure. But not fixing our roads and bridges and ports is also expensive — and not just in dollars.
by | May 24, 2012

Everything has a cost, and those costs take many forms. There is no way to escape them; they can only be balanced and traded off against one another. As people tried to manage the costs of daily life, they learned to band together and create governments to deal with costs they could not manage on their own. We began to create municipal water and sewer systems, for example, when we learned that typhoid fever was caused by contaminated water. Allowing each of us to draw water from the stream or the community well and dispose of our waste however we wished was too costly.

Infrastructure costs a lot of money, but as with the cost of deadly typhoid epidemics, that needs to be weighed against the cost of not doing the work. The American Society of Civil Engineers reports that we need to invest about $2.2 trillion to bring our aging infrastructure systems up to date. The costs of not doing that work include 1.9 billion gallons of gasoline wasted annually in traffic on congested streets and roads as well as what we must pay to repair the damage to our automobiles as a result of driving on inadequately maintained highways. Infrastructure deficiencies add about $97 billion a year to the cost of operating vehicles.

The cost of electricity is increased as aging inland waterway systems and ancient locks and dams create delays in delivery of coal to power plants. The cost of consumer goods is increased as transporters, from trucking companies to railroads to shipping lines, deal with inadequate roads, bridges, ports, railway systems and border customs facilities.

In addition to these costs, there is the loss of opportunity as corporations move factories and distribution centers to countries where the infrastructure is better and their costs of doing business are therefore lower. Nearly every major international competitor, including emerging economic powers such as Brazil and China, is moving ahead of us in the condition of basic infrastructure. Unless we act now to make the investments we need, jobs and wealth will move away from the United States at an ever-increasing pace, wages here will be depressed at an even greater rate, and the social strain on families and communities will increase.

These are the types of costs — not just dollars — to weigh against the $2.2 trillion that our states and localities and our national government need to put into the nation's infrastructure. And we need to tap every source of funds to get this enormous amount of money. We need to access the huge amount of private capital available through public-private partnerships. We need to stop spending taxpayer money on stadiums and arenas and other non-essentials. We need to stop giving away tax dollars in corporate incentives that, if they have any positive economic impact at all, pale in comparison to the economic benefits of state-of-the-art infrastructure. And, yes, we need to increase a wide variety of taxes and fees and target the revenue specifically for investment in infrastructure.

Nothing in life is free. Everything has a cost of one form or another, and all costs are borne by the public. I think this is something that previous generations understood, which is why they made the sacrifices required to build the huge infrastructure systems we are still relying on, from the Brooklyn Bridge to the Interstate Highway System. Now, in the 21st century, when American governments seem so distant from the people and the gulf between the governed and the governing has grown so vast, we have forgotten this simple truth. Reality may soon refresh our memory.

Mark Funkhouser  |  Director, GOVERNING Institute
mfunkhouser@governing.com  | 

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Finance