Growing the economy and fighting climate change, far from conflicting, are mutually reinforcing priorities. Even without looking at the costs of climate-change impacts on our nation’s infrastructure, there is a strong business case for making these investments. America’s infrastructure is in urgent need of repair and reinvestment, creating a drag on the economy due to traffic congestion, inefficiency and delay in air travel and the movement of freight, and periodic economic disruptions from blackouts and avoidable storm damage.
As but one indicator of the overall disrepair prevalent in our infrastructure, nearly 70,000 bridges around the country have been deemed structurally deficient, according to recent analysis done by the American Society of Civil Engineers—this coming nearly six years after the disastrous bridge collapse in Minneapolis in 2007 that took 13 lives.
To be sure, the administration has made major commitments to infrastructure reinvestment already, leveraging more than $181 billion in new infrastructure investment through Build America Bonds, direct federal subsidies that offset a portion of borrowing costs on taxable bonds. These bonds encourage investment by allowing state and local governments to incur lower net-borrowing costs. The administration has overseen the reconstruction of more than 350,000 miles of roadways, more than 6,000 miles of railways, and more than 20,000 bridges. Yet the gap between what Congress has budgeted to spend on upgrading public infrastructure and what is needed to address the dangerous disrepair prevalent in our nation has risen to $129 billion per year. According to the American Society of Civil Engineers, without a “down payment” on this balance of at least $157 billion annually, the nation will lose $3.1 trillion in gross national product and $1.1 trillion in trade—a $3,100 annual drop in personal income per capita, and a $2.4 trillion fall in consumer spending— all while the nation hemorrhages up to 3.1 million jobs.
Historically low interest rates and disproportionately high unemployment among construction workers together mean that borrowing money and hiring workers to take on these urgently needed projects have never been easier or more cost effective. These projects will put Americans back to work while making the overall economy more efficient. Further, in an era of tightening public budgets, government investments in infrastructure increasingly must be undertaken by leveraging private capital and by using public dollars or guarantees strategically to reduce the financial risk of undertaking these projects and to lower their costs. For all of these reasons, it is the right moment to take on the challenge of rebuilding America’s infrastructure and to develop a strategic approach that fully engages the private sector and capital markets in ensuring that this generation of investment is made in a way that secures the greatest long-term benefits.
Climate change will lead to increasingly more frequent, erratic, and severe extreme-weather events. In 2011 and 2012 alone, there were 25 climate-related extreme-weather events that each caused about $1 billion in economic damages. Superstorm Sandy, which made landfall in October 2012, especially exposed the tremendous vulnerability of American infrastructure to intensified climate-change impacts. Climate disruption presents a diverse range of threats, from sea-level rise to more frequent and severe storms, droughts, and wildfires, to floods and stifling heat waves. These events will strain U.S. infrastructure capacity, unnecessarily burden the economy, and threaten public health and safety in every region of the country.
Suggesting we make our nation’s infrastructure more resilient to climate change does not mean that we should give up on efforts to reduce our nation’s carbon pollution. To the contrary, the nation needs leadership now more than ever to reduce the carbon emissions responsible for climate change, or we will experience more frequent and severe extreme-weather events.
As global temperatures rise, cities, states, and the federal government will have to play a bigger role—including helping to pick up a skyrocketing tab—in assisting communities to recover from debilitating storms, droughts, and other extreme-weather events. This proposal lays out a strategy to clearly define that role, while integrating it into the core planning and budget activities of federal, state, and local governments along with private-sector investors as a normal part of doing business in the face of known climate threats. As the National Climate Assessment bluntly put it, “There is mounting evidence that the costs to the nation are already high and will increase very substantially in the future unless global emissions of heat-trapping gases are strongly reduced.”
Post-Sandy, Gov. Andrew Cuomo (D-NY) acknowledged the vulnerability to future climate impacts of some coastal homes and businesses damaged in the storm. The state has proposed to buy out property owners who agree not to rebuild in these once safe but now vulnerable places.
An analysis by CAP determined that extreme weather from climate change disproportionately affects lower- and middle-income households, and “adaptive planning” without addressing this reality will only exacerbate economic inequities. On the other hand, the study found that taking on a systemic approach to reducing vulnerability can broadly benefit Americans at every rung on the economic ladder. This reality of new costs and rising vulnerabilities is unfortunately the new normal and it will get much worse before it gets better. America must act now.
America needs a national infrastructure-resilience plan
Efforts to build better, more resilient infrastructure have too often historically been hamstrung by funding shortfalls, policy and legal barriers, and poor access to reliable information about local climate-change risks. To knock down these impediments, President Obama already made important proposals in its budget package. Moving forward and working with Congress, the administration should initiate an action plan that marshals federal resources and technical support wisely, helps cities and states understand their infrastructure vulnerabilities and identify their priority upgrades, and incentivizes private-sector investment to rapidly drive a major wave of productive new investments.
An effective strategy to improve America’s infrastructure must take steps in three essential areas.
- Launch a national infrastructure-vulnerability assessment: It must improve planning and make high-quality information more usable to decision makers.
- Establish a comprehensive federal infrastructure-investment strategy: It must increase the flow of capital resources from both the public and private sector into those projects that are truly needed for national security and economic growth.
- Create an infrastructure and resilience council: It must meet implementation challenges by effectively linking federal, state, local, and private efforts to ensure that projects are built effectively and efficiently on the ground in communities.
Below we outline the core elements of such a successful national strategy for infrastructure resilience.
Launch a national infrastructure-vulnerability assessment
The Obama administration must conduct a single comprehensive assessment of our nation’s infrastructure. This survey would link the information that already exists within the agencies so it would look systematically at the needs and vulnerability of U.S. transportation, electricity, water, ports, and other strategic infrastructure and identify pressing infrastructure needs nationwide. The survey would then help the administration develop a strategy to promote efficient and rapid deployment of advanced infrastructure at the national level and, in each individual case, create new infrastructure systems with an eye toward what is most vulnerable to more extreme weather and other emerging climate-change impacts. This assessment is essential to identifying priorities for increasing the resilience of these economic assets to future storms, floods, droughts, and wildfires.
The U.S. Department of Transportation completed a study of climate risks to transportation infrastructure in the Gulf Coast and launched a similar study for Mobile, Alabama, where communities and critical infrastructure were pounded by Hurricane Katrina in 2005 and a severe tornado in 2012. The Gulf Coast study revealed that more than half of the Gulf region’s major highways, almost half of the rail miles, and virtually all of the ports face increased risk of flooding and damage from more intense storms and sea-level rise. These assessments are an important first step in outlining our most pressing infrastructure-repair needs, but governments, communities, and private investors need a better, more comprehensive picture of how climate change threatens the long-term stability of our nation’s infrastructure.
The president should immediately call on all agencies to work with state and local leaders to initiate a national infrastructure assessment under the leadership of the U.S. Department of Homeland Security, the National Oceanic and Atmospheric Administration, or NOAA, and the Army Corps of Engineers. These agencies should also engage the resources and expertise of the Department of Transportation, the Department of Energy, the Department of Housing and Urban Development, the Department of Defense, Department of Agriculture, the Council on Environmental Quality, and the White House Office on Science and Technology Policy, among other agencies, in service of better local-threat characterization and resilience planning.
This assessment should be conducted in close partnership with states and local governments and reported to the president and vice president within six months of its initiation. This effort would help city and state officials and private-sector investors to better understand how climate change is threatening existing and planned infrastructure and would enable identification of the most urgent upgrade investments. This assessment would help inform the creation of comprehensive plans for infrastructure reconstruction and resilience, which federal agencies and state and local governments should collaborate directly to develop, and must be driven by communities nationwide.
Build on the budget proposals to establish a comprehensive federal-infrastructure-investment strategy
In his budget, the president laid out several vitally important financing programs that together could serve as key building blocks in establishing an even more systematic and comprehensive financial foundation to ensure efficient flows of both public and private capital into urgently needed infrastructure upgrades. It is now incumbent upon Congress to pass these vital measures.
First, the president renewed his call for the establishment of a national infrastructure bank, an idea that was originally introduced to the 112th Congress in the “Building and Upgrading Infrastructure for Long-term Development Act” by Sens. John Kerry (D-MA) and Kay Bailey Hutchinson (R-TX), but which died in committee. This is a wise policy suggestion that would have a powerful impact in supporting pressing infrastructure projects of both national and regional significance. Realizing the goal of launching an infrastructure bank will require congressional action, and though this proposal is essential over the long term, current political realities present significant challenges to its passage.
Second, the president’s budget called for the establishment of America Fast Forward Bonds. This new tool would build on the highly successful experience of the Build America Bonds funded by the American Recovery and Reinvestment Act, which successfully leveraged investment of more than $92 billion of new federal, state, local, and private investment into badly needed physical-infrastructure upgrades in environmental, transportation, and utilities projects, with an additional $89 billion in social spending, covering related investments in education, health care, public safety, and housing. America Fast Forward Bonds would build upon this example to include additional forms of private-activity bonds and would establish a dedicated pool of bonding authority to support state and local school construction. In addition, changes to the Foreign Investment in Real Property Tax Act would change the tax treatment for foreign investment in real property in the United States, which imposes income taxes on nonresidents who invest in American property, to create new incentives that bring low-cost global capital back into job-creating domestic investments. Doing so would leverage the pension-fund investments of retired American workers to build a new generation of job-creating infrastructure.
Third, the president’s budget highlights the expansion of the highly successful Transportation Infrastructure Finance and Innovation Act, or TIFIA, loan program. This program provides federal credit assistance such as direct loans, loan guarantees, and credit lines to finance transportation projects, and it received an eightfold increase in the recent reauthorization of the surface-transportation bill. TIFIA has been a powerful tool for encouraging more innovative and cost-effective financing strategies for local governments to engage private capital in new ways into strategically important public projects, boosting regional economies. Effective implementation of TIFIA investments can be a cornerstone of a broader program of reinvestment in America’s infrastructure.
To date, however, the federal governments’ total financial authority has too often been less than the sum of its parts. While many smaller programs exist across the federal government to provide credit enhancements, bonding authorities, or tax-credit investments, these individual tools do not stimulate a more structured and systematic review of how and whether the federal government is meeting its infrastructure-investment needs. These individual programs have certainly had notable successes over the years in advancing pressing purposes from rural electrification and local economic development to affordable-housing construction and small-business incubation. But the fragmented and limited nature of these programs can too often constrain public awareness and restrict market uptake for what could ultimately be much more powerful tools for accessing new private-capital investment to advance important public purposes.
While Congress remains gridlocked on budget and investment issues and little new legislative headway seems likely, the president should also call for a governmentwide assessment of the disparate financing authorities that are already at his disposal. A comprehensive assessment of credit supports and financing programs already in existence across the government could help ensure that the full suite of financial tools in each agency are used in a much more systematic and coordinated manner to finance infrastructure more comprehensively and with better planning. Further, these resources must be made available to states and cities more effectively to allow them to lead in implementing the reconstruction of their infrastructure.
Establish an infrastructure and resilience council to coordinate deployment efforts
By establishing among his own cabinet secretaries an infrastructure and resilience council of top-level agency leadership reporting directly to the president and coordinated by the National Economic Council, the president could create a mechanism for ensuring accountability and leadership in seeing these planning and coordination efforts through to implementation. Each agency would be instructed to identify new executive actions that support infrastructure modernization, and wherever discretion is allowed within agency authorities, this body would prioritize and expedite those efforts outlined in the national infrastructure-vulnerability assessment.
This interagency effort would also provide additional resources to support the administration’s efforts to expedite the approval process for strategically important infrastructure projects, while preserving fundamental environmental protections. This would advance the president’s goal of cutting timelines in half for better highways, bridges, railways, ports, waterways, pipelines, renewable energy, and other infrastructure projects, while ensuring resiliency in the face of a changing climate. Through this process, the administration can give those states and cities that wish to lead the charge the chance to move faster and further ahead. It uses the oversight of the federal government to help ensure that grassroots economic-development investments add up to a robust, resilient, and state-of-the-art national infrastructure platform for the U.S. economy. Those jurisdictions that wish to accelerate their focus on mapping local-priority infrastructure needs should be prioritized for supplemental resources and federal support wherever resources and existing authorities allow.
Resource-constrained state and local leaders often do not have access to the needed information regarding local and regional climate-change risks to help them make smart planning decisions and prioritize investments in adaptation and resilience because the data haven’t been made available concretely to the states. Where effective tools for mapping and financing these projects exist within the federal government, too often they do not filter down to the point of local decision making. Interagency coordination, then, would bring to the forefront efforts to make federal data fully available and useful to local decision makers. Much data have also already been collected within the National Climate Assessment, a project undertaken by 13 federal government agencies to communicate relevant information about climate-change impacts to community decision makers. By offering funding and technical support to early movers, the federal government can reward local leadership and foster innovation. The White House should work with the National Governors Association, the U.S. Conference of Mayors, and similar groups to ensure that this effort represents a true partnership with a strong commitment to implementation.
A national program of infrastructure reconstruction and modernization will necessarily depend on close federal and state collaboration. A new federal strategy will rely on close working partnerships with cities and states as they implement their capital budgets—the portion of a budget that covers infrastructure—and develop their own long-term infrastructure plans separate from that of the administration. The president should lead any national strategy for infrastructure resilience by establishing a formal coordinating body of high-level agency officials to work with states and localities— not only with key elected officials and the state and regional offices of all federal executive agencies, but also with state regulators through coordinating bodies such as the National Association of Regulatory Utility Commissioners, or NARUC. This improved coordination will facilitate states’ work as they undertake voluntary resiliency assessments paralleling federal efforts.
President Obama’s second-term agenda takes an important leap in directly linking a renewed push for investment in job-creating domestic infrastructure with a legacy focus on ensuring that our next generation of infrastructure is designed with an eye toward meeting a new wave of threats and challenges to America’s economic resilience. The moment is upon us to choose either the high costs of failing infrastructure and a mounting climate crisis or a more resilient and prosperous future through well-planned and targeted investments in productive infrastructure.
President Obama deserves praise for placing infrastructure and resilience at the center of his second-term agenda laid out in his budget plan. This agenda will best be advanced through coordination of policies that respond to the predictable impacts of climate change along with strategies to improve planning, availability of capital, and improved organization of rebuilding the nation’s physical infrastructure. It is time for a national strategy for infrastructure resiliency, backed by a coordinated infrastructure-investment strategy, with the highest level of support across all federal agencies to help communities grow smarter and build for the long haul. American leadership, growth, and prosperity depend upon meeting this challenge. If done right, this may be a central and defining legacy for President Obama.
Plans for our nation’s future physical infrastructure are being laid today. We can exhibit the foresight that our predecessors showed as they laid out plans for canals, railways, rural electrification, an interstate-highway system, and a global Internet, or we can fail to anticipate the needs of future generations. This is a moment for strong leadership, meaningful investment, and mobilization of the nation through a coordinated national strategy. The choice is ours.
Bracken Hendricks and Cathleen Kelly are Senior Fellows at the Center for American Progress. Adam James is a Research Assistant for Energy Policy at the Center.
Thanks to Darryl Banks, Dan Weiss, Richard Caperton, and Melanie Hart for their contributions to this report.