Infrastructure – Public Benefit Generating, Long-Lived, Sustainable and Green

by | Oct 6, 2016 | Economics, Sustainability

I agree that using a triple bottom line assessment for infrastructure makes sense because when it comes to infrastructure we are ignoring three basic facts. The first is that we build infrastructure for the public benefits that it brings. Second, the benefits of infrastructure to the environment and quality of life are not captured in the traditional economic rationales – job creation and growth. And finally, green infrastructure is, in many cases, cost-effective and can reduce the need for grey infrastructure.

In “Sustainable infrastructure after the Automobile Age” The Boston Globe September 26, 2016, Jeffrey D. Sachs notes that our infrastructure must be renewed “in line with new needs, especially climate safety, and new opportunities”. And Michael S. Burke of AECOM says in “Bipartisan Support of Infrastructure” LinkedIn September 26, 2016 “Both candidates agree; it is not a matter of if we should be increasing infrastructure spending, but where and how much.”

Sachs argues for a new approach to deciding on the what and where. He advocates for long-term thinking over shovel-ready projects. “We should seek an infrastructure that abides by the triple bottom line of sustainable development.”

Burke makes the case for US infrastructure investment in terms of the economic growth it creates. Similarly, the Globe and Mail (16 Jan. 2016 “The $125-billion question”) asks whether infrastructure spending will work to boost the economy. This is the wrong question. We should be asking- why do we build infrastructure?

Finance Canada has a simple table that shows that every dollar spent on infrastructure increases economic growth by a dollar-and-a-half. In the US, according to Business Roundtable, $1 spent on infrastructure generates $3 of economic output.

The right infrastructure investment should generate jobs and growth, but we build infrastructure is to make our lives, where we live, and our environment better. With this mindset in place we are forced to think more broadly about whether and what to invest in. What is cleaner air and water worth? How do we value time spent getting around? These things are trickier to pin down but they are real and have value.

Economists, those skilled in cost-benefit analysis, eco-system valuation and micro-economics, can help. We should stop listening to the (macro) economists blathering on about growth and jobs.

People worry that infrastructure spending will create big budget deficits. But as long as the infrastructure remains so do the public benefits. Cleaner air, and water stay and continue to give us health and happiness year after year. And while GDP growth is a crude attempt to capture these on-going benefits, direct measures of welfare are better. So let’s put the worry and cost of deficits up against all the benefits and make an informed choice before being scared off by the deficits bogeyman.

Finally, no-one is yet talking about sustainable or green infrastructure. Using nature rather than paving it over has gained favour in the engineering profession. Stormwater management is a case in point. Using wetlands, trees, and natural processes means that we get less flooding which is a financial gain. But we also get cooler cities in the summer, cleaner water, and more recreational areas. Green stormwater infrastructure brings multiple benefits. It also means less need for grey infrastructure – less pipe and reduced investment in water treatment.

Civil engineers and architects are becoming skilled in using nature. They are using green infrastructure in designing buildings and infrastructure to make it more resilient. Ecological economists are helping them make the business case for green. Small and green should be not be overlooked as a sensible and cost-effective alternative to the traditional pouring of concrete that only exacerbates our flooding and climate change challenges.

There is solid evidence that if we build infrastructure and maintain it we will be healthier, wealthier and better off. We should justify our investments more broadly than with just job creation and growth. We should not be distracted by arguments against deficit funding if they ignore the benefits side of the equation. Finally, we should think about infrastructure as including green solutions because working against nature is always a bad idea.

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