Saturday, August 04, 2007

Minnesota bridge collapse should be a warning sign and a wakeup call for aging infrastructure

While the Minnesota bridge collapse is sad and unfortunate, those who know about the aging infrastructure in the US are wagging their fingers and saying "I told you so."

Here is a solid, data-intensive story (like they should all be) at the WSJ.
While bridge failures remain rare, one-third of some 40,000 highway fatalities every year result from substandard road conditions, according to the American Society of Civil Engineers. The group also warns that one-third of major roads are in poor or mediocre condition. Congestion delays in the 85 largest metropolitan areas cost the average traveler 47 hours in 2003, up from 16 hours in 1982, according to the Texas Transportation Institute.
One of the main reasons things have gotten like this is that we're talking about no small chunk of change:
How much could an upgrade cost? The American Society of Civil Engineers puts the total price tag for improvements to the nation's roads, bridges, dams, water systems and airports at $1.6 trillion. Repairing deficient bridges alone would cost $188 billion over 20 years.
But finding money for transportation projects has grown more difficult, in part because the federal gas tax, which pays for improvements, hasn't risen since 1993. Also, highway construction costs have risen 50% since 1999. The federal Highway Trust Fund is projected to run a deficit of nearly $4 billion in 2009.
But it has wide-ranging effects on the entire country.
How does aging infrastructure hurt the economy? Highways remain the most important shipping lanes in the country. In 2005, highways carried three-quarters of all freight by weight and 92% by value. While the Interstate Highway System comprises just 1% of public road miles, it carries 41% of the country's large-truck freight traffic. Growing congestion threatens to drive up logistics costs for businesses. Poor road conditions cost motorists some $54 billion in repairs every year, about $275 per motorist.

The problem is world-wide, as noted in this in depth piece by Strategy + Business, the magazine of Booz Allen Hamilton, one of the big 4 management consulting firms. They put the total pricetag at $40 trillion, 85% of the entire world's GDP (or 60% if you adjust for PPP).

I hold that article in high regard because I read it and said, "GE would be a good stock to buy now," and it went up 15% (after recent pullbacks) in a couple months. (disclaimer: on the same logic, I also bought MWA, Mueller Water Products, which has been just as bad so far as GE has been good)

So people recognize the problem, but as with everything else, nobody wants to face the costs. But it would be a prudent decision for all of us.
Hours before Wednesday's bridge collapse, Sen. Christopher Dodd (D., Conn.) and Sen. Chuck Hagel (R., Neb.) introduced legislation calling for a new trust to fund infrastructure upgrades.
Maybe now the senators will have the political backing to make something happen. It's unfortunate that it often takes a tragedy, but regardless, let's route for them.

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