Photo: Bruce Tuten via flickr
The Obama administration is expected to unveil a plan for jobs in September that is likely to include significant spends on infrastructure.Critics say infrastructure spending does not create jobs fast enough. Roads and bridges are not exactly “shovel ready” projects. In many cases the bureaucracy in the government slows the approvals process and the release of funds.
But proponents hail the multiplier effect of infrastructure spending and its long-term effects in improving productivity.
Few can deny that America is falling behind on infrastructure spending. The U.S. spends 1.3% of Gross Domestic Product on infrastructure compared to 3% in 1980. The American Society of Civil Engineers rated U.S. infrastructure in 2009 a D, in an A to D scale of excellent to poor and noted a 5-year investment need of $2.2 trillion.
In a recent report, the engineers group said the nation’s deteriorating surface transportation infrastructure will cost the American economy more than 876,000 jobs, and suppress the growth of the country’s Gross Domestic Product by $897 Billion by 2020.
“Our infrastructure matrix was designed 60 to 70 years ago for a world that does not exist anymore,” says Norman Anderson, President and CEO of CG-LA Infrastructure, a consultancy outfit based in Washington D.C. “Basically, if we need to invest $2 trillion in our infrastructure to bring it back to a B grade by the Engineers Group, and we currently invest about half of what we need ($130 billion, and we need to invest $250 billion) then we are falling behind at an increasingly rapid pace.”
Anderson notes that more than funding, it is the slow approvals process that is hurting investments in infrastructure. “It takes an average of 10 years to put a shovel on the ground. In Holland it takes 3 years.”
CG-LA every year identifies the top strategic infrastructure projects that would significantly boost competitiveness and economic benefits.
Upon TheStreet’s request, Anderson identified 10 projects in the U.S. that could yield significant economic benefits if they commence right away.
“If we were to attack this pent-up demand expeditiously we would see the creation of nearly 1.5 million direct and indirect jobs,” according to Anderson. “We need a vision, we need a financing mechanism and we need a radically streamlined approvals process.”
Many of the projects listed below need financing but Anderson stresses that most of them need increased velocity. “Approvals need to come faster and financing needs to be more readily available.”
The following are the top 10 projects in the US that would require an investment of over $93 billion.
About 40% of U.S. waterways is not navigable, according to CG-LA. But inland water is the most economical way to transport bulk commodities such as coal and there is continuing demand for water-borne commerce.
The Olmsted Lock & Dam Project located on the Ohio River Mile in Olmsted, Illinois was built in 1929, providing a minimum 9- foot channel for year-round navigation .
More than 76 million tons of commodities shipments worth $17 billion passed through in 2008 and the river is expected to see total shipment of 141 million tons by 2030.
Locks and dams 52 and 53 are now deteriorating structurally, have no steel reinforcements and are 50 to 100% stressed under normal operating conditions, according to US Army Corps of Engineers. The temporary locks are inefficient, often shut down and are past their 15-year life.
The project to replace the locks will involve a total investment of $2.5 billion. The new locks will operate more efficiently and will pass tows with fewer delays, according to the Corps of Engineers. The project will produce average annual economic benefits to the nation of more than $700 million, according to the website.
'Critical to commerce in the Mississippi watershed, this infrastructure project impacts economic success in 32 states,' CG-LA said.
The Westside Subway Extension is a $5- billion project designed to provide a high-capacity, high-speed, dependable alternative for those travelling to LA's 'second downtown' that includes key destinations such as Miracle Mile, Beverly Hills, Century City and Westwood, including the UCLA campus. Over 300,000 people travel into the Westside every day for work from areas throughout the County and beyond, according to the Metro's website. The project is expected to cut travel times by 30% to 60%.
'Urban Mass Transit is a huge requirement for the US, and the expansion of the Los Angeles urban mass transit system is exceptionally important, and years behind schedule. The Westside Subway Extension should be under construction, but is still in the approval process, with uncertain funding, and a completion date of 2022,' says Anderson.
He estimates that there are at least 50 cities in the U.S. with immediate transit requirements in this range , which would lead to the creation of 650,000 direct and indirect jobs.
The Bayonne Bridge that connects New Jersey to Staten Island has a height problem that obstructs large vessels passing under it. The problem is likely to get bigger once the panama canal expansion - to be completed in 2014- that would make room for bigger ships.
The Port Authority of New York and New Jersey are now investing $1.5 billion in to raise the bridge's roadway to approximately 215 feet to increase the existing 151-foot navigational clearance restrictions.
The US Army Corps of Engineers' September 2009 Bayonne Bridge Air Draft Analysis indicated that raising the Bridge to eliminate the current air draft restriction will produce an estimated $3.3-billion national benefit.
Anderson at CG-LA notes that the construction will take at least till 2020. 'Meanwhile Norfolk, Charleston, Savannah and Nova Scotia are all dredging to be able to attract new business, and putting 360,000 jobs in New York at risk.'
The Tres Amigas Super Project attempts to unite America's three electricity grids. Currently, the U.S. has three electricity grids- the Western Interconnection, the Eastern Interconnection and the Texas Interconnection that are not connected. So a wind farm in Texas cannot supply power to markets in California.
The $3 billion Tres Amigas Super Station which looks to connect the three grids at Clovis, New Mexico will solve this transmission problem for renewable energy providers.
'By providing access to all three of the nation's power grids, the Tres Amigas Super Station will help America unlock its wind, solar and geothermal assets, meet its renewable energy targets, create new green jobs and reduce greenhouse gas emissions,' according to Tres Amigas.
Dominion Virgina, a unit of Dominion Resources(D) is working on nine major power generation and environmental protection projects that is underway or planned for between now and 2015to meet Virginia's rising demand for power.
The projects are expected to generate $3.3 billion in economic benefits by 2015, according to an independent study by Chmura Economics and Analytics. The program will support more than 14,200 construction jobs in Virginia from 2007 through 2015.
Additionally, once the projects are completed, their ongoing operations will produce annual economic benefits of more than $290 million and generate more than 750 jobs beginning in 2015, the study found.
CG-LA notes that Dominion Resources is converting 2000 MW of fossil fuel power plants to natural gas. 'Shale gas is transforming the energy matrix of the US, and almost no one is paying attention - these are huge developments that we need to facilitate. This includes the conversion of old and polluting power plants to natural gas, the development of new industrial liquids, the creation of new LNG rail car technologies and even the creation of natural gas vehicle fleets,' Anderson noted.
Yet another project to enable transmission of wind power. Green Power Express is a $12-billion project of ITC Holdings (ITC) that envisages a 'high-voltage electric highway' to help transmit the abundant wind resources in the Midwest and foster more efficient development of electric resources, according to the company's website.
CG-LA says the project suffers not from a lack of funding but from a 'painfully slow permitting and approvals process' that has delayed the project completion date to 2020.
ITC estimates that approximately 12,000 megawatts of power from the high capacity and consistent wind areas will be enabled through the construction of the Green Power Express.
The Crescent Corridor is a 2,500- mile rail network through 13 states from Louisiana to New Jersey that supports the supply chain from New Orleans to New Jersey.
Norfolk Southern (NSC) is now making improvements to the corridor that will enable it to handle more traffic, including adding new independent intermodal facilities at Memphis, Tennessee, Birmingham, Alabama, and Franklin County, Pennsylvania; the expansion of intermodal terminals in Harrisburg and Philadelphia and the addition of freight rail capacity in Virginia and Mississippi.
The Crescent Corridor program of projects is estimated to cost $2.5 billion for full development by 2020. Norfolk Southern was granted $105 million from the U.S. Department of Transportation under the American Recovery and Reinvestment Act's TIGER program. Virginia and Pennsylvania are other states that have contributed to funding the project.
The project is projected to create 73,000 green jobs by 2030. Other benefits include 2 million tons of carbon avoided/year; 170 million gallons of fuel saved; and $576 million saved from reduced highway congestion.
The San Francisco Public Utilities Commission is working on upgrading its waste water system, aiming to upgrade ageing pipes and facilities, minimize sewer overflows, and address specific neighbourhood and environmental justice concerns such as odor and flooding.
In March, a federal court ordered seven Bay area cities to upgrade their leaky facilities that spewed millions of gallons of sewage into the Bay. Nearly 125 million gallons of raw and partially treated sewage was spilled into the bay since October, according to the U.S. Environmental Protection Agency.
The entire water system is at risk if the sewage system is not fixed and puts public health at risk. 'Across the US it is probably the water and wastewater system that is most at risk, particularly in older cities. Pent-up demand in this sector is at least $100 billion, and probably much higher,' according to CG-LA's Anderson. 'Without federal government support it is difficult to imagine - based solely on user fees - that investments will be anything but chronically - dangerously - low.'
The Federal Aviation Administration has long been planning an upgrade in the air-traffic control system to a satellite-based system, a project that is expected to cost $20 billion.
The FAA estimates that by 2018, the NextGen air-traffic control system would reduce total delays in flight and on the ground by about 35%. That delay reduction will provide, through 2018, $23 billion in cumulative benefits to aircraft operators, the travelling public and the FAA, according to its estimate.
The technology will not only improve safety, but also improve environmental standards, reducing carbon dioxide emissions by 14 million tons and saving 1.4 billion gallons of aviation fuel, according to a FAA report.
'This is the kind of satellite-based air traffic control system that should have been in place 10 years ago - and is already in place in Europe,' says Anderson.
The Northeast Corridor upgrade is probably the largest strategic infrastructure project with a planned investment of $35 billion through 2040. Total job creation is estimated at 500,000.
The Northeast has received more than $800 million in federal funding to upgrade rail service along the heavily traveled corridor. Of that, $450 million will be spent by Amtrak to upgrade rail between New York and Washington.
The changes will allow Acela trains to increase their speeds from 135 mph to 160 mph along a 24-mile section of track. Amtrak will also reconfigure some switches outside New York's Penn Station to reduce congestion. The work is scheduled to be completed by September 2017, according to Amtrak.
Amtrak has a high-speed rail plan that could see passengers travelling between Philadelphia and New York at a speed of 220 miles per hour by 2023.
About $295 million will be used to construct a flyover at the Harold Interlocking rail junction in Queens, separating Amtrak from Long Island Railroad and Metro-North commuter trains, easing congestion.
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