The U.S. needs to spend a staggering $2 trillion to rebuild infrastructure, including roads, bridges, water lines, sewage treatment plants and dams reaching the end of their planned life cycles, according to a recent study by the Urban Land Institute.In the face of budget deficits and financial shortfalls, however, infrastructure policy has become a backburner issue.
After the latest batch of stimulus money runs out, the outlook gets even bleaker. In 2009, the federal government appropriated $62 billion in funding for transportation and water infrastructure under the American Recovery and Reinvestment Act. The CBO estimates that by 2013, 90% of the funds made available through ARRA for infrastructure will have been spent.
Meanwhile emerging-market competitors like China, Brazil and India are placing a high priority on infrastructure, with long-term public spending initiatives that eclipse U.S. infrastructure federal support.
Infrastructure outlays for transportation and water projects made available through the American Recovery Act of 2009 (ARRA) peaked in 2010. The CBO expects cumulative spending for infrastructure under ARRA to total $54 billion in 2013, leaving less than $8 billion in stimulus funding to be spent over the next seven years.
At least three studies since 2009 have concluded that massive investments are needed to rebuild the nation's deteriorating infrastructure in order to remain competitive with global challengers.
Between 2003 and 2007, overall spending on infrastructure declined by $23 billion, or 6%. Total public spending on infrastructure in 2007 was $356 billion, about 2.4% of the nation's GDP. Infrastructure spending as a share of GDP peaked at 3.1% in the early 1960s.
About 75% of total public spending on infrastructure is supplied by state and local governments; the federal government accounts for the remaining 25%.
State and local governments account for about 90% of total public spending on operation and maintenance.
Meanwhile, China plans to spend at least $1 trillion over the next five years to overhaul the nation's transit, water supply, and electricity networks. Included in that hefty sum is a 10,000-mile high-speed rail network to be completed by 2020. The country currently spends about 9% of its GDP on infrastructure.
Looking to rival China, India plans to double total infrastructure investment to $1 trillion — about 9% of GDP — in its 12th Five-Year plan, which runs from 2012 to 2017. The country previously committed $500 billion to construct roads, upgrade major highways, and expand the metro rail system in New Delhi.
Brazil is ramping up its infrastructure spending as the country prepares to host the 2014 World Cup and 2016 Summer Olympics. Last year, the government announced a $900 billion investment program over the 2011-2014 period to improve its roads, railways, and ports. Part of that multiyear commitment is a $19 billion-plan to build a high-speed rail that will connect Rio de Janeiro and São Paulo.
The UK recently greenlit a five-year, $320 billion infrastructure investment plan. A large percentage of that budget will go toward improving the country's energy and transportation systems in order to cut greenhouse gas emissions and reduce its dependence on other nations, like Russia and France, for clean energy sources.
Canada continues to invest in large-scale infrastructure projects under the seven-year, $33 billion Building Canada plan rolled-out in 2007. Since 2009, about $280 million has been directed toward improving British Columbia's light rail system. By the end of October, more than 4,600 projects totaling approximately $4.5 billion in federal outlays will be completed.
In 2007, Mexico committed more than $141 billion to modernize the country's transportation, communications, water, and energy sectors. Mexico's goal is to increase structural reform spending to 5.5% of GDP by the end of 2012 (about $300 billion).
In 2008, the Australian government committed $27.7 billion over 6 years to the biggest road project in the nation's history. The country also set aside $4.5 billion to invest in clean energy, $14.7 billion to build education and research facilities, and $250 million to improve the nation's broadband network.
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