Sustainable Critical Infrastructure Systems: A Framework for Meeting 21st Century Imperatives: Report of a Workshop (2009)

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3 Underlying Issues Renewing the nation’s critical infrastructure systems to help meet some 21st century imperatives is a radically different task from that of building new systems across undeveloped territory. A comprehensive and coordinated renewal effort must account for a number of underlying issues, including the extensive net- work of existing systems, their interdependencies, who owns them, how they are financed, and the level of public support for investment. LEGACY INFRASTRUCTURE At the end of the 20th century, the United States had 55,000 community drinking water systems; 30,000 wastewater treatment and collection facilities; 4 million miles of roads; 117,000 miles of rail; 11,000 miles of transit lines; 600,000 bridges; 26,000 miles of commercially navigable waterways; 500 train stations; 300 ports; and 19,000 airports (GAO, 2008). Although infrastructure components and systems are often thought of as “public goods,” myriad public- and private-sector organizations are responsible for infrastructure investment, construction, operations, repair, and renewal. Whereas water and wastewater systems are primarily owned and operated by public entities, the private sector owns and operates most power and telecommunications systems. Similarly, state and local 23 

authorities are responsible for roads, highways, and bridges, while subways, ports, airports, and railroads are owned and operated by quasi-public or private organizations. Overlaid on these organizations are institutions responsible for developing standards and enforcing compliance with regulations for critical infrastructure systems. All of these systems and their components have finite lives. Their condition and performance inevitably deteriorate over several decades of use. For their service lives to be extended, these systems require reinvestment through timely maintenance and repair. Eventually they require replacement, in whole or in part. In 2004 alone, public and private expenditures on critical infrastructure systems totaled $285 billion (Table 3.1). However, these investments have not kept pace with infrastructure needs. The American Society of Civil Engineers, for example, estimates that $2.2 trillion are required over a 5-year period to bring the nation’s infrastructure to a good condition that meets the needs of the current population (ASCE, 2009). Studies for the Federal Highway Administration, the Federal Aviation Administration, and other agencies report that about $20 billion more are needed annually to keep transportation services at today’s levels—levels that are already inadequate in some areas of the country (CBO, 2008). Another report estimates that the electric utilities indus- try will need to make a total investment of at least $1.5 trillion between 2010 and 2030 to keep pace with demand (Chupka et al., 2008). The Congressional Budget Office has estimated that an average annual investment of $24.6 billion to $41 billion is needed for drinking water and wastewater systems for the years 2000 through 2019 (CBO, 2002). Although the needs are great, public investment in infrastruc- ture has declined substantially as a portion of the gross domestic product for the past 50 years (Figure 3.1). Even before the 2008 financial crisis, the U.S. Government Accountability Office projected that net interest on the national debt, Social Security, Medicare, and Medicaid would consume an increasingly large portion of the federal budget through 2040, limiting the funds available to meet the nation’s critical infra- structure challenges (GAO, 2006). Although the 2009 economic stimulus package contains some funding for infrastructure improvements, over the long term the resources available to renew and restructure infrastructure systems and their compo- 24 SUSTAINABLE CRITICAL INFRASTRUCTURE SYSTEMS 

TABLE 3.1  Capital Spending on Infrastructure in the United States in 2004, by C ­ ategory (in Billions of 2004 Dollars) Federal State and Local Private-Sector Infrastructure Spending Spending Spending Total Highways 30.2 36.5 n.a. 66.7 Mass transit 7.6 8.0 n.a. 15.6 Freight railroads 0 0    6.4 6.4 Passenger railroads 0.7 0    0 0.7 Aviation 5.6 6.8    2.0 14.4 Water transportation 0.7 1.7    0.1 2.5    Total transportation 44.8 53.0    8.5 106.3 Water and wastewater 2.6 25.4 n.a. 28.0 Energy (electricity, natural gas,   1.7 7.7   69.0 78.4 oil pipelines) Telecommunications (wired and   3.9 n.a.   68.6 72.5 wireless, Internet service,   fiber optics, and broadcasting)     TOTAL 53.0 86.1 146.1 285.2 NOTE: n.a., not available. SOURCE: CBO (2008). Percentage of Gross Domestic Product 2.0 1.8 1.6 1.4 1.2 Federal 1.0 0.8 0.6 0.4 State and Local 0.2 0 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 Year FIGURE 3.1  Public capital spending on transportation and water infrastructure as a percentage of gross domestic product, 1956-2004. NOTE: Includes spending on highways, mass transit, rail, aviation, water transportation, water resources, and water supply and wastewater treatment systems. SOURCE: CBO (2008). Figure 3-1.eps fully editable grabbed from source as .pdf (CBO) U N D E R LY I N G I S S U E S 25 

nents will be limited. Efficient use of those funds that are avail- able requires that choices be made about where to invest and about the objectives to be achieved by those investments. At this time, the United States does not have in place a set of objectives, a strategy, policies, or decision-making processes for prioritizing infrastructure investments to meet national objectives. Nor does it have processes or measures for determining the outcomes of investments that are made. INTERDEPENDENCIES Infrastructure systems, like environmental corridors, do not stop at community, city, state, or national boundaries. Instead, they physically link regions and markets, crossing jurisdictional and political boundaries. The 2007 water shortage in Atlanta, Georgia, for instance, required negotiations among the three states of Georgia, Florida, and Tennessee for agreement on water flow regulations that affect power plant operation, fish- ing grounds, and the region’s economic activities (Goodman, 2007). Although critical infrastructure systems were built as stand- alone entities for specific purposes, in actuality they are function- ally interdependent. For example, power is needed to treat and pump water, water is needed to cool power and telecommunica- tions equipment or to power steam systems, and telecommuni- cations systems provide automated control for transportation, water, wastewater, and power systems. Many other complex interdependencies exist. Because these systems share rights-of-way and conduits above- and belowground, they are also geographically interde- pendent. These functional and geographical interdependencies have resulted in complex systems that regularly interact with one another, sometimes in unexpected and unwelcome ways (Connery, 2008). Because these interdependencies were achieved by default, not by plan, they create vulnerabilities whereby a failure in one system can cascade into other systems, creating more widespread consequences than those resulting from the one system originally experiencing the failure. For example, the failure to repair or replace a deteriorating water main could lead to a break in the main; the flooding of adjacent roads, homes, and businesses; the shutting off of water for drinking and fire sup- 26 SUSTAINABLE CRITICAL INFRASTRUCTURE SYSTEMS 

pression; the short-circuiting of underground cables; and the loss of power for a larger community (Figure 3.2). On a much larger scale, the failure of the levees in New Orleans in the aftermath of Hurricane Katrina in 2005 led to the flooding of large portions of the city, knocking out power, water supply, transportation, and wastewater systems for months and even years. Long-standing institutional arrangements exist with respect to the ownership of, planning for, and building, financing, oper- ating, and regulating of infrastructure systems. Complex pro- prietary considerations, such as those surrounding the interface between freight and passenger rail (track ownership and other issues), also exist. Such arrangements are often both highly seg- mented and overlapping, involving some combination of local governments, regional authorities, states, federal regulatory and funding agencies, and private-sector organizations. The current segmented decision-making and governing structure provides few incentives for public- and private-sector groups to discuss crosscutting issues, to collaborate to improve entire infrastructure systems, or to analyze the interdependencies among systems. FIGURE 3.2  Water main break in Bethesda, Maryland, on December 23, 2008, trapping passengers in cars and creating water and power outages. SOURCE: WTOP Photo/Markette Smith. Figure 3-2.eps U N D E R LY I N G I S S U E S bitmapped image 27 

OWNERSHIP AND FINANCING STRUCTURES Today’s decision-making and investment strategies, whether public or private, typically focus on one type of infrastructure (e.g., airports), individual components or projects (e.g., a bridge), and the design and construction costs (first costs) of new proj- ects, as opposed to the operation and maintenance costs that will accrue over the 30 to 50 years or more of the infrastructure’s service life. The ownership of a portion of an infrastructure system largely dictates how investments are financed. For example, investments in publicly owned water and wastewater systems are typically funded through federal grants and municipal bonds and thus by taxpayers. Publicly owned systems provide the same level of services to all users, and all users pay the same rates per unit of service. In contrast, fiber-optic systems and towers for telecommunications, television, radio, the Internet, and cellular telephones are built primarily by profit-driven corporations and regulated by public authorities. For-profit businesses typically provide services to those users who are able to pay for them and may offer different levels of service based on willingness to pay. The differing objectives of owners and operators of infra- structure influence their investment decisions. In general terms, businesses invest in infrastructure and other resources primarily to retain their current customers, expand their customer base, and benefit their stockholders and/or the corporate bottom line. Without some assurance that infrastructure investments can be paid back within a few years, there are few incentives for private- sector firms to make such investments. Local and state governments, in contrast, must provide ser- vices to all households, even if it is not cost-effective to do so. In providing services to all households, governments are also challenged to keep taxes low and contain service costs. Major infrastructure improvements are primarily financed through 15- to 30-year bond programs, which require the support of the local electorate. Faced with a multitude of demands for avail- able funding, including education, health care, and public safety, and reluctant to take on long-term financial obligations, elected officials may decide to defer the maintenance and repair of infra- structure systems indefinitely. 28 SUSTAINABLE CRITICAL INFRASTRUCTURE SYSTEMS 

Although most planning, construction, and operation of infrastructure take place at the local, state, or regional level, the influence of the federal government on infrastructure develop- ment and management is substantial. This influence is exercised through a multitude of funding programs, standards, and regula- tions. However, there is no overall concept or set of objectives for critical infrastructure systems, nor is there an integrated federal policy toward infrastructure as a whole to provide a framework within which federal and other infrastructure-related invest- ments might be prioritized and optimized. Twentieth-century methods for owning and investing in critical infrastructure have resulted in a decision-making envi- ronment in which public- and private-sector investments are made on a project-by-project basis. Potential projects for one type of infrastructure are not evaluated against other projects to determine where the greatest overall value might be achieved. The lack of “apples-to-apples comparisons” confounds a pri- oritization of investments. The segmentation of funding sources among various levels of government and among a multitude of private-sector organizations almost certainly results in the sub- optimization of those resources that are invested. PUBLIC SUPPORT FOR INFRASTRUCTURE INVESTMENT From the national to the local level, the demands for public services of all kinds exceed available resources. Citizens and jurisdictions are often reluctant to support bonds or other funding for needed infrastructure improvements when other services—police and fire protection, education, health care—are more visible and seem more urgent. In addition, because much of the existing infrastructure is underground or located away from population centers, it engenders an “out-of-sight, out-of- mind” attitude that makes it relatively easy to defer routine maintenance that could prevent failures and extend a system’s service life. Well-publicized cost and schedule overruns in projects like Boston’s Central Artery (“Big Dig”) (NRC, 2003), coupled with legislative earmarks for projects with unclear objectives—for U N D E R LY I N G I S S U E S 29 

example, the “bridge to nowhere”—have led many to debate the purpose, value, and costs of infrastructure projects. Typically, it is only when infrastructure systems fail completely that their value is apparent. The lack of transparency in decision-making processes presents a significant obstacle to building public support for infrastructure investments. Contributing to the lack of trans- parency is the lack of metrics for quantifying the outcomes of infrastructure investments—for instance, improved efficiency or reliability. Metrics are used by some organizations to measure some aspects of infrastructure investment, such as miles of roads paved or miles of sewer lines repaired. However, such metrics do not help decision makers or the public understand what returns they should expect (i.e., improvements in levels of service) from a given investment in infrastructure. To date, the public dialogue regarding the use of alternative sources of energy to replace oil and other fossil fuels has not focused on the infrastructure systems and components that will be needed to generate and deliver power from these sources. New systems could potentially have significant environmental and social impacts. If local citizens and officials oppose proposed locations for new facilities and infrastructure, the delays in the siting and construction of required facilities may extend several years or more. Finding ways to deliver mobility and power from alternative energy sources while accounting for local desires is challenging. Finding ways to communicate effectively about what is at stake, as well as the risks, costs, and benefits of differ- ing options, will be essential to building public support. Tackling the range of issues associated with critical infra- structure renewal is a major challenge in and of itself. Attempting to resolve these issues while also meeting other imperatives of the 21st century is daunting. Meeting such complex challenges requires a new paradigm for critical infrastructure renewal, as outlined in Chapter 4.  The “bridge to nowhere” refers to a bridge from Ketchikan, Alaska, on one island in the southeastern part of the state to an airport on another, nearby island. The bridge, proposed for federal funding at a cost of $398 million, became a national symbol of federal “pork barrel” spending. See “ ‘Bridge to Nowhere’ Abandoned.” Available at http://www.cnn.com/2007/US/09/22/ alaska.bridge.ap. Accessed January 10, 2009. 30 SUSTAINABLE CRITICAL INFRASTRUCTURE SYSTEMS