Economic and Development Implications of Transportation Disinvestment (2015) / Chapter Skim
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Pages 11-24
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From page 11... ...
11 Aging Infrastructure Aging infrastructure is broadly identified as a challenge for transportation infrastructure management in the United States (Knowledge@Wharton 2010; AECOM 2011; Transportation for America 2013; U.S. Government Accountability Office 2013)
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12 plan is to include an assessment of road and bridge assets and their condition, definitions of management objectives and measures, identification of performance gaps, analysis of life-cycle costs and risk, and a financial plan and investment strategies (AASHTO 2012)
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13 of freight congestion, decreased global competitiveness of the United States, increased travel costs, and reduced safety of travelers." The authors also note characteristics of the U.S. policymaking process that tends to discourage the type of longterm investment required for system upkeep, such as the shortness of election cycles, the relative invisibility of benefits from infrastructure investment, and general public misunderstanding of the benefits of proactive maintenance (Andrijcic et al.
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14 Interestingly, the authors also note that a greater estimated return on public capital, relative to private capital, can also be a sign that public infrastructure capital and private capital are out of balance (Gillen 2012)
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15 different investment strategies against the costs imposed on users of the system. His understanding of investment included decisions made in setting design standards, noting that in some cases "the costs of overdesign may be just as great as the costs of under-design." Indeed, the lowering of performance standards to save on cost and (hopefully)
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16 of agency expenditure. Under an unlimited-fund scenario, the optimal strategy is indicated by point (I)
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17 county's rural road network. The potential for disinvestment arose because a declining number of farms and increased truck size were changing traffic patterns on the local road system.
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18 These examples are samples of the current state of the practice in state agencies where agencies assume future needs based on a current understanding of long-term demand, and characterize the economic benefits and impacts of the gap in terms of economic costs accruing to agencies, households, or businesses when such needs are left unmet. It can be noted that in all of the needs-based planning studies to date, needs are presumed to be set based on a singular understanding of future demand -- and there has not generally been consideration of different levels of need that may arise from different possible socioeconomic futures.
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From page 19... ...
19 ognizing that the type of performance available may not be the same a few years down the road as it is at the time of analysis. Real Options and Flexibility in Decision Making Another analytical construct that can be of relevance to the economics of highway and bridge disinvestment is the concept of a "real option" (Pindyck 2008)
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20 political and public perception switching costs associated with transportation infrastructure (even if owned privately) that can be particularly difficult to assess and account for because of the high visibility of these facilities.
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21 Examples of needs models include the federally supported Highway Economic Requirements System for States (HERS-ST)
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22 Berkeley and University of Washington 2011) or CubeLand (Citilabs 2014)
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23 deviation in cost based on the average values of cost determinants) could be applied to user costs in a disinvestment situation to assess risk, as could Monte-Carlo simulations (computerized probabilistic calculations that use random number generators to draw samples from probability distributions)
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From page 24... ...
24 facility (they only show how this cost affects the larger economy)
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