This article comes from law firm Pillsbury, Winthrop Shaw Pitan LLP and was written by Paul C. Levin.
The American Society of Civil Engineers (ASCE) just released a report titled Failure to Act, the Economic Impact of Current Invesent Trends in Electricity Infrastructure and the findings are not pretty. According to the report, the gap between the amount actually spent on infrastructure across America and the amount that must be spent to maintain the system will reach $107 billion by 2020 and $732 billion by 2040. The Southeast and the Western portions of the country are particularly vulnerable to infrastructure under-investment, making up about half of the country’s infrastructure deficit. Furthermore, don’t forget about the 2003 blackout across large sections of the East Coast, including New York City, that showed the grid’s vulnerability. This report comes on the heels of ASCE giving the U.S. a grade of “D+” in the Energy category in 2009. D+ seems pretty generous.
The ASCE report predicts that disruption and inconsistent service resulting from faulty electricity infrastructure will lead to a reduction in U.S. GDP of almost $500 billion and half a million fewer jobs in America by 2020. The calculations implicit in this report are simple: If we can spend $100 billion to address this problem over the next decade, the country on the whole will be half a trillion dollars better off. It seems so simple. However, the crunch of budget deficits at both the federal and state levels means that these profitable long-term investments lose out to short-term cost cutting. President Obama, however, has championed doubling overall infrastructure spendingthat would also help spur job growth and make up for years of under investment, but it is not enough.
Public-Private Partnerships will play an important role in bridging this funding gap by leveraging private investment over the long-term. The private sectors sees this $500
billion in potential savings and the U.S. needs to think creatively to spur further infrastructure development.
Pillsbury Winthrop Show Pitan LLP
Filed Under: News, Policy