Gain value from technology and private partnerships

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Article Highlights

  • America’s infrastructure is old, poorly maintained and in need of revitalization

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  • there are no panaceas, one promising avenue is increased use of public-private partnerships

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  • an array of technological innovations can improve the return on scarce infrastructure investment dollars while enhancing its resilience

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America's infrastructure is old, poorly maintained and in need of revitalization. But the cost of major renovations exceeds state and local resources in a time of persistent fiscal problems in cities and when new federal infrastructure programs are unlikely to be approved.

Traditional methods of financing and maintaining infrastructure must evolve so that the maximum is squeezed out of each dollar spent on renovation and maintenance. Meanwhile, 9/11 and Hurricane Sandy have spurred a renewed focus on enhancing the resiliency of the nation's critical infrastructure so that it can withstand both natural and manmade hazards.

Fortunately, an astonishing array of technological innovations are available now that can improve the return on scarce infrastructure investment dollars while enhancing its resilience. Examples include new types of fibers spun into the lining of a natural gas line to improve its flexibility and service life, as well as tiny sensors poured into concrete that broadcast its evolving chemical properties. Concrete sensors provide information on when various pieces of a road need replacing, obviating the need to demolish an entire section. Such innovations allow budgets to stretch farther.

Those technologies are costly of course, and new approaches to encourage their adoption are warranted. Although there are no panaceas, one promising avenue is increased use of public-private partnerships. These contractual relationships allow global infrastructure construction and operating companies to invest in, renovate and maintain crucial facilities. Partnership contracts often mandate that the latest technology be used and that infrastructure be properly maintained. Such provisions are enforceable through explicit, transparent financial penalties and rewards. Partner companies themselves have an incentive to invest in such technologies due to life-cycle costing. Life-cycle costing reflects a concern not just for the infrastructure's initial design and construction cost, but also for its proper maintenance and operation over time. Life-cycle costing thus reduces the scope for deferred maintenance.

If carefully executed, these partnerships can provide the capital, expertise and incentives necessary to avoid tragedies in the future. While they are only one tool in the toolkit of creative policy approaches, they exemplify the fresh thinking that is critical for meeting the level of infrastructure performance that Americans have come to expect, but to do so in an era of severely strapped public budgets

 

 

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About the Author

 

R. Richard
Geddes
  • Rick Geddes is associate professor in the Department of Policy Analysis and Management at Cornell University. His research fields include private infrastructure investment through public-private partnerships, postal service policy, corporate governance, women's property rights, and antitrust policy. He is a Research Associate at the Mineta Transportation Institute, and a visiting scholar at the American Enterprise Institute. He was a Fulbright Senior Scholar at Australian National University in Canberra in the fall of 2009, and a Visiting Researcher at the Australian Government's Productivity Commission in the spring of 2010. His research focused on Australian public-private partnerships in both positions. Geddes teaches courses at Cornell on corporate governance and the regulation of industry.

    In addition to his teaching and research at Cornell, Geddes served as a commissioner on the National Surface Transportation Policy and Revenue Study Commission, which submitted its report to Congress in January 2008. He has held positions as a senior staff economist on the President's Council of Economic Advisers, Visiting Faculty Fellow at Yale Law School, and National Fellow at the Hoover Institution at Stanford University.

    In 2008, Geddes received the Kappa Omicron Nu/Human Ecology Alumni Association Student Advising Award. His published work has appeared in the American Economic Review, the Journal of Regulatory Economics, the Encyclopedia of Law and Economics, the Journal of Legal Studies, the Journal of Law, Economics, and Organization, the Journal of Law and Economics, the Journal of Law, Economics, and Policy, and Managerial and Decision Economics, among others.

  • Email: [email protected]

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