There is an urgency in finding new, creative solutions to deliver modern infrastructure systems, but it can only happen with an engaged and supportive public.
A market-based approach to infrastructure investment presupposes an informed and active electorate. Working with the private sector and government, people must have access to data and tools to help them better understand how infrastructure ‘works’ and is financed. Our cities are too dependent on infrastructure systems for those most affected by them to just accept things the way they are. This is especially true when service levels are subpar or when urbanization poses new stresses.
What’s more, as our Future of Infrastructure report findings point out, the public is interested in being more fully engaged.
Providers can best address long-term infrastructure needs by better involving the public in three key ways: knowledge — providing greater transparency, primarily by making infrastructure data widely available; understanding — of infrastructure broadly and of how it is funded and financed, and engagement — encouraging the public to join the discussion through planning, advocacy and politics.
Pillar 1: Knowledge: Awareness of the problem
Infrastructure data abounds, and there’s a need to leverage this rich material to improve our networks and systems, to inform public discussion about needs and procurement, and to improve government decision making and accountability.
Infrastructure agencies should make as much data publicly available as possible so constituencies including academia, think tanks, and the private sector can convert it into actionable information. Areas where access to wider data can make a positive difference include the following:
- Quality of life. Performance reports on critical infrastructure can provide public sector officials, planners, and the public with a reference point for measuring impact. For example, traffic data can be analyzed to quantify the true economic cost of road congestion, possibly supporting the case for investment in new transit or road infrastructure.
- Budget clarity. Governments face growing obligations, such as debt service and pension funding. This means that less capital is available for infrastructure operations and maintenance, which leads to reduced service levels. An informed public needs to know this, as well as the available solutions.
- Project governance and accountability. Too often, and for numerous reasons, major infrastructure projects come in over budget and late. With meaningful data from previous projects, accountability would be enhanced and everyone involved in delivering new projects would be able to make realistic assumptions.
- Innovation. Entrepreneurs have developed smart city technologies using data collected about critical infrastructure systems. More data leads to innovation. For example, flow rates through water utility mains have been used to develop leak-detection systems, while transmissions from internet-of-things sensors on LED street lights can alert cities to outages.
- Private investment in public infrastructure. Investors in large-scale, privately financed developments need sufficient data to calculate the risk and reward inherent in their projects. For example, inferences from interpretation of road- and air-traffic data encouraged private investors to develop new inter-urban and high-speed rail and Hyperloop systems. Similarly, historical traffic data is a prerequisite to private investment in toll road concessions.
Pillar 2: Understanding: How infrastructure is funded and financed
At the heart of most conversations about infrastructure is how best to pay for it.
With price tags for major transportation, power, and wastewater projects running into billions of dollars, it is important to understand how infrastructure is funded and financed. Most citizens only confront these questions when they see their utility bills rise or are asked to approve infrastructure funding measures at the polls.
For governments, translating complex funding and financing models for the public can be daunting, but it is a critical step in boosting understanding as new models gain traction. Transparency, in particular, is an important concern. For example, any public-private partnership discussion must include the true implications for lifetime costs and risk-transfer characteristics. That’s not an easy conversation.
It is very difficult to introduce private financing to infrastructure that does not have a secure source of funding in the form of tolls, tariffs, or other user fees. Sometimes, such as in the case of a seawall, there is no obvious revenue source and innovative financing techniques need to be considered.
Greater understanding about financing options expand the toolbox of potential capital solutions, including the following:
Asset recycling, which uses proceeds from the sale of existing assets to finance new development. This model is understood in Australia where it is used. It is not yet used in the U.S.
- Value capture is another under-appreciated and misunderstood financing technique. It leverages the value of property made viable by new infrastructure, such as a subway-line extension, to finance that new infrastructure.
- Tax-increment financing earmarks incremental property tax revenues to service debt incurred to develop new transit infrastructure.
- Better asset management Municipalities own substantial properties that are often underutilized. With more proactive asset management, cities could extract significant value that can be invested in infrastructure.
- The Canadian experience There is much value in learning from Canada, which has established an infrastructure bank and has been a pioneer in direct investing by public pension plans into infrastructure, even greenfield projects.
PILLAR 3: ENGAGEMENT: POLITICS, PLANNING, AND PUBLIC ADVOCACY
While infrastructure delivery depends heavily on leadership from the public sector, there is an inherent conflict between the interests of those who control infrastructure assets (and public sector finances) and the interests of citizens whose lives are impacted by these assets.
In my view, a long-term perspective is essential in the case of capital-intensive, monopolistic assets whose development is often irreversible. The physical location and layout of entire cities is effectively unchangeable once inter-urban and urban highways and local roads are developed.
One way to ease this conflict is through long-term planning by organizations independent of government that include representatives of major stakeholder groups. These municipal planning organizations can take an unbiased perspective, create long-term plans, and educate both the electorate and elected officials. New York’s Regional Plan Association is a great example of an informed public advocating for change. A similar body could be established in other large metropolitan areas, and could share best practices, to everyone’s benefit.
Another example of knowledge leading to change is in Los Angeles County, by far the most populous county in the U.S. with more than 10 million people. In 2016, after a three-year effort that placed a premium on public education, voters overwhelmingly approved Measure M, a dedicated sales tax that provides up to US$120 billion for future transit and road infrastructure needs.
An important consideration for long-term planners is the need to be realistic with the time horizon and the public’s ability to project into the future. It is inadvisable to make plans based on population trends and – more controversially – environmental models that peer too far into the future. For example, projections of coastal cities being under water 100 years from now are less likely to lead to action than are calls for coastal protection for the coming 20 years.
Cities that meet the needs of their residents and listen to their voices are more likely to thrive than those which do not. This is as true with respect to infrastructure as it is with other urban systems such as public safety, healthcare and education. An informed population can take a long-term perspective, will advocate for its infrastructure needs, and is likely to be supportive of new development.
It’s time for a truly knowledge-based and interdisciplinary approach to infrastructure.
For too long, government, financiers, engineers, and policy experts have operated in independent silos, and often without the benefit of an involved and educated public. Effective policy development and implementation require breaking down these artificial boundaries and bringing everyone around the same table to operate from a common base of knowledge, develop integrated plans, and ensure complete accountability. This way, we will make sure that the combination of infrastructure innovation and delivery leading to positive benefits is everyone's business.