Desperately seeking infrastructure: The problem

According to a recent World Economic Forum report, countries around the world are experiencing severe infrastructure needs because of growing populations, economic growth, increasing urbanization, and aging legacy assets. Although demand is skyrocketing, supply is impeded by various factors, resulting in a global investment gap of about $1 trillion per year. Infrastructure problems are considered by industry experts to have surpassed corruption as the leading economic obstacle. Generally comprised of transportation (e.g., roads, bridges, airports, mass transit, etc.); energy and utilities; and "social" (e.g., hospitals, schools, universities, etc.), inadequate infrastructure undeniably inconveniences New Yorkers on a daily basis. Consider: How crowded is your rush hour subway? How often is your flight delayed - particularly at LaGuardia? As annoying as these situations are, the lack of sufficient suitable infrastructure is increasingly having a far more devastating effect here and abroad. Ramifications range from stunting economic growth, to undermining global competitiveness; significant job loss and lack of productivity, to injury and death. Whether: impeding growing world economies, such as the Phillipines, from reaching the next level through an improved manufacturing base, bolstering troubled economies, in Western Europe, India and elsewhere, or your daily means of getting to work: effective crisis management is needed now to avert looming infrastructure disaster across the globe, the U.S. and in our N.Y. backyard. Certainly, there are site-specific reasons for the deplorable state, or lack, of existing infrastructure, and problem-solving hurdles. The commonality of these across nations, however, is far greater: difficulties in acquiring requisite land; environmental and regulatory impediments; economic distress and a dearth of long term financing facing developers, particularly in developing countries; suboptimal management of infrastructure maintenance and repair; bureaucratic red tape and indecision; depleted government coffers; politics and corruption. Furthermore, many governments have failed to maximize asset utilization and meet adequate user quality standards, while needlessly incurring high costs, as well as environmental and social externalities. Maintenance is all too often neglected, due to tremendous backlogs and a political bias toward funding new assets, causing existing assets to deteriorate much faster than necessary, shortening their useful life. These new assets have not been the solution either, due to the foregoing challenges stalling many new projects so long they are abandoned. Against this backdrop of increasing infrastructure demand and financing constraints, and an aging and poorly maintained asset base, governments are struggling to cope with the dangers and limitations. This includes the U.S., where bridges, highways and mass transit systems across the country are in dire need of significant capital infusion - and a major source of such funding, the Highway Trust Fund, which relies on gasoline taxes for revenue, is nearly depleted. After years of underfinancing much-needed repairs and maintenance to America's infrastructure - by as much as $2.2 trillion, according to some estimates, digging out of the current deficit will be costly. Cooperative effort, meaningful investment and risk-taking by both public and private sectors - without political overlay/agendas - is needed to solve the problem, as discussed in the next article in this series. Barbara Champoux, Esq., is a partner at Crowell & Moring LLP and a past president at NYCREW Network, New York, N.Y.