By Jeffrey D. Sachs SEPTEMBER 26, 2016
Part of a weekly series on the economic choices facing the United States and its relations with the rest of the world. For previous entries, click here.
THE BREAKTHROUGH AMERICAN infrastructure of the early 19th century was the Erie Canal, which connected the Midwest farm belt with the Port of New York and the eastern seaboard. In the second half of the 19th century, the railroad offered the next infrastructure revolution by connecting the two oceans and the continent in between. In the middle of the last century, the transformational infrastructure was the Interstate Highway System, consummating America’s 20th-century love affair with the automobile.
Each new wave of infrastructure underpinned a half-century of economic growth. Yet each wave of infrastructure also reached its inherent limits, in part by causing adverse side effects and in part by being overtaken by a new technological revolution. And so it will be with our generation. The Automobile Age has run its course; our job is to renew our infrastructure in line with new needs, especially climate safety, and new opportunities, especially ubiquitous online information and smart machines.
Our generation also needs to reinvest in infrastructure for an even more basic reason. The nation’s core infrastructure — its highways, power grid, water treatment, and waste systems — is now at least a half-century old, and much of it is falling into disrepair. The American Society of Civil Engineers estimates that we need around $3 trillion in infrastructure investments during the coming decade in order to upgrade the old and failing capital stock. The group estimates that we have funding for around half of that sum, with a looming $1.4 trillion financing gap to be filled.
The chronic underinvestment in infrastructure dates back at least 30 years, essentially since the completion of the Interstate Highway System. Starting in the early 1980s, under the Reagan administration, public spending on just water and transport infrastructure fell from around 1 percent of GDP to around 0.6 percent of GDP. Instead of building new cutting-edge infrastructure, we began merely to patch the existing system. We’ve done that now for more than three decades. But with the advanced aging of the existing infrastructure, patching alone will no longer suffice; we need a more fundamental overhaul.
In an era when the two major parties agree on almost nothing, there is an emerging consensus on the need to spend more on infrastructure. Hillary Clinton has called for $275 billion in new infrastructure spending over the coming five years. Donald Trump replied that $275 billion was insufficient, and declared himself in favor of $500 billion. Bernie Sanders campaigned for a full decade of infrastructure renovation at $1 trillion. While campaign positions are wish lists, not policies, in this case they seem to signal a realization that the era of patch-patch-patch has reached the end.
There has been much less discussion, however, about where and how to spend the funds. The Obama administration offers a case study in how not to decide those issues. Obama made one attempt to increase infrastructure spending, as part of the 2009 stimulus spending in his first term. But that 2009 stimulus package was designed all wrong from the point of view of making high-quality public investments. The stimulus spending was aimed at quick job creation rather than long-term transformation. The administration’s favorite buzz-phrase, remember, was “shovel-ready projects,” recalling the labor-intensive public works spending of the New Deal, in the Great Depression, rather than the advanced technological needs of the 21st century. As a result, Obama produced few if any lasting results in the area of infrastructure. Despite years of the president’s bold talk about high-speed rail, for example, not a single mile of a high-speed rail was laid.
I PROPOSE THE opposite approach to short-term “stimulus.” I’d call it “long-term thinking,” even “long-term planning” (to use an idea that is anathema in Washington). Rather than trying to deploy construction workers within the next 60 days, I propose that we envision the kind of built environment we want for the next 60 years. With a shared vision of America’s infrastructure goals, actually designing and building the new transport, energy, communications, and water systems will surely require at least a generation, just as the Interstate Highway System did a half-century ago. The Interstate Highway System was given legislative mandate in the 1956 Federal Highway Aid Act, under Eisenhower, and the actual construction of the system stretched through the Kennedy, Johnson, Nixon, Ford, and Carter presidencies, in a bipartisan effort lasting a quarter-century.
The new vision should start with a basic realization: The Age of the Automobile is drawing to a close. Yes, cars will still be with us, but never again as centrally in our lives, economy, and culture. The era of the internal combustion engine is also drawing to an end, to be replaced by climate-friendly electric vehicles and other forms of low-carbon mobility. American households will no longer aspire to own two cars in every garage, but instead will have mobility apps on every phone, to hail self-driving vehicles that they will share rather than own. In high-density cities, the overall number of vehicles will fall considerably, while the intensity of their use (passenger trips per day) will soar. Low-income households will likely reap enormous advantages in improved access to transport services, similar to the gains in access to low-cost mobile phone services.
The first infrastructure task, therefore, is one of imagination. What kind of cities and rural areas do we seek in the future? What kind of infrastructure should underpin that vision? And who should plan, develop, build, finance, and operate the systems? These are the real choices facing us, though they’ve hardly been considered in our political debates to date. My best guesses to these questions are the following:
We should seek an infrastructure that abides by the triple bottom line of sustainable development. That is, the networks of roads, power, water, and communications should support economic prosperity, social fairness, and environmental sustainability. The triple bottom line will in turn push us to adopt three guiding principles.
First, the infrastructure should be “smart,” deploying state-of-the-art information and communications technologies and new nanotechnologies to achieve a high efficiency of resource use.
Second, the infrastructure should be shared and accessible to all, whether as shared vehicles, open-access broadband in public areas, or shared green spaces in cities.
Third, transport infrastructure should promote public health and environmental safety. The new transport systems should not only shift to electrical vehicles and other zero-emission vehicles, but should also promote much more walking, bicycling, and public transport use. Power generation should shift decisively to zero-carbon primary energy sources such as wind, solar, hydro, and nuclear power. The built environment should be resilient to rising ocean levels, higher temperatures, more intense heat waves, and more extreme storms.
HERE’S THE RUB. Markets alone can’t come close to achieving these goals. Infrastructure requires fundamental choices on land use. In the 20th century, for example, conscious decisions by mayors, governors and Congress (backed of course by the intense lobbying of big oil and the auto industry) opted for urban land use for roads and highways rather than trolleys and light rail. Now we need conscious decisions to opt out of carbon-based energy and transport systems in favor of clean energy and electrification.
In the northeast United States, for example, decarbonization probably entails teaming up with Canada to bring far more Quebec hydropower down from regions near the Hudson Bay in an expanded transmission system. Such a strategy requires long-term purchase agreements between end-users and the hydropower providers, as well as complex public rights of way in both Canada and the United States, involving several US states. In short, a binational program for low-carbon hydropower in the United States and Canadian northeast would be a major public policy decision involving multiple actors, including major cities (e.g., Boston and New York City), several states, the regional grid operators and utility regulators, and the two national governments.
I recently helped lead a project on “deep decarbonization” for the world’s major emitting countries, including the United States. To achieve the goal set in the Paris climate agreement of staying “well below 2-degrees C” (or 3.6-degrees F) in global warming, all countries will need to build low-carbon infrastructure. Our project examined, and verified, the technological and economic feasibility of decarbonization. We showed that the new infrastructure must be based on three low-carbon pillars: high end-use efficiency of energy (such as through smart grids and smart appliances); zero-carbon power generation (wind, solar, hydro, nuclear, biofuels); and fuel switching from internal combustion engines to electric vehicles, and from boilers burning heating oil to heat pumps run on electricity. We also demonstrated a feasible, low-cost pathway of deep decarbonization for the US economy, with the shift in power generation to low-carbon sources.
Yet we also found the essential need for long-term planning and strong cooperation among neighboring countries and between national and local governments. There is nothing “shovel ready” about decarbonization. The challenge combines the technological complexity of the moon shot and the organizational complexity of building the Interstate Highway System.
Once we agree on the general direction, we should give wide berth to, and financial incentives for, local innovation. Consider the new experiment starting this month in Pittsburgh. The city government is teaming up with Carnegie Mellon University, a world leader in information sciences, and Uber to introduce self-driving shared-mobility services. I have little doubt that this powerhouse combination will make important breakthroughs and will be widely emulated by cities across the country. My confidence is bolstered by the fact that electric vehicle-based shared driving fits all of the objectives of sustainable development: efficiency of vehicle use (cutting down sharply on vehicles per person); high social access through the sharing economy; and environmental sustainability.
ONE OF THE important reasons for our national slow economic growth is that private investors are waiting on the sidelines until basic infrastructure decisions are taken at the national level. With public investment held back by chronic underfunding and the lack of a shared national vision, private investment inevitably is held back as well. Will we partner with Canada on more hydropower? Will we shift decisively to electric vehicles? Will we reinvest in nuclear energy or close the industry? Will we invest in new interstate power transmission lines to bring low-cost renewable energy to population centers? Will we finally build high-speed intercity rail? Will we rebuild the infrastructure to promote high-density, socially inclusive, low-carbon urban living? Will we build smart grids to support autonomous vehicles, energy efficiency, and the like? Clear public policy answers in the affirmative will greatly boost private investment opportunities.
But who is to plan these systems? In China, which has successfully installed more than 20,000 kilometers of high-speed rail (speeds greater than 200 km/h), the National Development and Reform Commission helps to amalgamate investment priorities and to organize financing for the country’s vast infrastructure needs. America’s infrastructure planning processes will of course be very different, with far more engagement of citizens, local governments, think tanks, and, inevitably, the courts as well, to uphold regulatory standards and processes. Yet we do need a national process to get things moving.
I propose that the next president and new Congress quickly establish a national commission on 21st-century infrastructure, including members of Congress, executive-branch departments and agencies, state and local government representatives, the National Academy of Engineering, and academia, private business, and civil society, to put before the nation a compelling vision of a smart, inclusive, and environmentally sustainable infrastructure. This commission should report back to Congress, the president, and the American people within one year. Congress could act on the recommendations in 2018, time enough for a building effort that will in fact last several decades.
Last, but not least, must come the trillions of dollars over several decades needed to implement such a plan. The multiple sources of public revenues are clear: taxes on fossil fuels, user fees, general government revenues, bond issues, taxes on land improvements, public leasing and royalties, and private-project financing. With regard to the vast needs for private capital, Wall Street needs a new, socially constructive role that goes far beyond high-frequency trading and peddling toxic assets. As America builds the new infrastructure for the Age of Sustainable Development, Wall Street would also restore its role as the financial powerhouse behind the world’s most dynamic economy.
Jeffrey D. Sachs is University Professor and Director of the Center for Sustainable Development at Columbia University, and author of “The Age of Sustainable Development.”
FIND THE ORIGINAL: http://www.bostonglobe.com/opinion/2016/09/25/sustainable-infrastructure-after-automobile-age/XpXcdFR626Xw931oOGXTAL/story.html