The Infrastructure Investment and Jobs Act (IIJA) has been a crucial lifeline for the United States’ deteriorating infrastructure, injecting $590 billion in new funding to revitalize essential services and facilities. This boost has sparked a boom in the civil engineering sector, with states like Texas taking the lead on upgrading bridges, roads, railways, and more. But with the current funding only secured until 2026, what are the repercussions to the civil engineering sector and the economy if a ‘snap back’ to previous levels were to occur?
Let’s take a look at the highlights of the recent 2024 ASCE ‘bridging the gap’ report to find out.
The current state of investment
The IIJA addresses critical areas needing immediate attention:
- Surface Transportation: Receives the bulk of the funding at 78%, amounting to $455 billion investment in highways, bridges, rail & transit.
- Energy: Allocated 7% of the funding, which is around $42 billion.
- Water: Including drinking water, wastewater, and stormwater management, secures 8% of the funding or $46 billion.
- Aviation: Gains 4% of the funding, approximately $25 billion.
- Ports & Inland Waterways: Receives 3% of the funding, about $14 billion.
While these may appear substantial investments, the American Society of Civil Engineers (ASCE) suggests that these efforts still fall short of bridging the gap caused by over 30 years of underinvestment, estimating a $15.2 trillion shortfall across all sectors.
Why does infrastructure matter?
Infrastructure is nothing short of the nation’s backbone, critically impacting the health, safety, economy, and environment. Key areas affected include:
- Energy: Unreliable services increase production costs and impact public health.
- Highways: Poor conditions increase transportation costs and affect quality of life.
- Airports: Inadequacies slow cargo movement and increase travel costs.
- Transit: Unreliable services extend travel times, increasing local travel costs.
- Economy: Insufficient infrastructure impedes economic growth and quality of life.
The threat to continued funding
Current funding under the IIJA is only guaranteed until 2026. Beyond this, there is a real risk of funding reverting to pre-2021 levels—a scenario the ASCE refers to as ‘Snapback’. Alternatively, investments could continue through to 2043, an outcome labeled as the ‘continuing to act’ scenario.
Is current funding even sufficient?
Despite the influx of funds from the IIJA, significant work remains. The top three investment areas—surface transportation, energy, and water—highlight why a sustained focus is critical, especially in the face of the climate crisis and the aftermath of COVID-19:
- Surface Transportation: Impacted significantly by COVID-19, with a 30%-40% reduction in travel partly due to remote and hybrid work models. Public transit remains at 73% of pre-pandemic levels, suggesting a funding-feedback loop affecting reliability.
- Energy: Extreme weather causing over $1 trillion in damage has refocused attention on sustainable solutions. With substantial price reductions (70-80%) in solar and wind energy and rising EV demands stressing the grid, the transition from fossil fuels is essential.
- Water: Ongoing issues with ‘forever chemicals’ and their massive impact on the health of citizens keep it high on the agenda. Legacy initiatives still to be completed like replacing lead pipes within the next decade underscore the continuous need for funding.
Implications of funding scenarios
- Household Impact: Varying investment levels could significantly affect disposable income, with a potential $1.9 trillion difference in impact between continuing current investments and the Snapback scenario through 2043.
- Annual Household Income Loss: Could range from $2,000 to $3,300 depending on the scenario.
Industry and trade impact
The cumulative impact of deteriorating infrastructure on businesses could significantly undermine the U.S.’s competitive edge on the global stage. The ‘snapback’ scenario could cost the economy $5 trillion over the next 20 years, with the manufacturing sector particularly vulnerable, accounting for 20% of the losses across all industries. This sector, already weakened by outsourcing and globalization, stands to lose substantially.
Extended trucking times, increased transportation costs from ports, along with power blackouts and unreliable water supplies, could further hinder trade. Notably, maintaining the current level of infrastructure funding, as opposed to reverting to ‘snapback,’ could result in a $244 billion savings in these detrimental impacts.
Conclusion
While the investment figures are substantial, they represent a necessary down-payment on America’s future. This investment is crucial for maintaining and enhancing the nation’s infrastructure backbone. However, the potential ‘Snapback’ to lower funding levels could dramatically impact not just the civil engineering sector but also the overall economic and functional stability of the country.
In the civil engineering sector specifically, reduced funding could jeopardize future infrastructure projects. This would stifle career opportunities and sector growth. Without consistent and adequate funding, we risk losing momentum in developing the skills and technologies that drive this critical industry. A lack of investment could lead to fewer large-scale projects, essential for both the career development of new engineers and the maintenance of expertise among seasoned professionals. Consequently, this scenario could curb the innovation and adaptation necessary to meet future challenges.
References:
- American Society of Engineers. Bridging the Gap Report (2024). URL: www.bridgingthegap.infrastructurereportcard.org/
