Third-World Infrastructure Threatens Long-Term Growth

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Third-World Infrastructure Threatens Long-Term Growth

Third-World Infrastructure Threatens Long-Term Growth

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Many words were tossed at random during Monday night’s presidential debate – some of them instructive even for their repetitiveness, others just distracted distortions.

But only tangentially was the issue of “infrastructure” addressed.

To his credit, Donald Trump, among his bill of particulars defining the trouble the Obama administration has ushered in over the past eight years, mentioned the sorry state of U.S. airports and compared them unfavorably to similar facilities in Asia.

“Our airports are like from a third-world country. You land at LaGuardia, you land at Kennedy, you land at LAX, you land at Newark and you come in from Dubai and Qatar and you see these incredible — you come in from China — you see these incredible airports and you land — we’ve become a third-world country,” Trump observed.

If you’ve traveled via any number of major U.S. airports anytime in the 21st century, you’ll understand what he’s referencing.

Odds are you had a hard time simply getting there, and you suffered through an extended security clearance process exacerbated by poor crowd control systems.

Your flight was probably delayed, and you had an inconvenient gate change and a frustrating, harried trek to the next one.

Finally, it’s likely you spent some time sitting on the tarmac waiting for takeoff from an overtaxed runway.

“Our airports are like from a third-world country. You land at LaGuardia, you land at Kennedy, you land at LAX, you land at Newark and you come in from Dubai and Qatar and you see these incredible — you come in from China — you see these incredible airports and you land — we’ve become a third-world country.”

The good news is we can upgrade airport facilities and stimulate economic growth with relative ease — Denver, Colorado, providing a case in point.

As Kim Day, the CEO of Denver International Airport, noted in an Op-Ed for The Denver Post on the 20th anniversary of the local airport’s opening: “DIA is an economic powerhouse for Colorado, growing its initial annual economic impact of $3.1 billion to an estimated $26.3 billion in 2013. The airport supports nearly 190,000 jobs, and is on track to be even more impactful in the years to come.”

It’s not a perfect picture, of course, as cost overruns for project expansions, including a new train station and a hotel, well illustrate.

Nevertheless, a decision made 27 years ago to spend more than $2 billion on a new airport — the only major new one built in the U.S. since 1974 — has helped diversify Colorado’s economy and spurred broader growth.

Yes, we have a tenuous debt-and-deficit situation. But government entities can also borrow at historically low rates.

It makes simple sense to lock in cheap money to pay for infrastructure investments with long economic tails.

Airports are certainly one area in which we can use an upgrade. We also need more and newer bridges, roads, and tunnels. And we need to upgrade the electrical grid. And we need to improve and update our port facilities.

Those items are always at the top of lists interested folks make when advocating infrastructure investment.

But what about water, the very stuff of life itself? Hydration is absolutely essential, and yet we continue to ignore the state of the infrastructure that delivers it to us.

Humankind has been working on water supply issues since about 700 B.C., when Persians started building “qanats” to carry groundwater from hillsides to nearby settlements.

The Romans got started on their famous aqueducts in about 312 B.C. and finished by A.D. 455; some of these structures still stand today.

Americans used bore logs to make water distribution lines in the early days. Our first waterworks was formed in Boston in 1652 for domestic and firefighting purposes.

Philadelphia introduced cast-iron pipes in 1804 for use in its water mains.

Soon the engineering scheme incorporated windmills and increasingly sophisticated pumps to move water from source to end-user.

But what about water, the very stuff of life itself? Hydration is absolutely essential, and yet we continue to ignore the state of the infrastructure that delivers it to us.

What we now take for granted is actually the result of a century of planning and execution. And more than 90% of Americans still get their water from these same community water systems.

In its 2013 Report Card for America’s Infrastructure, the American Society of Civil Engineers gave our “drinking water” assets a “D.”

According to Professor Robert Glennon of the University of Arizona:

Our water infrastructure consists of approximately 54,000 drinking water systems, with more than 700,000 miles of pipes, and 17,000 wastewater treatment plants, with an additional 800,000 miles of pipes. A 2012 report of the American Water Works Association concluded that more than a million miles of these pipes need repair or replacement. That’s why communities across the nation suffer 240,000 water main breaks per year. The major cause of pipe failure is age.

Disease and death follow from poorly conceived and maintained water infrastructure.

We’re making progress solving the great challenge of the global shortage of potable water, with new desalination systems incorporating cutting-edge membrane technology leading the way.

In the U.S., the primary challenge — though we do face acute supply problems in California, New England, and other smaller regions — remains infrastructure, specifically a lack of investment.

In the absence of a massive program to replace systems that, in many cases, date to the 19th century, Aegion Corp. (AEGN) subsidiary Insituform Technologies is going to see a nice business for its cured-in-place pipe (CIPP) solutions for sewer facilities and water delivery.

Insituform is currently working on multimillion-dollar contracts for municipalities such as Baltimore, where it’s done nearly $60 million of work since 2012, and St. Louis, where it’s received more than $22 million in contracts since April 2013.

The company has installed more than 100 million feet of CIPP around the world, including multiple projects in Canada and Australia.

Perhaps Insituform and Aegion aren’t going to solve the world’s or the U.S.’ water problems entirely.

They can, however, provide much-needed CIPP “bandages” until the political will for longer-term solutions materializes.


Get Smart

In a recent post at Farnam Street, “The Need for Biological Thinking to Solve Complex Problems,” Shane Parrish addresses the question, “How should we think about complexity?”

Here’s a portion of the answer, drawn from Samuel Arbesman’s Overcomplicated: Technology at the Limits of Comprehension:

Biological systems are generally more complicated than those in physics. In physics, the components are often identical — think of a system of nothing but gas particles, for example, or a single monolithic material, like a diamond. Beyond that, the types of interactions can often be uniform throughout an entire system, such as satellites orbiting a planet.

Parrish notes the advantages of “a biological approach to thinking,” and observes, “Arbesman makes an interesting point here when it comes to how we should look at technology. As the interconnections and complexity of technology increase, it increasingly resembles a biological system rather than a physics one.”

At the same time, “This doesn’t mean we should abandon the physics approach, searching for underlying regularities in complexity. The two systems complement one another rather than compete.”

Smart Investing,

David Dittman
Editorial Director, Wall Street Daily

The post Third-World Infrastructure Threatens Long-Term Growth appeared first on Wall Street Daily.
By David Dittman