North American stakeholders need to jolt into action to prevent a quarter-century decline in infrastructure from becoming a crisis, a report issued this month by the Royal Institution of Chartered Surveyors warned.
“If current infrastructure investment levels continue in the US and Canada over the next 15 years, there will be a $3.5 trillion to $4.5 trillion shortfall,” the RICS report said, calling for “decisive action”.
But the report also drew a contrast between the trajectory of infrastructure in Canada and the US, pointing to the former’s openness to tapping the private sector for infrastructure improvements. The US spends around $500 billion, or 2.87 percent of GDP on infrastructure versus just $30 billion, or 1.68 percent of GDP, in Canada; yet the average age of Canada’s infrastructure dropped over the decade to 2013 while in the US that number has risen.
“The US has an opportunity to learn from the experience of Canada and other nations around the world where P3s have become the dominant vehicle for infrastructure finance,” the report stated. In the US, “a comprehensive effort in Congress is necessary to establish a P3 marketplace that goes well beyond road infrastructure”.
The report also pointed to the difficulty of working across state lines in the US.
“The private sector risks significant resources just to bid these projects,” the report continued. “And there are significant costs that accrue when dealing with 50 different states as the legal, risk and cost variables are similar in scope to doing business with 50 different countries”.
Based in London, RICS is a professional body for qualifications and standards in land, property, infrastructure and construction. The report was written following roundtable discussions with infrastructure professionals in Toronto, New York, and Washington, DC.