Treasury Study Rates 40 Transpo/Water Megaprojects

Treasury Study Rates 40 Transpo/Water Megaprojects

January 05, 2017  | Jeff Davis

January 5, 2017

A new study commissioned by the Treasury Department identifies 40 transportation and water “megaprojects” costing a total of $334 billion that, the study estimates, could bring as much as $1.3 trillion in national economic benefits.

A December 30 statement from Treasury indicated that the study was in support of the Obama Administration’s “Build America Investment Initiative.” It came from Treasury, not Transportation or the Army Corps of Engineers, because part of the initative was expanded tax-exempt bonding authorities repeatedly proposed by the White House, the Qualified Public Infrastructure Bond (QPIB) and Financing America’s Infrastructure Renewal (FAIR) programs.

The Treasury statement said that “The study, authored over the past year by a team of third-party, independent infrastructure experts, highlights how investing in infrastructure projects may generate economic benefits for businesses, consumers, travelers, and residents across the country.”

Almost one-third of the total project costs – $101 billion – are in a single project (building true high-speed rail in the Northeast Corridor from D.C. to Boston). After a 3 percent per year discount rate has been applied to the capital cost (reducing it to $75 billion), the study estimates that the gross economic benefits from the project would be somewhere between $150 billion and $300 billion. This gives a benefit-cost ratio of between 2.0 and 4.0, which is actually on the low end of the projects included in the study.

In order to gauge net economic benefits, the discounted capital cost has to be subtracted from the gross number, leaving somewhere between $75 billion and $225 billion. (The median number of that range is $150 billion, which is printed in the table in the report.)

The projects with the highest benefit-cost ratios analyzed in the report, exceeding a 10 to 1 benefit-cost ratio in each case, are:

  • Capacity upgrades to the Interstate 10 corridor from Florida to California ($28.6 billion nominal capital cost; over $236 billion in net economic benefits).
  • A national project to increase traffic efficiency by coordinating traffic signals ($455 million nominal capital cost; over $3.9 billion in net economic benefits).
  • Expansion of Interstate 70-East in Denver, Colorado ($1.9 billion nominal capital cost; over $15.6 billion in net economic benefits).
  • A proposed linear induction rail system to move shipping containers between Juarez, Mexico and El Paso, Texas ($1.1 billion nominal capital cost; over $9.4 billion in net economic benefits).
  • Improved freight rail transfer facilities in New Orleans, Louisiana ($721 million nominal capital cost; over $5.5 billion in net economic benefits).
  • A new highway-rail bridge across the Mississippi River near Memphis, Tennessee ($603 million nominal capital cost; over $5.0 billion in net economic benefits).
  • A water medium diversion project between the Mississippi River and the River aux Chenes ridges in Louisiana ($421 million nominal capital cost; over $3.5 billion in net economic benefits).
  • Another water medium diversion project in Myrtle Grove, Louisiana ($302 million nominal capital cost; over $2.5 billion in net economic benefits).

ETW focuses on the nominal capital cost, not the discounted cost over time, because those are the dollar amounts that politicians will have to vote to appropriate, loan, or borrow in order to build the projects.

Not a part of the top 40 list were two ultra-super-megaprojects that are still in the hypothetical stages. The report estimates that spending $1.3 trillion to fully accommodate autonomous vehicles on U.S. roads would bring in $5.0 to $7.5 trillion in net economic benefits (BCA in the 7.0 to 10.0 range), and that a full recapitalization of the National Highway System would cost $790 billion but would yield between $1.6 and $3.1 trillion in net economic benefits (BCA in the 4.0 to 7.0 range).

The table showing the top 40 projects is below. The full study is here.

(Online update, Jan. 30, 2017 – Bob Poole at the Reason Foundation has taken issue with the cost-benefit analyses of the projects in the Treasury list. His views can be found here.)

Share

Related Articles

Transportation May Be Left Out of Permitting Reform

Transportation May Be Left Out of Permitting Reform

As part of his deal with Democratic leaders to gain his support for the budget reconciliation bill, Senator Joe Manchin (D-WV) has also...

Biden Names Former CO, DE Transportation Chief Shailen Bhatt to Head FHWA

Biden Names Former CO, DE Transportation Chief Shailen Bhatt to Head FHWA

President Biden yesterday nominated Shailen Bhatt, former secretary of transportation in two different state governments (Colorado and...

Phil Washington Nominated to Run FAA

Phil Washington Nominated to Run FAA

As predicted in the Seattle Times on June 9, President Biden on July 6 announced that he has selected Phil Washington, the head of the...

The Present and the Future of Women Leading Transportation

The Present and the Future of Women Leading Transportation

Women’s Transportation Seminar (WTS) International, headquartered in Washington, D.C., was founded in 1977. The 8,000+ member...

Nominations News: Senate Panel OK's FMCSA Head, MWAA Board Member; POTUS Makes STB Nominee; Sully Out at ICAO

Nominations News: Senate Panel OK's FMCSA Head, MWAA Board Member; POTUS Makes STB Nominee; Sully Out at ICAO

There was a smattering of transportation nomination news in Washington this week. The Senate Commerce, Science and Transportation...

Inflation Poses biggest threat to IIJA rollout: U.S. DOT official

Inflation Poses biggest threat to IIJA rollout: U.S. DOT official

“Externally our biggest headwind is the current economic environment,” said Katie Thomson, director of the Bipartisan Infrastructure...

Phil Washington Rumored for FAA Administrator

Phil Washington Rumored for FAA Administrator

Yesterday, the Seattle Times reported that Denver International Airport CEO Phil Washington, the former head of the Los Angeles County mass...

Webinar: The IIJA in Play: Six Months Later

Webinar: The IIJA in Play: Six Months Later

In November 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA), the single largest infrastructure spending bill...

Mineta and Wachs: Two Giants Remembered

Mineta and Wachs: Two Giants Remembered

The transportation community lost two giants when Norm Mineta and Marty Wachs both passed away just over one year apart from one another....

Looking Beyond Infrastructure Week

Looking Beyond Infrastructure Week

Looking Beyond Infrastructure Week Infrastructure Week 2022 starts on Monday, May 16. After a decade of coordinated (and uncoordinated)...

Biden's Cure for High Gasoline Prices? The 2021 Infrastructure Bill

Biden's Cure for High Gasoline Prices? The 2021 Infrastructure Bill

"The Biden infrastructure law should produce reduced demand for gasoline once projects now being allocated funding [are]...

Workforce Issues Front-and-Center in Congress

Workforce Issues Front-and-Center in Congress

Last year, the President's National Infrastructure Advisory Council (NIAC) released a report concluding that the United States is...

Be Part of the Conversation
Sign up to receive news, events, publications, and course notifications.
No thanks