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News from EPI Policymakers should improve the way infrastructure projects are selected to benefit the economy and the public

A new paper by EPI Research Director Josh Bivens suggests that policymakers need to rethink how infrastructure projects are selected, giving more weight to regional and national benefits, environmental impact, and benefits to distressed communities.

“Recently we’ve seen the impact of natural disasters on our country’s infrastructure, and now more than ever, it is important that policymakers commit to a strong, transparent public investment to improve the public good,” said Bivens. “For both economic and humanitarian reasons, the value of mitigating climate change should be given higher priority in project selection.”

Bivens argues that policymakers should prioritize projects with considerable geographic spillovers. Currently, an insufficient level of coordination across levels of government means that the significant regional and national benefits—or the spillover effects—of local infrastructure projects aren’t always taken into account.  This could lead to underinvestment in projects with small local benefits but large spillover benefits. Bivens argues that it’s hard to see any alternative besides a strong federal role in ensuring that such projects are selected and prioritized.

Policymakers should also consider the environmental impact of infrastructure projects and prioritize those that provide benefits from mitigating greenhouse gas emissions. The costs of climate change—and therefore the value of mitigating carbon emissions through green energy investments—are likely being underestimated when prioritizing infrastructure projects, as today’s selection processes do not provide enough credit for these benefits in their analyses.

Bivens also makes the case that policymakers should prioritize projects that create jobs in distressed urban and rural communities. Policymakers should look for infrastructure projects that create jobs in these areas, which would help spur productivity growth while also providing valuable services to these communities—addressing crucial needs besides job creation, such as safer drinking water.

In order to best manage infrastructure project selection and ensure these priorities are met, Bivens recommends establishing a governing body at the federal level to oversee infrastructure coordination, regularly reassessing the social cost of carbon, and earmarking a significant portion of infrastructure investment as long-term economic support for communities in distress.

See related work on Infrastructure