Monday, December 29, 2008 0 comments ++[ CLICK TO COMMENT ]++

Proposed US infrastructure spending not working in the environment's favour

It looks like the proposed infrastructure spending of the Obama administration is not going to help the environment or improve energy efficiency. Although those were never the goals, some, including me, were hoping that it would improve energy efficiency and battle pollution. It looks like some states are simply going to be promoting urban sprawl (source: Bloomberg):

Missouri’s plan to spend $750 million in federal money on highways and nothing on mass transit in St. Louis doesn’t square with President-elect Barack Obama’s vision for a revolutionary re-engineering of the nation’s infrastructure.

Utah would pour 87 percent of the funds it may receive in a new economic stimulus bill into new road capacity. Arizona would spend $869 million of its $1.2 billion wish list on highways.

While many states are keeping their project lists secret, plans that have surfaced show why environmentalists and some development experts say much of the stimulus spending may promote urban sprawl while scrimping on more green-friendly rail and mass transit.

“It’s a lot of more of the same,” said Robert Puentes, a metropolitan growth and development expert at the Brookings Institution in Washington who is tracking the legislation. “You build a lot of new highways, continue to decentralize” urban and suburban communities and “pull resources away from transit.”

Admittedly, a lot of this always comes down to an ideological battle between urbanites and rural dwellers. I have to admit that I'm biased, given that I live and breathe city, so I tend to favour public transportation or mass transit over rural roads or highway projects. Mass transit would be more energy efficient and environmentally friendlier than promoting urban sprawl. However, any sort of urban plan can take a long time since they tend to be far more complex and it wouldn't really be much of a short-term stimulus.

I'm not sure what the Canadian government's stimulus plan is going to end up looking like. I just hope that they allocate most of it to mass transit given that population growth is projected to be stronger in urban areas. Canada probably should also spend some on ports and border crossings. The economic situation in Canada is not supposed to be as grave as in some parts of the US--who really knows though*--so the Canadian government should consider long-term plans that improve energy efficiency and reduce pollution. No need to rush into some mega-spending project like the US government is pursuing.

(* Canada's economy is a tough read right now. Unlike the US, the housing bubble may not be as large, with it being possibly limited to Alberta and BC, and certain dwellings such as condos in Toronto. Canadians are also slightly poorer (lower incomes, higher taxes, many goods slightly more expensive than in US) so the credit bubble may not be as bad (although wealth alone does not limit leverage.) On the other hand, a big chunk of Canada's growth in the last 10 years has come from the commodity boom. If this is a permanent commodity bust, as I think it may be, some commodity industries will contract. Yet, half of the country, particularly the manufacturing and service-oriented Ontario and Quebec, would benefit from lower commodity prices. The weaker Canadian dollar, if permanent, would also help the economy (while hurting savers.) So, it's going to be interesting to see if Canada does worse than the US over the next 3 years. It's not clear to me if Canada should be undertaking a massive stimulus.)

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