LEIPZIG, Germany - Faced with tight budgets and political pressure, the United States and many other countries are missing on a chance to invest in transportation, economists said Wednesday.
"I think of freedom as important and, to me, freedom is the capacity to move around," Harvard University economist Amartya Sen told more than 1,000 people attending the first day of an International Transport Forum in Leipzig, Germany.
Sen, who in 1998 won a Nobel Prize in economic sciences, laid out a multi-pronged, 20-minute argument in favor of investing in roads, rail lines and other modes to help people move to and from their jobs, shopping and other tasks.
He briefly touted transportation as a proven path to prosperity for developing countries, and a tonic for bringing already developed yet stagnant economies out of recession.
But, noting that progress has been slow in many budget-weary countries, Sen said leaders from those nations need to take the time necessary to help residents determine "a public reasoning," a mutually-agreed path to better mobility.
John Micklethwait, editor in chief of The Economist, cited political pressures in many countries, where elected leaders are looking to tighten their belts, rather than invest in projects whose benefits won't be realized for years.
"If you look at the west in particular, you can make the case really rather strongly that we've not invested in this particular recession, in this time of need, in those projects as we expected to," Micklethwait said.
Micklethwait was particularly critical of the U.S., saying "Their infrastructure is lousy. Most of it was built 50 or 60 years ago. It's amazing that it's been only five years since that bridge collapsed in Minnesota, claiming 13 lives, and despite that America still has 70,000 bridges found to be structurally deficient."
Much of the discussion on this first day involved countries exploring alternatives to traditional, tax-supported transportation projects.
An emerging popular alternative is a type of funding known as a PPP - an acronym for public-private partnership. That's a bit of a geeky name, but Texans are familiar with the concept of inviting private developers to help pay for projects in return for allowing them to make a profit on them.
In the Dallas-Fort Worth area, private developers are being used to build North Tarrant Express, a $2.5 billion project that involves the overhaul of Loop 820 and Texas 121/183 and addition of toll lanes. Also, Texas officials have approved a plan to add the expansion of I-35W to that project, and to apply for a federal transportation infrastructure (TIFIA) loan to make it work.
But such partnerships can quickly fail, if public officials don't carefully negotiate contracts with developers to ensure that all parties involved understand who is financially responsible for all the risks.
For example, a project in Saudi Arabia known as the Saudi Land Bridge connecting the Persian Gulf to the Red Sea was initiated as a public-private partnership but the process was canceled because the parties couldn't agree on issues such as who would assume financial risk. The project is now being pursued as a publicly-funded project, said Frank Beckers of Symbulos Infrastucture Consultancy in Dubai.
Another project, South Bay in the San Diego area, went bankrupt, and one of the factors was that original traffic projections were too high, said Jonathan Gifford, a professor at George Mason University in Virginia. The project was backed by a TIFIA loan - which normally is the last of debts to be serviced on a project - but because of "springing lien" language in the agreement the federal loan was moved to the top of the repayment list during the bankruptcy process.
Gifford said the South Bay project, which is now owned by the San Diego Association of Governments "is a success."
"It's a success in the sense that those who put their money at risk absorbed the loss," he said. "Of course, those who put their money at risk do not consider it a success."
Despite those setbacks, public agencies are becoming smarter in laning how to negotiate public-private partnership agreements, several panelists said.
Photo 1: A look down from the top floor of the conference center in Leipzig, Germany, which is hosting the International Transport Forum.
Photo 2: Economist Amartya Sen of Harvard University greets attendees after speaking at the International Transport Forum Wednesday in Leipzig, Germany. (Photos by Gordon Dickson).