RECENT EXAMPLES OF 

THE ECONOMIC BENEFITS FROM 

INVESTING IN INFRASTRUCTURE

Executive Office of the President

NOVEMBER 2011
This report was prepared by the President’s Council of Economic Advisers, the National Economic Council,

the Department of Transportation, and the Department of the Treasury.
1

RECENT EXAMPLES OF THE ECONOMIC BENEFITS FROM INVESTING IN INFRASTRUCTURE

Introduction

Investments in transportation infrastructure have substantial economic benefits, in both the short 

and the long run. Evidence of these benefits is clearly visible in many of the infrastructure 

projects that have recently been completed throughout the country. These investments, some of 

which are described in this report, result in the following benefits for Americans and our nation’s 

economy:

Reduced congestion in key bottleneck areas, such as the I-10 bridge span replacement in 

New Orleans, LA and the new Woodrow Wilson Bridge connecting Virginia and 

Maryland, which helps to reduce the estimated $100 billion in congestion costs on roads 

and highways in urban areas. 

Improved safety on our nation’s highways and bridges, such as the reconstruction of the 

I-10 / I-95 interchange in Jacksonville, Florida, which can both save lives and reduce 

bottlenecks on key thoroughfares. 

Expanded public transit services to new communities, such as the Green Line light rail 

extension in Portland, OR, which get commuters and other travelers to their destinations 

in more efficient, less congestion-prone ways.

Rehabilitated and much-needed maintenance of aging infrastructure, such as the 

rehabilitation of a stretch of I-77 in North Carolina, which often results in the some of the 

highest returns on infrastructure investment. 

The U.S. economy relies heavily on transportation infrastructure, and these investments to 

improve the condition and performance of our infrastructure allow people and goods to move 

more efficiently and safely around the country. Without a well-functioning system of roads and 

highways, public transit, railways, seaports, and aviation, much of the activity in the U.S. 

economy would grind to halt. 

In order to meet the needs of a growing economy, there is an ongoing need for new investments 

to maintain, upgrade, and expand the nation’s stock of transportation infrastructure. Moreover, 

the value of making such investments is especially great at a time when the economy continues 

to have substantial underutilized resources, including more than a million construction workers 

seeking employment.

Yet the U.S. has been underinvesting in infrastructure for many years. Recognizing the pressing 

need to revitalize America’s infrastructure network, President Obama has proposed $50 billion in 

immediate investments in transportation infrastructure, as part of the American Jobs Act. The 

President’s proposal includes investments to make highways safer and more efficient; to repair 

and modernize public transit systems; to improve intercity passenger rail service and develop 

high-speed rail corridors; to improve airports and modernize the air traffic system; and to support 

innovative multi-modal transportation programs. Among the innovative infrastructure efforts the 

President is championing through the American Jobs Act is a $10 billion proposal to capitalize 

an independent National Infrastructure Bank, which will both increase overall investment in 

infrastructure by attracting private capital to co-invest in specific infrastructure projects and help 
2

to improve the efficiency of infrastructure investment by relying on a merit-based selection 

process for projects.

This report discusses the compelling economic rationale for making these investments now and 

lays out four types of infrastructure projects likely to yield large returns. The benefits of these 

investments are illustrated in this report through examples of recent projects that have already 

had a substantial positive impact. The report ends by discussing innovative methods of financing 

infrastructure, leveraging private funding and creating structures to direct infrastructure funds 

where they will be most effective.

The Economic Benefits of Transportation Infrastructure Investment

A large body of economic research has shown that investments in transportation infrastructure 

can have a substantial positive impact on the long-run performance of an economy.1Investments 

that create, maintain, or expand transportation networks are likely to promote improved

economic efficiency, higher productivity, and more rapid growth of economic activity. 

Nonetheless, despite the potential for substantial long-run economic benefits from infrastructure 

investment, the U.S. has been underinvesting for many years. Relative to the size of our

economy, the United States is investing less in infrastructure than many other nations. For 

example, while the U.S. is investing approximately 2 percent of GDP on infrastructure, China 

and Europe are investing close to 9 percent and 5 percent of GDP on infrastructure, 

respectively.2 The American Society of Civil Engineers (ASCE) estimates that we face a $2.2 

trillion need for infrastructure investment over the next five years.3 In short, the U.S. has not 

been investing adequately in infrastructure. The infrastructure investments being proposed by 

the President in the American Jobs Act can serve to jump start critical infrastructure projects, and 

highlight the Administration’s longer term commitment to enhance and reform the nation’s 

surface transportation investments.

The benefits of investing in infrastructure are especially high when there are underutilized 

resources in the economy. In addition to the long-run effects on economic growth and 

productivity, investments in infrastructure can have short-run benefits by supporting employment 

in construction and in the production of materials. Moreover, increased spending by the workers 

hired in these sectors can have positive ripple effects throughout the economy. However, these 

short-run effects can vary greatly depending on the state of the overall economy. At the peak of 

a business cycle, when the economy is operating at or close to its full potential, the benefits from 

hiring workers for infrastructure projects will be partially offset by the diversion of these workers 

from other productive activities, and the investment of public funds may “crowd out” some 

private investment. Many valuable infrastructure investments will still be justified during such 

 

1

For more detail, see the report by the Department of the Treasury with the Council of Economic Advisers, “An 

Economic Analysis of Infrastructure Investment,” October 11, 2010. 

http://www.whitehouse.gov/sites/default/files/infrastructure_investment_report.pdf

See also Gramlich, Edward, “Infrastructure Investment: A Review Essay,” Journal of Economic Literature, Vol. 32, 

No. 3 (Sept., 1993), pp. 1176-1196. 

2 Remarks by the President at CNBC Town Hall Discussion on Jobs” The White House Office of the Press 

Secretary, 2010. http://www.whitehouse.gov/the-press-office/2010/09/20/remarks-president-cnbc-town-halldiscussion-jobs

3

“2009 Report Card for America’s Infrastructure”, ASCE. http://www.asce.org/PPLContent.aspx?id=2147484137
3

times, but the opportunity costs of diverting economic resources from other activities would 

reduce the net benefits of such investments.

By contrast, today the economy is gradually recovering from the most significant economic crisis 

since the Great Depression and is operating significantly below its full potential, with 

unemployment still unacceptably high. In September 2011, 1.1 million workers in the 

construction industry were unemployed, an unemployment rate of 13.3 percent.

4

 In these 

circumstances, public transportation projects can freely hire with little risk that other employers 

will have difficulty finding available workers. With excess capacity widely available in the 

economy, increased public spending on construction materials and increased private spending by 

newly hired workers is unlikely to divert goods or materials from other uses. Similarly, with 

interest rates at exceptionally low levels, there is little risk that federal investment will crowd out 

private investment. Indeed, at a time when the U.S. Treasury can borrow for ten years at an 

interest rate near 2 percent, and a real interest rate near zero, many more infrastructure 

investments yield a positive rate of return. Moreover, state and local governments, which 

typically fund a significant portion of infrastructure spending, have been forced to cut back on 

spending due to revenue shortfalls since the recession of 2007-2009. Recent macroeconomic 

research confirms the intuition that the expansionary effect of federal investment spending is 

likely to be significantly greater during times when there is substantial slack in the economy.5 

Overall, with so many of the necessary resources sitting idle, the opportunity costs of using those 

resources for infrastructure investment are greatly reduced. Just as it makes sense for a 

household to stock up on consumer goods when they are on sale, the low opportunity cost of 

hiring unemployed workers and making use of underutilized resources provides a compelling 

economic rationale for the federal government to make substantial immediate infrastructure 

investments.

Recent Infrastructure Projects with Significant Economic Benefits

While infrastructure investments generally provide substantial positive benefits, economists have 

shown that not all infrastructure investments are equally valuable. For example, a study by John 

Fernald finds that the construction of the interstate highway system in the 1960s led to 

substantial productivity gains, while a comparable investment today would likely have a much 

smaller impact. As Fernald notes, “Building an interstate network might be very productive; 

building a second network may not.”6 In order to maximize the net benefits of additional 

infrastructure investment, new investments should be targeted towards projects where the return 

on investment is likely to be particularly high. This section of the report describes four types of 

infrastructure investment that can have particularly high returns, and provides some specific 

examples of recent projects that illustrate the economic benefits that can be achieved by targeting 

investments in these ways.

 

4

Source: BLS News Release, October 7, 2011, “The Employment Situation – September 2011.” 

5

See, e.g., Auerbach, A. and Y. Gorodnichenko, “Measuring the Output Responses to Fiscal Policy,” NBER 

Working Paper No. 16311, August, 2010. 

6

Fernald, John G., "Roads to Prosperity? Assessing the Link Between Public Capital and Productivity," The 

American Economic Review, Vol. 89, No. 3 (Jun., 1999), pp. 619-638.
4

Expanding capacity by targeting investments towards key bottlenecks.

One of the most significant costs of inadequate transportation infrastructure is the congestion that 

arises when the demand for transportation exceeds the physical capacity of the available 

infrastructure. According to the Texas Transportation Institute, the total cost of congestion on 

roads and highways in urban areas was over $100 billion in 2010, reflecting the cost of time 

delays and wasted fuel.7 In many instances, substantial congestion is caused by specific 

bottlenecks or “chokepoints” in the network. As a result, substantial net benefits may be 

available from targeted investments to expand capacity at those chokepoints, allowing the 

network to accommodate a greater flow of traffic. 

One important way to address critical highway bottlenecks is to replace bridges that have 

become inadequate for the public’s transportation needs. Often, bridges become bottlenecks 

when traffic has expanded dramatically on a major corridor, exceeding the levels anticipated 

when the bridge was originally constructed. In other instances, an old bridge may require 

replacement due to damage or deterioration.

 

7

2011 Urban Mobility Report, Texas Transportation Institute. http://tti.tamu.edu/documents/mobility-report2011.pdf
5

Example: Woodrow Wilson Bridge, VA, MD, and DC

The Woodrow Wilson Bridge (WWB) Project, spanning Virginia, Maryland, and 

Washington, DC, along 7.5 mile section of I-95, replaced the existing bridge and 

reconstructed the I-95 interchanges with MD 210 and I-295 in Maryland and US1 and 

Telegraph Road in Virginia. The old WWB, which opened in 1961, was one of the 

area’s worst traffic bottlenecks and a huge safety concern. In 1969, only eight years 

after opening, the bridge started exceeding its designed capacity of 75,000 vehicles a 

day and prior to its replacement, the bridge was carrying more than 195,000 vehicles a 

day. As a result, commuters and interstate commerce were regularly plagued with 

several miles of gridlock when crossing the bridge. There were major safety concerns 

as well, as accidents occurred at twice the rate of those on similar highways in 

Maryland and Virginia. 

The project involved replacing the existing six lane bridge with a new structure 

designed to accommodate four lanes of the Capital Beltway in each direction, an 

auxiliary lane in each direction to handle the heavy entrance and exit volumes 

between US 1 and I 295 interchanges, and a High Occupancy Vehicle/Express 

Bus/Transit lane in each direction when/if such a system is put in place on each side 

of the Potomac. In addition to the main river crossing bridge replacement, the project 

consists of 102 lane miles of reconstructed and new pavement and more than 

1,169,000 square feet of retaining and sound walls for reconstruction of four 

interchanges with I-95 over a 7.5 mile section. 

Excluding mitigation contracts, this project was constructed with 35 contracts of 

which 34 are completed and one is under construction. Construction began in 2000 

and the new WWB opened to traffic in 2008 with the scheduled full completion of the 

project in early 2013. The project is more than 94 percent complete, and is expected 

to be completed at or below the Initial Financial Plan budget. The new WWB has 

virtually eliminated bottlenecks crossing the Potomac River and increased safety and 

mobility for Interstate and commuter traffic. The project has received numerous 

awards, including AASHTO’s Grand Prize -- Nationwide America's Transportation 

Award and the OPAL Trophy for Outstanding Civil Engineering Achievement Award 

in 2008 awarded by the American Society of Civil Engineers.
6

Example: Mike O’Callaghan – Pat Tillman Memorial Bridge and the Hoover 

Dam Bypass, AZ and NV.

Between 2002 and 2010, the Hoover Dam Bypass Project constructed eight bridges, 

five miles of new road and one of the world’s largest bridges to increase security at the 

Hoover Dam and to address traffic congestion issues in the area. It also eliminated the 

congestion problems, removing interstate traffic from atop the dam and improving the 

route’s shoulders and poor sight distance. This project greatly improved safety for 

drivers and pedestrians. Notably, the project included construction of a 1,900-footlong O’Callaghan-Tillman Memorial Bridge to provide a four-lane bypass that 

reroutes traffic for 3.5 miles from the two-lane bottleneck on U.S. 93 across the 

Hoover Dam. The project employed more than 1,200 workers, engineers and safety 

experts. 

From extreme desert heat for months at a time to high winds, the area’s rugged 

conditions made the project one of the nation’s most demanding and difficult 

engineering challenges. U.S. 93 is a high-priority trade corridor and is a central part of 

the major transportation network in the western United States. Due to increases in 

commercial freight shipments to and from southern California, and population booms 

in Las Vegas and Phoenix, the road over the Hoover Dam became progressively more 

congested. Security concerns after Sept. 11, 2001, led authorities to ban commercial 

trucks from traveling across the dam, forcing truck drivers on the route to use a 75-

mile detour which added cost and delay to businesses and consumers relying on such 

shipments. 

Opened to traffic on Oct. 19, 2010, the new Hoover Dam Bypass shortens the route for 

commercial shippers along this major trade corridor and reduces traffic congestion for 

all who use it. In addition, the bypass accommodates migratory animals in the area --

such as Desert bighorn sheep (Nevada's state animal) -- with wildlife crossings built of 

concrete and anchored to ridgelines on each side of the highway. The surfaces are dirt 

and have been seeded with native plants. They are not accessible from the highway or 

from any developed trails. The crossings improve safety to drivers on US 93 and to the 

animals themselves who otherwise had no other means to cross the highway. 

Earlier this year, the project received the Grand Conceptor Award, the highest honor 

given by the American Council of Engineering Companies. It was also recognized as 

National Project of the Year by the American Public Works Association, and is one of 

five finalists for the Outstanding Civil Engineering Achievement Award to be 

announced in March by the American Society of Civil Engineers. 
7

Example: I-10 Twin Span Bridge replacement in New Orleans, LA

The replacement of the I-10 Twin Span Bridges -- a major conduit in and out of New 

Orleans destroyed by storm surge during Hurricane Katrina – was completed and 

opened to traffic in September 2011 several months ahead of schedule.1Spanning 

more than five miles over Lake Pontchartrain on I-10, the new bridges are a critical 

part of the east-west link between Slidell and New Orleans – particularly for the 8.6 

million tons of commercial shipments traveling to and from the Port of New Orleans. 

Replacing the I-10 Twin Span Bridges has been a national priority since 2005, when 

Katrina devastated the Gulf Coast. Realizing the dire nature of the situation, Louisiana 

Department of Transportation and Development (DOTD) personnel began working 

immediately with private-sector partners from the engineering and construction 

contractor community to make temporary repairs and restore single lanes of east and 

westbound traffic. This goal was realized after 40 days of around-the-clock activity. 

In addition, DOTD used in-house design professionals to produce construction bid 

documents for a new Twin Span Bridge. Through their efforts, workers broke ground 

for the new bridge in July 2006, less than one year after the hurricane. 

I-10 is the southernmost, east-to-west transcontinental highway in the United States. 

It stretches 2,460 miles between Jacksonville, Fla., and Santa Monica, Calif. The 

interruption of this critical transportation link resulted in crippling impacts upon the 

regional and national economy. Two additional lanes on the new bridges relieve local 

traffic congestion and improve safety by providing a more reliable evacuation route. 

At the crest, the new bridges are 30 feet high – 21 feet taller than their predecessors, 

making the pair of new bridges more resistant to storm surge. In addition, it includes a 

high-rise navigational segment that provides 80 feet of vertical clearance for maritime 

traffic. The DOTD designed the new bridges to last 100 years, and the improved 

anchoring system will prevent bridge spans from “floating” off the structures as 

happened during Hurricane Katrina's storm surge. This is the first bridge in Louisiana 

built entirely with high-performance concrete. The concrete is stronger, denser and 

less porous than normal concrete, and less vulnerable to saltwater induced corrosion. 

The new bridge’s innovative design uses reinforced concrete walls to improve 

resistance to damage from barge collisions.
8

Example: Ocean City Causeway, NJ

Beginning in 2006, N.J. DOT started the first part of an effort to replace the Route 52 

Causeway bridges and the roadway section between Somers Point and Ocean City –

including the elimination of the Somers Point Circle. The project, anticipated to be 

completed next year, is one of the state’s largest projects and is critical because it is 

the emergency evacuation route for Ocean City. 

Two fixed and two moveable bridges will be replaced by two bridges that will have 

two high fixed spans over Ship Channel and Beach Thorofare (Intracoastal Waterway) 

and a touchdown on Rainbow Island. The new roadway section will have two 12-foot 

lanes and 8-foot minimum outside shoulders in each direction separated by a concrete 

median barrier. Construction will continue on the existing north- and southbound 

lanes of the Route 52 bridges at Elbow and Garrets Islands and the roadway over 

Rainbow Island. The northbound lanes are being built first to minimize interference 

with traffic. The rest of the causeway, including the elimination of the two 

drawbridges, at the Ocean City and Somers Point limits and the elimination of the 

Somers Point Circle will take place along with improvements to MacArthur 

Boulevard. This project extends from the intersection of Routes 9 and 52 in Somers 

Point, south along Route 52 (MacArthur Boulevard), through the Somers Point Circle 

and over Great Egg Harbor Bay to Ocean City at Ninth Street and Bay Avenue.

Many benefits have already been realized. For example, the completed new structure 

and raised roadway into Ocean City has improved the emergency evacuation route out 

of the city during flood conditions. Also, the new structure eliminates the need to raise 

the draw bridge at the old section that is still being replaced. This feature eliminated 

delay and reduced congestion that would have occurred due to the passing of ships 

through the channel. The completed section does improve safety (provides 

pedestrian/bike/emergency pull off) over that completed section, but not over the 

whole length. The completed section doesn’t increase capacity from the overall 

roadway standpoint because of the short segment of old roadway still acts as a 

restriction.
9

Example: The “Fort to Port” corridor between Fort Wayne, IN, and Toledo, OH.

In October 2009, a newly reconstructed 22.5-mile stretch of US-24 officially opened, 

from the Ohio-Indiana state border to Defiance, Ohio, where it connects with an 

existing bypass. This new stretch of roadway is part of the $300 million Major Moves 

construction project that is improving access between Fort Wayne to the Port of 

Toledo. US 24 has become a critical shipping route, with trucks representing a third 

of the overall traffic. By replacing the former two-lane highway to four lanes, this 

project will alleviate safety concerns about the mixture of truck traffic and residential 

travel. Studies on improvements to US 24 were initiated years ago for safety and 

economic development reasons. When combined with the Hoosier Heartland Corridor, 

the new, limited access travel corridor allows for the distribution of products from 

Lafayette to the Great Lakes ports. In addition to the 23-mile segment that opened in 

2009, two additional sections between Defiance and Napoleon opened the previous 

year. Construction of the remaining portions of the road is under way, and is expected 

to be completed in 2012. U.S. 24 is a major transportation corridor linking 

agricultural and industrial areas, stretching from Ontario, Canada, through Detroit to 

Toledo, and westward to Fort Wayne. U.S. 24 provides access to the Port of Toledo, 

to Toledo Express Airport and to major rail carriers along the corridor.

Example: Manchester Airport Access Road, Manchester, NH.

The Manchester Airport Access Road (MAAR) project provides a new four-lane, 

limited access highway facility to the Manchester Airport to address the existing and 

future transportation needs of the expanding airport and surrounding developing 

industrial commercial areas. The new highway connects the F.E. Everett Turnpike 

and U.S. Route 3, west of the Merrimack River, with NH Route 3A (Brown Ave.) and 

the Airport's South Perimeter Road east of the river. 

The project includes construction of two grade-separated interchanges, two 

roundabouts, seven bridges, a multi-use path, and other related roadway work. It 

improves safety and congestion by providing direct access on a new roadway facility 

to the Manchester Airport and removes traffic from local roads. This direct access 

makes it more convenient for the traveling public, and improves air quality by taking 

traffic off of the stop-and-go local network and provides a direct airport access option 

from the F.E. Everett Turnpike. This new facility will open to traffic on Nov. 11, 

2011. The only work that remains will be landscaping, minor connection work to 

local roads, and removal of temporary roads. The use of ARRA funds allowed the 

New Hampshire Department of Transportation to accelerate the completion of the 

project by two years.

Another important way to increase the flow of traffic over the transportation network is to 

expand highway capacity in heavily congested corridors, such as major trucking routes, 

commuter corridors in growing urban areas, or roads providing access to expanding airports.
10

Congestion does not only affect our nation’s highways; many airports also face substantial 

congestion-related delays, imposing significant costs on passengers due to delays and flight 

cancellations. In 2007, the FAA projected that 27 airports would need additional capacity by 

2025 to accommodate the likely demand for air travel.8 Where feasible, expanding airport 

capacity can be a highly beneficial response to rising congestion.

 

8

“Capacity Needs in the Airspace System,” Federal Aviation Administration, May 2007. 

http://www.faa.gov/airports/resources/publications/reports/media/fact_2.pdf

Example: JFK Runway Reconstruction Project, New York, NY

The John F. Kennedy International Airport (JFK) Runway 13R-31L (“The Bay 

Runway”) Reconstruction Project was completed in November 2010. The project took 

approximately three years to construct at a total cost of approximately $204 Million. 

The project received approximately $15M of American Reinvestment and Recovery 

Act (ARRA) funding. Additional projects that were part of the airport’s Delay 

Reduction Plan also built as part of the project including new and improved taxiways. 

These projects were funded in part by an $89 Million Letter of Intent (LOI) from the 

FAA. At more than 2.75 miles long, Kennedy's Runway 13R-31L is the second 

longest commercial runway in North America. 

The scope of the project included the concrete replacement of the existing asphalt 

runway and widening of the runway from 150 to 200 feet to accommodate larger 

airplanes. The new runway concrete overlay is 18 inches thick and will increase the 

service life of the runway pavement approximately 40 years compared to an 8-year 

service life for asphalt pavement the project replaced. This will reduce the overall 

runway’s lifecycle costs as well as reduce the number of future runway closures 

required for maintenance of the pavement. The project also included taxiway 

improvements designed to reduce airport delays at JFK and incrementally improve the 

overall operational efficiency of the airport. Three new high speed exit taxiways were 

included to reduce the time planes spend on the runway and thus reduce arrival delays. 

New multiple entrance and bypass taxiways at both ends of the runway will reduce 

departure delays by providing additional queuing space and increased operational 

flexibility for airplanes departing from both runway ends. 

The project, including the new taxiways, will enable both swifter arrivals and 

departures, allow easier access from the runway to the taxiways and to the terminal 

gates. This will save time on the ground for nearly every passenger flying both in and 

out of JFK. The reconstructed runway and its new enhancements are estimated to 

reduce overall delays at JFK by 10,500 hours per year. The project also supported 

approximately 1,000 direct and as many as 1,500 ancillary jobs, including 

construction positions, asphalt and concrete production, procurement and installation 

of aeronautical lighting, and food services creating $800 million in wages and 

economic activity.
11

Example: The Big I: I-10 and I-95 interchange reconstruction in Jacksonville, FL.

The “Big I” project in Jacksonville, FL, reconstructed the Interstate 10/Interstate 95 

interchange. The project consisted of 17 bridges, 21 ramps, and 25 lane miles built 

over and around traffic moving through one of the busiest interchanges in the state. 

The interchange has three levels with the highest ramp at 60 feet above the ground. On 

average, 175,000 vehicles pass through it each day. 

The interchange was originally built in the 1950s and desperately needed upgrading 

because geometric elements were well below current standards. For instance, the I-10 

WB to I-95 SB turn was so sharp; traffic had to slow to 35-45 mph before making the 

movement. This condition is undesirable on a high speed facility because it increases 

the number of accidents and increases travel time and congestion. 

Construction began in February 2005 and was opened to traffic in October 2010, six 

months ahead of schedule saving taxpayer dollars. There were 69 companies that 

provided services and 470 people were employed throughout the project phases. The 

project has greatly improved interstate traffic flow and safety through the interchange. 

The project was selected as the Grand Prize winner of the 2011 AASHTO 

Transportation Award. 

Improving highway safety by addressing hazardous locations.

Highway travel in the U.S. has become significantly safer over time. For example, NHTSA 

reported that the fatality rate per 100 million vehicle miles traveled reached a new low in 2009, 

reaching a level close to one-fifth the level in 1966.9 At the same time, traffic accidents remain a 

leading cause of injury and death.10 As a result, investments that reduce safety risks, particularly 

in the most hazardous areas, can have substantial net benefits. One way to improve safety is to 

reduce congestion: with more cars on the road, and more dangerous stop-and-go driving 

conditions, congested roads are often also the most hazardous. Hence, investments that reduce 

congestion can have additional payoffs through improvements in safety. Similarly, many 

investments targeted at increasing safety have the added benefit of increasing the flow of traffic 

by replacing or upgrading obsolete infrastructure. The kinds of investments that can efficiently 

improve safety on highways include reconstructing hazardous interchanges, since a significant 

portion of crashes occur during lane crossings and other maneuvers at interchanges; and 

upgrading hazardous roads with safety features, such as medians, broader shoulders, and rumble 

strips.

 

9

2009 Traffic Safety Facts, NHTSA. http://www-nrd.nhtsa.dot.gov/Pubs/811402.PDF

10 According to the Centers for Disease Control and Prevention, Motor vehicle crashes are the leading cause of death 

among those age 5-34 in the U.S. http://www.cdc.gov/motorvehiclesafety/index.html
12

Example: US-17 in SC

US 17, known in South Carolina as the “Ocean Highway,” is a part of the National Highway 

System and the Strategic Highway Network for Defense Preparedness. It provides a direct 

route between the coastal cities of Myrtle Beach, Charleston and Beaufort. Earlier this year, 

area residents celebrated the completion of eight miles of widening improvements for US 

17/ACE Basin Parkway between Gardens Corner and Lightsey Plantation. 

Prior to completing the improvements, this section of US 17 was primarily a two-lane section 

with narrow to no outside shoulders, and was considered to be among the most dangerous 

roads in the state. Twenty percent of the traffic using this portion of US 17 is trucks, many of 

which are container trucks traveling between the ports of Charleston and I-95. The 

percentage of trucks is approximately double that of other US primary routes in South 

Carolina and almost the same as many Interstates in the State. The fatality rate along this 

stretch of US 17 was calculated to be 2.3 times higher than that of the multi-lane portions of 

US 17 and 1.5 times that of other US primary routes in South Carolina. Between 1997 and 

2005, there were 983 total crashes reported. Of these, almost 6% resulted in fatalities with 33 

persons killed.

The project provided both operational and safety improvements to the original two-lane 

facility. A four-lane, primarily divided, corridor was constructed. Wide naturally landscaped 

medians were established throughout the new highway section, preserving many of the 

historic live oak trees and protecting the ACE Basin environment. As improved safety was 

the primary goal of this project, adequate clear-zones were established to the extent possible, 

with aesthetically pleasing guardrail installed in those environmentally sensitive areas. In 

addition, the project included an improved drainage system, safer shoulders with rumble 

strips, enhanced pavement markings/markers, and the placement of an open-graded friction 

course (a treatment almost exclusively reserved for Interstate). Two new bridges were 

constructed and the at-grade intersection with US 21 was replaced with an interchange that 

encompassed the use of a roundabout.

This project was accomplished using the design/build contracting method and was 

substantially complete on 5/27/2011. An additional 15 miles of two-lane US 17, adjacent to 

this project, is currently under construction through another contract and is scheduled to be 

complete by September 2013.
13

Example: Green Line light rail extension in Portland, OR

In September, 2009, Oregon’s TriMet transit agency opened Portland’s 15-mile MAX 

light rail Green Line, which runs along the rebuilt Portland downtown transit mall 

from Union Station south to Clackamas town center. The two-year-old Green Line 

remains very popular, with weekday trips rising nearly 13 percent, and weekend trips 

rising nearly 7 percent, in August 2011 over the same period last year. MAX is one of 

the nation's top light rail systems. The Green Line light rail received $32 million in 

ARRA funds to help advance the project, which has a $436.3 million overall federal 

commitment, with an FTA share of 76 percent. With the Green Line, Portland’s 

extensive transit system now includes 52 miles of route and 84 stations, and connects 

central Portland with the suburban cities of Beaverton, Gresham, Hillsboro, and 

Clackamas, as well as the Portland International Airport. This project and the four 

previous light rail projects (Eastside, Westside, Airport, and Interstate) were 

completed on or ahead of schedule, and on or under budget. Portland’s transit 

network, with direct service to the downtown business district and attractions, helps to 

make this one of the most livable cities in America, offering affordable access to jobs, 

while spurring a healthy downtown core and continued economic development.

Investing in public transit to move commuters more efficiently.

Investments that extend public transit to new locations can also have substantial public benefits. 

They may help to reduce highway congestion and pollution by enhancing the opportunities for 

the use of public transit in major commuter corridors, and hence reducing the number of vehicles 

on the roads. They can also create benefits by providing workers with access to a broader set of 

potential employment opportunities, promoting economic development in new areas, and 

improving mobility for residents, including the elderly and disabled. Key investments that can 

help to shift commuters from highways to public transit include the construction of new rail lines 

in rapidly growing corridors within metropolitan areas; and extensions of existing transit lines to 

serve additional riders.
14

Example: The Mid-Jordan Transit Corridor Light Rail Project, Salt Lake City, UT

In August, 2011, the 10.6-mile Mid-Jordan Light Rail line opened, providing a direct 

connection to the Salt Lake City central business district, the University of Utah, and 

other metro area destinations. The Mid-Jordan route will connect Murray, Midvale, 

West Jordan and South Jordan with the main Sandy/Salt Lake TRAX line already in 

operation. It’s the latest completed project in Utah’s ambitious plan to develop a 

world-class public transportation backbone by 2015. The state is on track to complete 

70 miles of transit line in less than seven years. Utah’s extensive transit network 

significantly improves access to jobs for many area residents, improves air quality, 

and reduces highway congestion. By offering good transportation choices, Utah, as the 

crossroads of the West, is well positioned to compete for new jobs, new businesses, 

and a vibrant tourist trade. The Federal Transit Administration has committed to 

provide 80 percent of the funding for mid-Jordan, including $90.9 million in ARRA 

funds and $337.4 million in other funding. A 2006 voter-approved sales tax for 

transportation helps Utah to leverage state, local, and federal funds for its $2.5 billion 

FrontLines 2015 public transportation plan, which includes building additional transit 

to the airport, a 45-mile commuter rail extension to Provo, and other key destinations.

Example: Light rail extension in the Dallas metro area, TX

The Dallas Area Rapid Transit’s (DART) 24-mile Green Line light rail extension 

opened for service six months ahead of schedule in December, 2010. DART was able 

to finish the project early thanks to a $78.4 million-boost from ARRA as part of a 

seven-year, $700 million federal funding commitment to the project. The light rail 

extension runs southeast from the Transitway Mall in downtown Dallas to Buckner 

Blvd; and northwest from Victory Station to the city of Farmers Branch and on to 

Carrollton. Looking at the big picture, the DART rail system is responsible for $7 

billion in current, planned and projected transit-oriented development. The Green Line 

expansion plays a part in this and includes large and visible projects such as Ambrose 

at Baylor University Medical Center Station. DART continues to demonstrate 

visionary leadership for transit, delivering the project ahead of schedule and under 

budget. DART’s 2011 ridership survey found that 92 percent of Green Line riders use 

it for work, with over 75,000 riders on an average weekday, and 85 percent of riders 

survey said it eases their commutes. This is a remarkable transformation for a city, and 

a region, dominated by an automobile culture for most of the last century.
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Example: I-77 rehabilitation in NC.

The I-77 Rehabilitation project replaced 6.5 miles of poor and deteriorated concrete 

pavement with a new, high-quality and smooth riding surface. The existing pavement 

was more than 40 years old, 10 years beyond its anticipated service life, and had 

significant cracking, pitting, and distress. The project consisted of overlaying the 

existing concrete pavement with a thin layer of asphalt and 11 inches of concrete from 

US 21 to Asbury Church Road. It also included new pavement on the ramps, wider 

paved shoulders, and upgraded guardrail. With more than 36,000 vehicles - 26 percent 

of which was truck traffic - using I-77 each day, travelers now have a road that offers 

an improved ride and an extended service life of another 30 years. In addition, the 

wider shoulders and new guardrail will enhance safety and result in fewer accidents. 

Providing needed maintenance to existing infrastructure.

One important finding from the economic literature on the economic impact of infrastructure 

investments is that, in countries like the U.S. where a relatively well-developed transportation 

network already exists, the highest return investments will often arise from the maintenance of 

existing infrastructure, rather than from investments in new infrastructure.11 Investments that 

maintain existing infrastructure include, for instance, the resurfacing of aging highways and 

airport runways and the rehabilitation of rail transit systems.

 

11 See, for example: Gramlich, supra note 1. Kalaitzidakis P. and S. Kalyvitis, 2004, “On the macroeconomic 

implications of maintenance in public capital,” Journal of Public Economics, 88, 695-712. Rioja F., 2003, “Filling 

potholes: Macroeconomic effects of maintenance vs. new investment in public infrastructure,” Journal of Public 

Economics, 87, 2281-2304.
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Example: Runway rehabilitation at Nashville Airport, TN.

Nashville International Airport (BNA) is a Medium Hub Airport that is served by 9 

air-carriers serving 66 markets, with the major operator being Southwest Airlines. In 

Fiscal Year 2011, BNA had over 4.7 million passenger enplanements, which was a 5.3 

percent increase over 2010. Runway 2L-20R is 7,703 feet in length and 150 feet 

wide.

Prior to rehabilitation the Runway was over 35 years old and showed extensive 

cracking and structural deficiencies. These structural deficiencies had the potential to 

cause foreign object debris that could damage aircraft engines. Testing showed that 

the runway would deteriorate and fall below minimal service levels within 5 years if 

not rehabilitated.

Runway 2L-20R is one of BNA’s primary instrument runways. Losing this runway 

would require shifting aircraft arrivals and departures to other runways. This would 

overall increase congestion and delays because BNA has only one other runway 

besides Runway 2L-20R capable of low visibility operations. 

The Rehabilitation of Runway 2L-20R took approximately 1 year to construct due to 

seasonal timing of the project and the use of two design firms that began construction 

on each end of the runway. The project sustained about 300 jobs over the course of the 

year. 

The total project cost was $28.5 million of which $21,347,131 was funded with 

Airport Improvement Program grants. 

Innovative financing mechanisms to engage the private sector in infrastructure investment.

One way to address the need for more infrastructure investment is to attract more private capital 

for direct investment in transportation infrastructure. Increased reliance on the private sector to 

finance transportation infrastructure investments can also improve the efficiency of project 

selection and drive greater returns on investment. For example, in order to attract private 

financing, many projects incorporate dedicated revenue streams, often from user fees or other 

forms of usage-based pricing. Because these revenue streams link investment returns directly to 

user demand, they can help to guide capital towards the most efficient projects. In general, 

innovative financing mechanisms have the potential to engage the private sector in infrastructure 

investments with important public benefits. In particular, this report considers three innovative 

approaches to private sector engagement: public-private partnerships, particularly in the area of 

rail freight; Build America Bonds (BABs), as an alternative to municipal bonds that can attract 

new sources of private funding into the market for financing infrastructure projects; and a 

National Infrastructure Bank, that has the potential to leverage private capital into projects of 

national significance. 
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Example: Heartland Corridor Clearance Project (KY, OH, VA, WV)

This project is a public-private partnership among Norfolk Southern and federal and 

state agencies to increase vertical clearances in 28 tunnels and remove 24 overhead 

obstructions, to allow passage of double-stacked container trains between the Port of 

Virginia and Columbus, Ohio. It was among the most ambitious railroad engineering 

projects in the past century.

Construction began in 2007, and ended in 2010. The project excavated the roofs and 

replaced liners in 15 tunnels, carved notches into arch tunnel roofs to allow corners of 

containers to pass in seven tunnels, lowered or realigned track in six tunnels to 

improve vertical clearances along a heavily traveled freight rail route. Insufficient 

vertical clearances forced double-stacked container trains to take circuitous routes or 

to increase the volume of commercial trucks relying on highways when capacity of 

rail routes was insufficient.

The benefits of this project are numerous – increased corridor capacity and better use 

of assets helps the shipping community and reduces commercial traffic and fuel 

consumption on highways, thereby improving air quality all along the route. The 

project also helps to reduce transit time between Norfolk and Chicago from four days 

to three and improves overall reliability of service. It also makes the Port of Virginia 

more attractive to international shippers and inland terminals.

Public-Private Partnerships

In the U.S., most investment in freight railway infrastructure is privately financed, as that 

infrastructure is largely owned by the rail carriers themselves. However, even in a network 

based on private ownership, there are important public benefits that can be realized through 

investments that improve the flow of freight across the railway network. These benefits include 

reduced highway congestion, greater safety, and reduced pollution, when freight can be 

efficiently diverted from trucks to rails. Public-private partnerships between state and federal 

agencies and the rail carriers can be an efficient way to promote such investments. 
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Example: The CREATE program in Chicago, IL

The Chicago Region Environmental and Transportation Efficiency (CREATE) 

program is a public-private partnership between the US DOT, the State of Illinois, 

City of Chicago, Metra commuter rail and Class I railroad companies. CREATE 

involves significant financial cooperation between the private railroad industry and 

public government entities. In 2003, this landmark public-private partnership was 

formed to develop and implement a set of multi-modal infrastructure improvements to 

untangle congestion choke points in the Chicago transportation hub. FHWA assumed 

program leadership for CREATE, facilitating the development, design, and 

construction of the 70 component projects that are estimated to cost $3.2 billion. The 

70 projects in the CREATE Program include: grade separation of six railroad 

crossings (rail-rail flyovers); grade separation of 25 highway-rail crossings; extensive 

upgrades of tracks, switches, and signal systems via 36 rail projects; viaduct 

improvement program; grade crossing safety enhancements; and rail operations 

visibility improvements. 

CREATE has multiple benefits, including improved safety and operations at proposed 

grade-separation locations; reduced traffic congestion on the region’s highways; 

reduced fuel consumption by and emissions from locomotives and waiting autos and 

trucks; and improving livability in Chicago neighborhoods by improving drainage, 

reducing flooding, making sidewalks more appealing and safer, and improving the 

pavement condition of roadways.

CREATE has received $998.3 million in federal funds to date. With this funding, 12 

component projects have been completed, 13 are under construction, four have been 

advanced to the design phase, and 16 projects are undergoing environmental review. 

A key CREATE strategy has been to fill a pipeline of developed projects that have 

completed environmental review and preliminary design so they are ready to advance 

to the final design and construction phases.

Build America Bonds (BABs)

Introduced in 2009, BABs are taxable bonds for which the U.S. Treasury Department pays direct 

subsidy to the issuer to offset borrowing costs for public capital infrastructure projects. These 

bonds can function as an attractive alternative to municipal bonds, which deliver a borrowing 

subsidy only indirectly through the federal tax exemption to investors for interest earnings. 

BABs appeal to a broader class of investors through tax-exempt municipal bonds, including nonprofits, pension funds and many other institutional investors. Since the inception of the program 

in April 2009, BABs had a very strong reception from both issuers and investors, supporting 

more than $181 billion of financing in 2,275 transactions in all 50 states, the District of 

Columbia, and two territories, for new public capital infrastructure projects such as schools, 

bridges and hospitals. A recent empirical study by the Treasury Department found that state and 
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Example: Light rail projects, Seattle, WA

Sound Transit invested $377 million, which they raised by issuing BABs, on several 

projects, including the following: (1) Central Link Light Rail Transit: A $2.7 billion 

project funded with $92 million raised from BABs and $500 million in FTA 

competitively-awarded capital construction funds (“New Starts”). The initial 14-mile 

line connects downtown Seattle to Tukwila, WA. Line opened in July 2009; (2) 

Airport Link Extension: A 1.7-mile light rail extension carrying the Central Link line 

from Tukwila to SeaTac Airport. Service began in Dec. 2009; (3) University Link 

Light Rail: Extends the initial Central Link project three miles north, from downtown 

Seattle to the University of Washington. Project funded with $69 million from BABs 

and $863 million in FTA New Starts. (Total project cost is $1.9B). The project also 

received $44 million from ARRA funds. Project is currently under construction, about 

35 percent completed, on time and on budget. Service scheduled to start in Sept. 2016. 

These projects add tremendous transit capacity to a fast-growing region plagued by 

congestion, and reduce travel times to the airport, improve access to jobs in the Seattle 

downtown business district, and provide transportation choices to other destinations, 

such as the University of Washington.

local governments that issued BABs realized considerable savings as compared to the cost of 

issuing tax-exempt bonds, and that expanding the BABs program would lead to continued 

savings on borrowing costs for state and local governments.12 Although the initial BABs 

program expired at the end of December 2010, the Administration proposed extending BABs in 

the President’s FY 2012 Budget at a subsidy rate of 28 percent and to expand the range of 

eligible municipal projects.

National Infrastructure Bank

Another innovative approach to increasing private sector participation in infrastructure 

investment would the creation of a National Infrastructure Bank (NIB), as President Obama has 

proposed as part of the American Jobs Act. The proposed NIB would help to increase overall 

investment in infrastructure by attracting private capital to co-invest in specific infrastructure 

projects, and would help to improve the efficiency of infrastructure investment by relying on a 

merit-based selection process for projects. To ensure substantial leverage of private capital, the 

NIB would finance no more than 50 percent of the total costs of any project. The NIB would 

also fill in an important gap in our infrastructure funding system, by focusing on projects of 

national or regional significance, whose effects cross over state and jurisdictional lines. Such 

projects are often at a disadvantage under current financing mechanisms, including state-level 

infrastructure banks and bonds issued by state and local governments. As a result, the NIB 

would be a valuable complement to existing sources of funding, and would improve the 

efficiency of infrastructure investment in the U.S.

 

12 “Treasury Analysis of Build America Bonds Issuance and Savings,” U.S. Treasury Department, May 16, 2011. 

http://www.treasury.gov/initiatives/recovery/Documents/BABs%20Report.pdf
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Conclusion

This report has reviewed the economic rationale for making immediate, substantial investments 

in transportation infrastructure. The benefits from these investments will include long-run 

increases in the nation’s economic performance, as well as a much-needed short-run boost to 

economic activity to accelerate the economy’s recovery from the most severe recession since the 

Great Depression. This report has also discussed the importance of targeting infrastructure 

investments in ways that will have the greatest net benefits, and has reviewed some of the 

specific types of infrastructure investment that can have significant benefits, as illustrated by a 

number of recent case studies. Finally, this report has discussed the value of innovative 

financing mechanisms to improve the efficiency of public infrastructure investments by 

increased engagement with the private sector. The evidence discussed in this report shows that 

recent federal investments in transportation infrastructure have already created concrete 

economic benefits for the American people, and an expanded effort to promote further 

investments will build on those successes.