Category Archives: Sustainability

The Mobility Ecosystem: the changing landscape and the need for fresh, new ideas (Part 6: Funding)

14 Sunday Feb 2021

Posted by in COVID-19, Environment, Fuel Taxes, Funding, Funding Gaps, Future, Infrastructure, Investing, Needs Assessments, Pandemic, Rural, Society, Sustainability, Transportation, Urban, Vehicle Miles Traveled Tax (VMT)

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While there is never enough money to address the needs, there is not a transportation agency in the Nation that is not struggling with the lack of funding, largely due to the Pandemic 2020-present whether it’s fuel taxes, general funds, bonds, public-private-partnerships, wheel taxes, vehicle registrations, or other funding sources (American Society of Civil Engineers, 2020; Stofan, 2021; NPR, 2020; Jimenez, 2020). Still, are we talking about infrastructure the right way? That is, are we talking to and the about the people that use it (Milberg, 2021)?

In 2019 the U. S. federal government spent $96 billion on building and updating infrastructure, $67 billion was transferred to states. In 2017, the most recent data available, state and local infrastructure spending totaled $162 billion excluding these federal transfers. At the same time there has been a shift toward increased spending on operations and maintenance and away from spending on new capital projects. Some estimates are that roughly 2/3 of dollars go to keep infrastructure functioning (i.e. maintenance, repair, replacement, or system preservation) while roughly 1/3 of dollars go to upgrades (i.e. new capital projects). While this allocation can be disputed depending on the audience and perspective, keeping infrastructure functioning (system preservation) is the highest and best use of dollars and most economical in serving the public good. How dollars are best allocated for system preservation and new capital projects needs to be continually assessed, typically on an annual basis in conjunction with needs assessments and specific criteria. The current (2017) American Society of Civil Engineers, or ASCE, Report Card identifies an estimated $2 trillion gap in the $4.6 trillion needs required to achieve a state of good repair over the next 10 years (American Society of Civil Engineers, 2017). For surface transportation alone the gap is estimated to be $1.1 trillion gap in the over $2 trillion needs over the next 10 years. Perhaps more sobering, the world is facing a $15 trillion infrastructure gap by 2040 (George, et al, 2019).

Since the creation in 1919 by the State of Oregon, the fuel tax has been the primary federal and state funding mechanism  for transportation/mobility infrastructure for over 100 years. The past two decades have seen a decline in those fuel tax revenues as a result of little or no increase in many fuel taxes, improving fuel efficiency, alternatives fuels, and now a pandemic. To close those gaps, general funds, wheel taxes, vehicle registrations, bonds, and other sources have been used. Still the gaps exist.

A question: should the US align with the UN’s “people first” model for public-private infrastructure projects? The model evaluates projects on five criteria (United Nations Economic Commission for Europe, 2016):

  • Increasing access and promoting equity
  • Improving environmental sustainability
  • Improving project economic effectiveness
  • Ensuring replicability
  • Engaging all stakeholders

While there is important movement in this direction, it probably comes down to whether the needs of all stakeholders can be reconciled—consultants, builders, financiers, politicians, businesses, the public and others—that oversee infrastructure development and come to consensus on what they are doing. These can be powerful interests and getting people to work together, much less collaborate and come to consensus, will continue to be a challenging task to scale up the funding to meet growing needs.

So, what is the likely funding source for the future? That is unknown. A few years ago many believed that a Vehicle Miles Traveled (VMT) tax being tested over the past two decades in Oregon and other states would prevail and might yet. However, emerging technologies, declining personal car ownership, electric vehicles, alternatives fuels, remote work, changing business models, sustainability, climate change, access, equity and social justice, and future physical infrastructure needs may warrant new funding sources. Regardless, it is clear a new, reliable, and sustainable transportation/mobility funding model is needed that balances urban, rural, and multimodal needs and with an eye to the future. This includes a review of criteria for allocating funds, taking into account the needs of urban and rural communities, connecting roads and modes, and the capabilities of smaller communities who do not have the staffs to accommodate the substantial federal processes. The federal government must partner with states, communities, and other partners and entities to make funding and its allocation as effective and efficient as possible. While traffic is much higher with more costly infrastructure needs in urban areas, there are also critical needs in rural areas although there is less traffic (NAFB, 2021).

The funding space is also changing. Black Rock Chairman and Chief Executive Officer, Larry Fink, in his 2020 letter to CEOs has stated “In the near future—and sooner than most anticipate—there will be a significant reallocation of capital” (Fink, 2020). This is driven by their investors demand for investments that are sustainable and that will limit climate change. Black Rock is the world’s largest asset manager with $17 trillion under management, has said its clients are looking to double their environmental, societal, and governance (ESG) investments in the next five years. Institutional investors have said they will stop investing in companies that are not sustainable (CISION PR Newswire, 2021; Losavio and Tsai, 2021). This has implications for transportation, infrastructure, and mobility. To that extent it is not a surprise that stocks such as Tesla experienced dramatic growth in 2020 as investors look for positive and sustainable environmental, societal, governance, and economic outcomes.

Citations

American Society of Civil Engineers, ASCE. (2017). ASCE. Retrieved February 14, 2021, from https://infrastructurereportcard.org/wp-content/uploads/2016/10/2017-Infrastructure-Report-Card.pdf

American Society of Civil Engineers, ASCE. (2020). Status Report: Covid-19’s impacts on America’s infrastructure. ASCE. Retrieved February 14, 2021, from https://www.infrastructurereportcard.org/wp-content/uploads/2020/06/COVID-19-Infrastructure-Status-Report.pdf

CISION PR Newswire. (2021, January 7). The $120 trillion investment trend transforming Wall Street. CISION. Retrieved February 14, 2021, from https://www.prnewswire.com/news-releases/the-120-trillion-investment-trend-transforming-wall-street-301202526.html

Fink, L. (2020). Larry Fink’s 2020 letter to CEOs: A fundamental reshaping of finance. BlackRock. Retrieved February 14, 2020, from https://www.blackrock.com/us/individual/larry-fink-ceo-letter

George, A., R. Kaldany, J. Losavio. (2019, April 11). The world is facing a $15 trillion infrastructure gap by 2040. Here’s how to bridge it. World Economic Forum. Retrieved February 14, 2021, from https://www.weforum.org/agenda/2019/04/infrastructure-gap-heres-how-to-solve-it/

Jimenez, F. (2020, September 17). Impact of COVID-19 on state transportation revenues. LAO-Legislative Analyst’s Office. Retrieved February 14, 2021, from https://lao.ca.gov/Publications/Report/4268

Losavio, J. and O. Tsai. (2021, January 18). 4 big infrastructure trends to build a sustainable world. World Economic Forum. Retrieved February 14, 2021, from https://www.weforum.org/agenda/2021/01/four-big-infrastructure-trends-for-2021/

Milberg, E. (2021, January 8). Are we talking about infrastructure the right way? SmartBrief. Retrieved February 14, 2021, from https://www.smartbrief.com/original/2021/01/are-we-talking-about-infrastructure-right-way

NAFB. (2021, January 30). Rural coalition sends letter to Biden on infrastructure. KTIC. Retrieved February 14, 2021, from https://kticradio.com/agricultural/rural-coalition-sends-letter-to-biden-on-infrastructure/

NPR. (2020, August 3). States are broke and many are eyeing massive cuts. Here’s how yours is doing. NPR KIOS. Retrieved February 14, 2021, from https://www.npr.org/2020/08/03/893190275/states-are-broke-and-many-are-eyeing-massive-cuts-heres-how-yours-is-doing

Stofan, J. (2021, February 9). Bumpy road ahead for Florida transportation projects. News4Jax. Retrieved February 14, 2021, from https://www.news4jax.com/news/florida/2021/02/09/bumpy-road-ahead-for-florida-transportation-projects/

United Nations Economic Commission for Europe-UNECE. (2016, July). Promoting people first public-private partnerships (PPPs) for the UN SDGs. Inter-Agency Task Force on Financing for Development. Retrieved February 14, 2021, from https://www.un.org/esa/ffd/wp-content/uploads/2016/01/Promoting-People-first-Public-Private-Partnerships-PPPs-for-the-UN-SDGs_UNECE_IATF-Issue-Brief.pdf

One Seamless Transportation System 3.0: 7 Tenants for the Future

19 Sunday May 2019

Posted by in Collaboration, Future, Leadership, Management, Strategic Planning, Sustainability, Transportation

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The future of transportation/mobility is about leadership. Seven tenants to improve this include:

  1. Safety: reduce crashes, fatalities, injuries, and property damage

At its base, every department of transportation, their partners, and stakeholders hold their first priority as safety. This is the value we put on life. As the future of transportation and mobility evolve, driven by demand for technology and collaboration, a safe system can be achieved with zero crashes, fatalities, injuries, and property damage. However, human nature cannot be controlled and periodic mishaps are bound to occur. Nonetheless, the future is bright for a safer transportation/mobility system.

  1. Mobility: reduce congestion, increase the capacity of existing infrastructure; connected and intermodal=one seamless transportation system

Every transportation department, their partners, and stakeholders were formed to improve mobility, whether that was getting out of the mud or the interstate highway system. Earlier, these departments were focused on engineering and construction using concrete, asphalt, and steel to predominately build a network of roads and bridges. The complexity for these departments has long since become increasingly multi-faceted, demanding additional disciplines, skill sets, and more understanding. The future of transportation and mobility, again driven by increasing demand for digital technology and collaboration, portends the opportunity for one connected, intermodal, seamless transportation system. The parts to this system are fast emerging in autonomous vehicles, one shop stop apps for routing, transfers and payments, and increasing demands from the public to make it so. This latter is driven largely by demand for access, social justice, greater diversity and other social values for fairness.

  1. Economy: improve access to jobs, products and services, origin, destination, and transport

There is a strong argument that transportation and mobility have been a primary driver of economic growth. This is an especially strong argument in valuing the interstate highway system. Other countries recognize that, too. That is why China is building the “One Belt, One Road” which will result in the largest road network in the world and India’s National Highways Development Project which will result in a road network of over 30,000 miles as an element of their industrial revolution. Our entire society depends on transportation and mobility for access to jobs, public safety, health care, food, recreation, and many others. This access can be as large as the interstate highway system or as small as handicap ramps at intersections and curbs. Transportation and mobility are important at every level of our society although many take it for granted. Increasingly and rightly so, departments of transportation are using various and emerging systems to more directly value the impact of transportation and mobility in the economy. In fact, many have this reflected in their mission statements.

As the future emerges and more efficient, environmentally friending fuels come into the market, the future transportation and mobility system may include a newer user-based system such as a vehicle miles traveled tax or VMT, emerging from the fuel tax invented by the State of Oregon in 1919. This has been demonstrated as feasible for over 10 years by Oregon and other states. As such, the transportation and mobility system may operate more like a utility than it does now.

As the demand for digital technology and collaboration has increased, it requires a workforce that knows and understands how to use them. The rate of change is so rapid that the entire transportation and mobility industry, educators, and job seekers are challenged to keep up.

  1. Environment: improve air, land, and water

As the social consciousness of environmental pollution, impacts, and climate change has increased, the efforts to control, mitigate and cleanup those impacts have correspondingly risen. While the environment and the impacts put upon it are often complex, the ownership is often ambiguous. Although many businesses are leaders in improving the environment, governments at all levels are frequently the leaders in regulating, mitigating and cleaning up impacts. As such, it is increasingly common for departments of transportation to be looked to lead in the environmental arena and mitigate the impacts on air, land, or water. My own sense is that these departments are generally very sophisticated and are up to the task.

  1. Costs: reduce overall costs

Most people, governments, and businesses look closely at the costs in dollars since that is a primary measurement of value in our society. We view our savings, reduced costs, or costs avoided to a lesser degree. These can be significant, especially when viewed broadly such as the time-value to the driver either sitting in traffic, not being able to get to work or appointments on time, emergency responders including ambulances being slowed or stuck in traffic, and the increased opportunity for secondary collisions. Still, other impacts on the environment may be affected and add to global warming. What are the impacts on plants and animals which share our planet and sometimes may represent the “canary in the coal mine”. While direct costs in dollars serve an important purpose, viewing the wider range of costs, including those that are difficult or may not lend themselves to being valued in dollars, can be a challenge. In fact, progress in some areas such as environmental impacts and climate change may not be adequately valued in dollars, in spite of the fact that there are real financial impacts. Taking the “big picture” of the real or estimated costs in dollars or other value systems is difficult. Still, this must be done to more fairly assess the impacts to and within the built and natural environments. Otherwise, decision-making, which always has inherent flaws or risks, will not result in optimal judgments. Our ability to make more informed decisions on the total costs is evolving and improving in many parts of our society, including in transportation and mobility. Some of the systems enabling decision-making are well founded and continue to be well used, such as engineering economics. Others such as balancing the built and natural environments are more challenging but are improving within the emerging discipline of sustainability.

  1. Time: reduce travel time

There is only so much time. Most of us are very protective of it. If we cherish our time, then it makes sense to place a value on it. Increasingly this is done. For example, placing a dollar value on a driver’s time and doing a calculation for a construction contractor’s incentive if work is completed early, or conversely charging a disincentive if work is completed late. Driven by increasing demand for digital technology and collaboration, the transportation/mobility system future promises a transition from a fragmented multimodal system to one connected, seamless, intermodal system that will optimize travel time for each of us.

  1. Support: leverage emerging, business intelligence/analysis, data, and decision-making systems

The six previous tenants are ideas that cannot be achieved without an underlying support system. While these are based on education and research and development, emerging technologies are building tools for creating better built and natural environments. The rapidly evolving arena of the Internet of Things (IoT), big data, business intelligence, and analytics, augmented and virtual reality and others are great, especially when considering the Apple iPhone was only released in 2007. Digital technology is a significant driver in this brave new world of transportation and mobility. Another significant driver is our human ability to collaborate for the greater societal good. Using these emerging tools to create a better transportation and mobility system will be a significant step.

The above seven tenants do not supplant the process of planning, design, construction, operations, and maintenance. At least until there is a better way, these do not supplant many other important elements such as a strong safety culture and program, annual needs assessments and their costs or savings, preserving the existing system, utilization of asset management tools, assessing and documenting infrastructure condition, and monitoring and managing traffic speed and volume.

It is the utility of all tools that will optimize outcomes in creating a better world for us and our posterity.

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”

– Socrates

One Seamless Transportation System

08 Monday Feb 2016

Posted by in Business Transformation, Dynamic Transportation Management, Future, Government & Policy, Strategic Planning, Sustainability, Transportation

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The idea of one seamless transportation system has existed for many years. Currently we have strong transportation modes, but one seamless transportation system is lacking. Over the past 100 years we have become a nation that is car-centric, and our system of roads, highways and interstate allow us largely to travel where we want, when we want. I count myself among the many that are car-centric. In spite of the negative impacts of this surface transportation system, it has driven our economy to be the strongest in the world. However, if we want to connect various modes—public transportation, airports, trains, marine and inland water navigation etc.—we are frequently left to our own devices in getting where we want, when we want. This can be inefficient, ineffective and frustrating. As an example, in many areas of the country public transportation does not connect to airports, train stations or water navigation. While several urban areas have developed these connections, there is still a long way to go.

One Seamless Transportation SystemAlthough infrastructure will continue to be important to add value by connecting these “edges”, digital technology can act as a valuable force-multiplier in bringing a multimodal system to an emerging intermodal system and finally to one seamless system. The value of connecting these edges adds enormously to our economy and quality of life. In many ways these “edges” reflect the richness and value at intersecting biomes, a fact known by ecologists for many years. The freight industry has long recognized that their business relies on one connected freight system. Otherwise, products would be delayed, not delivered and at times products would rot. A national freight program has emerged in recent years, bearing testimony to its importance. While there are still needed improvements in the freight system, the efficient movement of people has lagged. This is an opportunity to be seized.

Strategic planning to achieve one seamless transportation system is a collaborative affair with inclusive interests. There is no entity, to my knowledge, that is not dependent on some form of transportation. Our economy and quality of life depend on a safe and reliable transportation system. In fact, the history of human colonization, societies and economies on planet Earth could be told in the context of transportation with all of its components.

These are exciting and challenging times in transportation, with perhaps more changes in the next 10 years than in the previous 60, or even the previous 100. In spite of the challenges, including to find a replacement for the fuel tax, mobility is the imperative, not infrastructure, vehicles, digital technology or other elements alone. It is about convenience, quality and affordability, using transportation to improve lives. Thus, we are at a watershed moment in time that requires that we change the way we think and act to build one seamless “transportation ecosystem” that will save lives, save costs, reduce congestion, reduce pollution and mitigate climate change, create jobs, grow the economy and increase customer service and satisfaction.

The industry has been slowly moving in this direction for some time but has failed to realize any significant improvement in developing one seamless system. In a previous blog (The Future of Transportation…September 2015) I reviewed the history leading to the start of the interstate highway system. The general concept for an interstate highway system was created during the World War I era as a means for defense and to spur economic growth—the Pershing Map, named for General John J. Pershing. The concept for an interstate highway system was further advanced based on the experience of Dwight D. Eisenhower shortly after World War I where a transcontinental road trip took weeks, and then during World War II as he recognized the efficiency and speed of the German Autobahn. During the intervening 30 years there was general consensus as to what the interstate highway system should look like but there was no agreement as to how it should be paid for. The States did not sit idle then, as they are not now. Oregon invented the fuel tax in 1919 and within 10 years every state had adopted a fuel tax to build the infrastructure (roads) to primarily “get out of the mud”. States, including Kansas, Oklahoma and others, also built toll roads, just as the states and locals had built toll bridges for many years before, to increase connectivity and spur economic development. Finally, agreement was reached to adopt a federal fuel tax and fund the construction (not maintenance) of the interstate system through the National Interstate and Defense Highways Act of 1956. The evidence is overwhelming that the interstate highway system, and transportation in general, has improved our economy and quality of life.

The question now is will it take another 30 plus years to decide what our future transportation system should be and how to pay for it? This does not even include the needs of other forms of infrastructure for water, waste water, power etc. that our society has become dependent on.

Once again, I believe the evidence is clear that states are leading the way in further developing transportation and how to fund it. However, this time there are two other events driving this:

  1. Rapidly evolving digital technology and
  2. Increasing demand for collaboration, especially with the private sector

Technology, especially digital technology, is evolving at breath-taking speed. As such, the public sector is not well suited to rapidly adjust to these changes in technology. The private sector is much better suited and again, I believe, there is evidence that the private sector will drive much of the transportation future. We are already witnessing this with Lyft, UBER, autonomous vehicles, connected vehicles, intelligent infrastructure, continuing to evolve intelligent transportation systems, drones, automated machine control, positive train control, just-in-time delivery services, Internet shopping and delivery, “big data” and resulting useful information, and other changes across all modes of transportation. Many of these technologies and businesses did not even exist a few years ago. This does not even contemplate other rapidly evolving technologies impacted by nanotechnology and other advances in materials.

Our societal values have also evolved. For example, we are much more aware of the risks to life and the economy from driving. Thus a safe transportation system is valued more highly than in the past. We recognize the impact that the built environment can have on our natural environment and the attention to maintaining and improving the natural environment has dramatically increased, largely since the National Environmental Policy Act (NEPA) of 1970. Other aspects such as societal justice has evolved. In reality there is no single solution to the way our society evolves, it is more a matter of weighing informed choices in decision-making. This has resulted in a relatively new field—sustainability—which “balances” our society, environment and economic interests.

The number of licensed drivers and privately owned vehicles is declining. Our society is aging as “baby boomers” move into “retirement” age, an indication of changing demographics. While oil is currently in abundance, it is not a renewable resource and the use of alternative fuels and more efficient vehicles continues to evolve. Debt is increasing, whether our national debt or the result of student loans. Wages are static. These only begin to portend some of the changes in our world, with little deference to the changing international landscape.

So, it is important, if not essential, to be as inclusive as possible when doing strategic planning. While strategic planning is more precise for the relative near-term, the long-term is much less clear. Perhaps the best we can do is to develop and be mindful of a “cone of possibilities” which so-called futurists propose. How many years a plan should be forward looking is open to discussion. However, strategic planning could be easily constructed along time horizons of a few years and up to 50 or more, realizing that longer time frames will be less certain with a point of diminishing returns. In my opinion, these strategic plans should be updated perhaps every five years based on how rapidly our world is changing.

While the visioning of a strategic plan is important, it is also important to identify next steps with specific and measurable performance measures and who is responsible for actions.

Since our economy and quality of life will be impacted by what we do, all citizenry interests must be represented to include pedestrians, bicyclist, motorcyclists, automobile drivers, truckers, rail roads, aviation, digital technology interests, ride sharing/taxi cab providers, public transportation, government, emergency responders (including fire departments and police), utilities, schools and academia, consultants, contractors, economists and economic developers, environmental interests, business owners, marine and inland water shippers, ports and others. While participation by these various interests cannot be guaranteed, outreach is necessary to solicit as much participation as possible. This must be balanced to avoid being “frozen” into inaction. The goal is for general consensus, knowing that complete agreement is rarely, if ever, obtained.

With these efforts, it is hoped that our societal buy-in for transportation strategic plans at the federal, regional, state and locals will advance our progress in developing one seamless system, using transportation to improve lives.

“Explore this next great frontier where boundaries between work and higher purpose are merging into one, where doing good is good for business.”

-Richard Branson

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

-John Quincy Adams