Environmental and Urban Economics

The Washington Post has published a piece stating that the Secretary of Transportation, Peter Buttigieg, is the big winner of the Biden Infrastructure Bill as he will be attending many ribbon cutting ceremonies as grateful local mayors shake his hand. 

Economic research offers many insights here about the efficiency and equity effects of this multi-billion dollar investment.

Point #1:  This is an irreversible investment.  When a city builds a new subway line, this billion dollar project cannot be later sold on Ebay and use the $ to do something else.  In contrast to light rail and subway lines, dedicated buses feature more option value because they can be sold off or redeployed on different routes in the same city.

Bill Gates argues that we were insufficiently prepared for COVID-19.  Does our failure to adequately prepare for this crisis portend a future under-investment to invest in self-protection to reduce our exposure to climate change risk?

In the case of COVID, we had enjoyed 100 years of little exposure to vast contagion.  This certainly played a role in lulling us into a complacent mindset.

A few thoughts about the pending Infrastructure Bill.

What Criteria Will be Used to Allocate the Money?

An efficiency criteria would state that it should be allocated to those places and on those projects within such places that offer the greatest economic and quality of life impact.