More people. More cities. More buildings. More infrastructure.
Infrastructure is turning out to be an asset class that, while appearing mostly immeuble, is fundamentally different from real estate requiring, among many things, strong and more diverse technical skills to develop and manage. A recent article about the EDHECinfra Days Conference says this asset class may have reached a defining moment.
The word itself originated in 19th century France, as that part of a roadway beneath its surface material. Infratranslates as below, beneath, and within. It used to be called public works. A broad definition of infrastructure is general public facilities that are essential prerequisites for economic life. The editors of the Economics of Infrastructure Provisioninglist several subcategories of infrastructure: tangible infrastructure such as roads and water, energy, and information distribution systems; intangible infrastructure like social services; institutions such as legal systems; culture and traditions. Some forms of infrastructure are considered merit goods – museums, public clinics and schools, for example – because the public at large may not understand their larger value.
Tangible infrastructure includes the roads, bridges, streets, plazas, surface, underground and elevated tracks, tunnels, pipes, sidewalks, cables, airports, towers, water-ports and waterways that accommodate movement of pedestrians, bicycles, animal and powered vehicles (airplanes, trucks, trains, automobiles, motorcycles, and other movement technologies), energy, information, water, boats, barges, waste and other things requiring movement. Surface infrastructure networks for moving people and goods is both coarse-grained (major arterials and controlled access highways, waterways, mass transit, local and trunk rail lines) and fine-grained (streets, bikeways and sidewalks). Infrastructures, like buildings, can decay and become obsolete but they last for multiple generations. It’s almost everywhere but seriously concentrated in metropolitan areas. Early research on public infrastructure as a capital good says its impact on private sector output is small but positive and statistically significant in all cases at several geographic levels. But how the actual benefits to metropolitan areas can be measured remains unclear.
What is, what should be, what is not and what should not be classified as infrastructure are questions raised at the EDHECinfra Conference. They’ll need resolution. Since it’s an integral part of a rail system, shouldn’t rolling stock be regarded as infrastructure? Some think it should. Then what about flying stock – the airplanes, the lighter-than air contraptions, the helicopters? Is the air above us infrastructure or just specific segments of it? Should vehicles using street and systems be considered infrastructure. What about when they’re fully automated and we no longer control them? Implementing infrastructure plans often requires eminent domain takings. The UC law professor Richard Epstein says the arbitrary use of state takings power works best “to weave the threads of infrastructure – highways, railroads, telephone easements, rivers and the like – and not for squarish plots of land used for other purposes.” Never mind airports.
What’s known about real estate doesn’t apply much to infrastructure. Imagine the real costs of perversely deferred infrastructure maintenance. Flint, Michigan comes to mind. Interfaces between one infrastructure and its various portals, and between one infrastructure and another, present problems with opportunities requiring solutions beyond engineering. Where does the common carrier concept fit? How can they be classified for typological purposes? One hopes it won’t evolve into something like ICSC’s typology. It’s like the one Jorge Borges mentions from the Celestial Emporium of Benevolent Knowledge, “in which it is written that animals are divided into: (a) belonging to the emperor, (b) embalmed, (c) tame, (d) sucking pigs, (e) sirens, (f) fabulous, (g) stray dogs, (h) included in the present classification, (i) frenzied, (j) innumerable, (k) drawn with a very fine camelhair brush, (l) et cetera, (m) having just broken the water pitcher, (n) that from a long way off look like flies.” Since they’re networks, to what extent will some need to have an exponential form and others a scale-free form to work effectively and handle complexity, network risk, failure and other extreme events? (Maybe there’s a PhD effort here.)
Complexity has become academically popular, and complexity theory addresses self-organising (or what appear to be) characteristics of systems. A premise in complexity theory is that small initiated changes may result in unexpected and large changes. Such changes can be naturally or humanly initiated or sustained and be developmental or destructive. It’s been said that bad things happen fast, while good things happen slowly. Yet some bad things don’t simply suddenly happen but emerge very, very slowly: so slowly you don’t know they’re in the process of happening. In X-Events, John Casti says that societies have grown too complex and become highly vulnerable to extreme events.
Infrastructure’s worldwide importance is reflected in articles in international media like The Economist, in the World Bank’s interest in funding infrastructure that promotes urban resilience, in conferences like McKinsey’s Global Infrastructure Initiative. Infrastructure construction at a large-scale is already well underway in developing countries as urban populations swell. New infrastructure is needed in developing countries and deteriorated and obsolete infrastructure needs to be replaced in developed countries. One or more new disciplines will probably emerge. McKinsey estimates US$40trn, $3.3trn a year, is likely to be invested in urban infrastructure across more than 4,400 cities around the world over the next 20 years. It’s likely to be significantly more.
