A G-20-backed infrastructure group says global infrastructure needs through 2040 total $94 trillion, but if countries don't increase their infrastructure spending, funding will fall short of that goal by nearly 20%, according to Reuters.
The Global Infrastructure Hub, which studied 50 countries and seven industries, said yearly spending on critical projects must increase to 3.5% of gross domestic product from 3% currently. The U.S. will have the biggest gap in funding with a forecasted shortfall of $3.8 trillion. China's infrastructure demands, $28 trillion, represent almost 30% of the world's needs.
Population growth is driving infrastructure projections. The world's population is expected to grow by 2 billion by 2040, with a 46% increase in people living in urban areas.
Knowledge of a gap in U.S. infrastructure funding isn't anything new. The latest American Society of Civil Engineers report said it would take approximately $4.6 trillion by 2025 to make the necessary U.S. infrastructure improvements — a figure that has increased by $1 trillion since the ASCE's last report in 2013. The shortfall will cost the country millions of jobs and trillions in gross domestic product over the next decade.
With the federal government in a holding pattern, states are stepping up to address the potential economic impact of substandard surface transportation. California, for example, approved a $52 billion infrastructure program earlier this year and plans to pay for it through an increase in motorist fees and a hike in the state gas tax. Drivers of the initiative include deteriorating roads and structurally deficient bridges.
The state has roughly $130 billion in pending infrastructure repair work, and the ASCE estimates that around half of the state's roads are in poor condition.
Indiana recently launched its own infrastructure program, with plans to spend $4.7 billion on state and local road and bridge construction and repairs. In April, when Indiana Gov. Eric Holcomb announced that additional gas taxes and vehicle registration fees would help finance the plan, he said that the state residents wouldn't mind the extra spend if the money was being used to improve their roads.
That sentiment was echoed in a recent Bloomberg poll, which found that 55% of Americans nationwide favor an increase in the federal gas tax if the revenue was used to improve infrastructure in their states. That could become a reality. Transportation Secretary Elaine Chao said earlier this month that an increase in the federal gas tax could be on the table as a way to fund the Trump administration's proposed $1 trillion in infrastructure work.