Introduction to Infrastructure: An Introduction to Civil and Environmental Engineering

Chapter Fourteen

Economic Considerations

Chapter Outline

• Introduction
• Introductory Case Study: China National Trunk Highway System
• The Relationship Between Infrastructure and the Economy
• Sources of Funds
• Consideration of Project Economics
• Outro

Learning Objectives

After reading this chapter, you should be able to:

1. Explain the relationship between infrastructure and the economy.
2. List common funding sources for public infrastructure projects.
3. Explain economic equivalence.
4. Determine the net present value of simplified infrastructure projects.

Introduction

Consider the fact that you can buy fresh produce during the winter in the northeastern United States at prices that are often not noticeably different from what you would pay in the summer for local produce. One of the reasons that these low prices occur is that very low transportation costs are possible because of the investment that federal, state, and local governments have made in infrastructure. If the condition of the infrastructure that helps move the produce (e.g., the interstate highway system and rail system) was less effective than it currently is, produce would take much longer to reach its destination and the price per pound would escalate. Even worse, if the infrastructure was in very poor condition or nonexistent, you wouldn't even be able to buy fresh produce during the winter.

Alternatively, imagine a hypothetical ...