Daryl Dulaney is President and CEO of Siemens Industry, Inc.
Cities today are battling many challenges. Growing unemployment, deteriorating infrastructure, finite water supplies, congestion, and shrinking budgets continue to plague some of America's biggest and most populated urban centers. By 2050, experts predict 6.2 billion people will live in cities worldwide–nearly as many as are in our current worldwide population. Today, 84 percent of United States residents live in metropolitan areas, and that number will expand steadily. Cities will be forced to accommodate a huge influx of people—many more than their aging infrastructure was built to support.
But there's good news here too. According to a recent Brookings Institution study, 366 metropolitan areas in the country produce 85 percent of U.S. exports. The study found that "the economic future for states hinges largely on the performance of their metropolitan economies, which bring together the innovative firms, educated workers, and critical infrastructure that will propel the next wave of U.S. economic growth." In short, we need to focus on our cities, and take another look at the importance of developing a strong, functioning, sustainable infrastructure to help turn cities—and our economies—around. [See a collection of political cartoons on the economy.]
As a company that has helped many countries around the world further their development, we have seen the importance of a strong infrastructure to a region's ability to maintain economic growth. And history bears this out as well, with an indisputable correlation between public infrastructure investment and economic growth: Between 1950 and 1979, public investments in core areas—transportation, water management, and electricity transmission—grew at an average annual rate of 4.0 percent. Overall gross domestic product growth averaged 4.1 percent per year over that same period. And between 1980 and 2007, public investment growth slowed dramatically, to an average 2.3 percent. GDP growth also fell in this more recent period, to a 2.9 percent average annual rate.
We've also seen this ourselves: Building an infrastructure builds jobs.
General upgrades to water and traffic solutions, as well as building updates, will not only help cities better meet today's population demands but also foster job creation in several hard-hit industries today. According to a recent Department of Treasury report: 80 percent of jobs created by investing in infrastructure will likely be created in three occupations—construction, manufacturing, and retail trade—which are among the hardest hit from the recession. [See the top 10 cities to find a job.]
In Atlanta, there are some immediate areas for infrastructure improvement. Let's look at traffic: we have found that we can reduce travel and wait times dramatically, just by better monitoring and adjusting traffic signal timing. When you improve travel times, you increase productivity, reduce waste and improve efficiencies for everyone. One initial test of a control system for five intersections in metro-Atlanta, showed an up to 32 percent decrease in morning rush hour travel time and a 14 percent reduction in the afternoon rush hour. There were also substantial reductions in vehicle delays and stops which reduced fuel consumption and, importantly, emissions.
And then there's the issue of water...or lack of it, in Atlanta's case. As we know, droughts affect agriculture and industry, key drivers of jobs in this state. But there are already many solutions being used in the country today that could be considered for Atlanta's dire water situation. For example, some water recycling and purification technologies are being used very successfully in Orange County California right now, helping them produce millions of additional gallons of high-quality water for regularly drought-threatened areas.
It's true that many of these solutions cost money. City officials have said that the city of Atlanta needs $922 million alone to update and repair its transportation infrastructure. That is, indeed, a daunting number. However, there are several cost-effective solutions which are possible, and more appropriate than ever, given today's economic situation.
By simply incorporating some new, efficient building technologies, we can help lower lighting costs by up to 80 percent and overall energy consumption by up to 50 percent. But do people realize that such retrofit investments can sometimes be made with little or no capital investment from cities? (These are often fully paid within 10 years as a result of their decreased energy consumption.) This can be accomplished through a contracting method called "performance contracting" which guarantees increased energy efficiency through the performance of new equipment upgrades. When tied to energy rates that are based on the historical increase in energy rates, these upgrades can yield direct savings that can then be applied to pay back the financing on the upgrade. [See a slide show of 5 bright spots in the U.S. economy.]
Performance contracting can be a very attractive way to improve a city's energy efficiency and upgrade its infrastructure to accommodate a rapidly growing population, challenged with a tight budget. Very simply, it is a way for cities to make critical investments even when they are low on capital.
The technology is here. The workers are here. And now the financing is here too. What are we waiting for?