Marine Infrastructure Investment Offers Economy-Wide Returns
A new report, prepared by Inforum at the University of Maryland for the U.S. Committee on the Marine Transportation System (CMTS), demonstrates that increasing investment in marine transportation system infrastructure above a business-as-usual scenario will improve U.S. economic performance.
An Economic Analysis of Spending on Marine Transportation System (MTS) Infrastructure (April 2020) indicates that increased investment in infrastructure such as ports and inland waterways would deliver higher levels of GDP, more jobs, increased incomes, improved trade performance and higher productivity.
Compared to a baseline forecast that assumes continuation of limited public infrastructure investment, the report finds the following:
• In the short term, enhancing the level of infrastructure spending would boost jobs by between 54,700 and 182,500 jobs in 2025, depending on the scenario.
• By 2030, the level of real GDP would rise between about $8 billion and $41 billion in 2012 dollars.
• Because of cumulative effects through time, by 2045 infrastructure investments could produce economy-wide returns of between $2 and $3 per every $1 spent, after adjusting for inflation.
The quantitative analysis underpinning the study uses data that spans a historical period ending in 2019, before the impact of the COVID-19 pandemic. Therefore, while the basic conclusions of the study remain valid, the magnitude of the benefits of marine transportation system investment will likely be smaller. For example, the report notes that, in the short term, additional investment will boost demand in the economy as construction workers spend their incomes on goods and services. Under current COVID-19 response practices, however, there will be fewer operating businesses where construction workers can spend their incomes, at least for a time. This means the short-term demand boost stemming from capital outlays will be smaller than estimated in the report.
However, the study finds that 80 percent of the gains to GDP from 2020-2045 will be due to higher productivity (output per hour worked), and the rest to increased employment. So, even under these changing economic times, if employees only gradually return to work, the country should still expect to see noticeable gains in GDP.
The report is available here.