Early Planning Can Curb Costs, Climate Stress on Neglected Infrastructure

The growing impacts of climate change—from near-term events such as hurricanes, floods, and wildfires, to longer-term risks, including higher temperatures, droughts, and sea-level rise—have wreaked havoc on the nation’s critical infrastructure in recent years.

Repairing damage to roads, bridges, public transit, and drinking water systems from increasingly severe climate effects will cost state and local governments billions over the coming decades: Climate-related damage to paved roads alone could incur up to $20 billion for repairs by the end of the century. And these costs are compounded by the widespread, long-term neglect of essential infrastructure systems. For instance, as of 2021, 43% of U.S. roadways were in poor or mediocre condition, with backlogged maintenance costs estimated at $435 billion.

Fortunately for state and local officials facing these daunting costs, estimates suggest that adapting critical infrastructure to the consequences of climate change, such as by implementing green infrastructure, such as rain gardens and permeable pavement, or relocating vulnerable assets, could reduce damage from climate-related extreme weather events—and the associated costs—by up to a third. To help governments make cost-effective investments in adaptation and resilience, The Pew Charitable Trusts published a brief, Climate Change Poses Risks to Neglected Public Transportation and Water Systems, that examines the risks to the nation’s transportation and water infrastructure from a changing climate and chronic underfunding. The brief draws on examples from proactive governments and recommendations from resilience and capital planning experts to outline a framework for assessing vulnerabilities and managing adaptation needs.

These efforts will involve their own significant upfront outlays of as much as $10 billion for roads and almost $1 trillion for water systems through 2025. And because climate change will affect infrastructure throughout the U.S. in myriad ways, no single approach can address the implications for all state and local governments. But by following a framework, decision-makers can better understand the risks and develop tailored, cost-effective, and holistic approaches for prioritizing investments in vulnerable infrastructure to ensure that critical public systems are resilient to current and future climate risks and can continue to serve the public. Although proactively addressing climate-related risk to infrastructure requires steep initial investments, ultimately the benefits far exceed the costs.

The core steps of the framework are as follows:

1. Identify climate vulnerabilities and risks by region and infrastructure type. States and localities should inventory their capital assets, including the location and condition of each, and then use that data to pinpoint climate hazards and conduct climate vulnerability and risk assessments on existing assets as well as future infrastructure projects. In many cases, governments can use data from existing transportation and water asset inventories. But when that is lacking, officials should consider establishing robust baseline inventories and collecting data on the condition and existing investment needs, such as for deferred maintenance, of all assets to ensure that subsequent analyses are grounded in solid data. Importantly, to ensure their processes are effective and their results reliable, officials should tailor their risk assessments to the unique challenges, circumstances, and administrative processes of their jurisdictions.
2. Define the parameters of the vulnerability assessment and fiscal analysis and examine direct and indirect climate risks and necessary expenditures. Once they have conducted risk assessments, governments should use the findings to examine the direct and indirect impacts to infrastructure from hurricanes, wildfires, floods, droughts, and other severe weather events. Direct effects include acute and chronic physical harm and the costs of necessary adaptation measures, while indirect impacts are broader economic consequences, such as a loss of revenue from service disruptions or higher borrowing costs if credit agencies cut municipalities’ credit ratings because of exposure to climate risks. Additionally, transition risks—costs associated with efforts to adapt infrastructure and reduce greenhouse gas emissions—may threaten the reliability of revenue sources that states rely on to fund infrastructure improvements, such as when increased use of electric vehicles reduces fuel tax collections.
3. Consider, plan, and prepare for climate challenges. After assessing the risks and associated costs, states and localities should develop resilience improvement plans or integrate infrastructure systems into long-term financial plans, such as capital improvement, state transportation improvement, state water, or other plans that inform budgeting processes. This should also include developing an approach, set of criteria, or scoring methodology to help ensure that policymakers’ spending decisions are based on the assessed levels of exposure and risk to critical systems. Officials can also look to incorporate successful models and holistic approaches used in other jurisdictions, including California, Massachusetts, and New Jersey.
4. Develop a strategy to pay for climate costs. Merely incorporating the long-term costs of climate effects into financial plans is not enough—policymakers should also look for ways to pay for these costs. Governments should identify a mix of potential funding and financing sources, such as federal grants for resilience and adaptation; debt, tailored to the types of infrastructure and governments’ financial needs; and any available state or local resources. Additionally, states can establish or strengthen capital reserve funds or statewide disaster accounts to help cover unexpected costs from natural disasters or extreme weather events.
5. Monitor, evaluate, and adjust periodically. Because environmental conditions are continually changing, states should develop a routine and transparent process for ongoing review and assessment of climate impacts and adaptation efforts. Approaches should include targets and metrics for resilience but also should be designed to integrate new information, data, or tools as they become available. To enhance coordination, states can also develop tools, templates, and guides to help localities apply state-level approaches.

Finally, when implementing this framework, officials should ensure that the process prioritizes not only the budgetary and fiscal consequences of climate events and infrastructure disruption, but also—and most importantly—the potential effects on people and communities.

Fatima Yousofi is a senior officer and Mollie Mills is an officer with The Pew Charitable Trusts’ state fiscal policy project.