Defining the Total Economic Disruption of Failed Infrastructure for a City
Updated: Mar 4, 2020
By: Mark Reiner, PhD, PE; Steve Fisher, PhD, PE; and Andrew Fang, PhD
Does failed infrastructure always cause a disruption to city life, or are some failures hardly noticed? For those failures that do disrupt city life, will cities continue to react, or take a more proactive approach to prevent failures? Can this proactive approach be economically justified utilizing existing city data and personnel?
This blog series concludes by discussing a methodology for cities to calculate the total costs of failed infrastructure that causes property damage within the distributive Roads and Buried Infrastructure Decay paradigm (RABID as defined in Part 1a). We specifically state ‘Distributive’ because infrastructure ‘disruption’ has been defined solely by the loss of service to End-users; for example, power outages after a storm . But it should be noted that infrastructure disruption occurs at all infrastructure transitions; for example, Supply (e.g. Cape Town’s ‘Day Zero’) and Transmission (e.g. PG&E’s Camp Fire). It is critical to note that viewing disruption in the RABID paradigm is primarily the result of deferred maintenance (aka “technical debt” ) that causes decay and the hazards of collocating multiple sectors infrastructure in close proximity (there are over 650 water main breaks per day in the US, and the roads of New York City are cut open over 550 times per day in order to access buried infrastructure). These hazards pose chronic threats to a city’s ‘livability’, and the frequency will only intensify over time. In order for city leadership (elected officials, city manager, public works director, senior staff, etc.) to be an empowered stakeholder in the city-utility-citizen relationship, a methodology needs to be in-place to better economically quantify the total costs when any sector of infrastructure fails and disrupts day-to-day city life.
As described in Part 2, the utilities that provide infrastructure services regard much of the costs of property damage resulting from failures as indirect costs, i.e. those that the city and impacted residents must bear. Yet, those costs are indeed direct for those that must pay the bills. In order to determine the total costs of failure, those indirect costs must be quantified. That is, the city needs to quantify the Total Economic Disruption (TED) of failed infrastructure. If formally integrated into the infrastructure maintenance budget, a robust asset and risk management system that proactively addresses potential infrastructure failure could result. Using TED as a substitute for indirect costs of failed infrastructure (and the life cycle cost indicators of the RABID paradigm, discussed in this previous blog) is a critical step to establish key performance indicators (KPIs) for the total costs of urban infrastructure. The second step is to define where failed infrastructure in a city would actually cause a ‘disruption’ to city life.
Defining Disruptive Areas for a City
What if the scope of work for urban planners included the task of classifying areas that would be disruptive if failed infrastructure caused road closures and property damage? They would need uniform classifications to facilitate the ranking of importance that certain residential, economic or commuter corridors are for maintaining normal city life. Rather, current urban planning either adopts custom city characterizations, or most often, use the engineer’s language of classifying corridors by road types: e.g. arterial, collector, local, highway, 2x2, etc. Emergency and evacuation routes are identified simply as – emergency or evacuation routes. But these routes are not evaluated for the potential of disruption that underlying infrastructure could pose (think arterials and bridges closed or failed).
Cities should self-define, utilizing existing data sources and personnel, where failed infrastructure would cause a disruption. A survey could be conducted across city departments to identify data sources that could be useful. Possible data sources include:
sales tax (commercial) as a portion of the city’s gross domestic product (GDP),
primary employer use tax (PEUT) that crosses the industrial and commercial sectors,
vehicle miles traveled (VMT) as a percent of the city’s total transportation model,
residential, commercial, and industrial density areas by block,
historical and tourism districts,
key public transit infrastructure locations, and
specific socioeconomic and demographic characteristics from census data to better characterize a city.
The above data sources could be readily incorporated into heat maps for a spatial visualization as to where the more critical areas exist across the city boundaries. Additional information could then be used to apply customized weighting criteria to fully characterize the impact of failed infrastructure. Consider how the following criteria may help refine the ‘why’ an area/neighborhood should remain ‘disruption-free’.
Demographics: Determination of residential and commercial corridors should be considered with equity of the city’s population in-mind.
Scale: The size and condition of collocated infrastructure sectors; i.e. large-diameter aging water mains vs small-diameter, or structurally deficient bridges.
Season: Sales taxes often change seasonally, i.e. summer tourism vs year-round sales. Also, the difficulty in repairing failed infrastructure due to weather conditions.
Major Events: Major events that might not be connected to weather; e.g. football games, concerts, and parades.
Traffic: Commuting or evacuation corridors that should never be interrupted.
Specific Infrastructure: Specific assets where failure would cause a public health threat.
Public Health: Certain industries or facilities that would lead to significantly more injuries, fatalities, or disease due to infrastructure failure.
By selectively weighting and combining these key data sources, boundaries can be defined and labeled by the most prominent segments of road that transverse each area. The reason for labeling an area by the key road segment(s) is that the city’s disruption-free areas are now associated with the infrastructure vulnerabilities of RABID. This creates critical corridors that should be discussed in a city’s resilience plan. Currently, cities to not employ a comprehensive methodology for evaluating the vulnerabilities of existing infrastructure at the block level. See this blog that reviews Boston’s - Resilient Boston - report.
TED for Cities Methodology – Pre-failure Stages 1 through 4
While any road/lane closure will impact some residents and businesses, most closures will not interrupt overall city life. A city must identify boundaries, and justify whether closures in certain areas of the city are disruptive or not. The goal in the first four stages of TED (see Table 3) are pre-failure, proactive exercises to define critical areas based on the data sources listed above. Each of the areas then are defined by a main road segment. As every city is different, the ranking of the road segments will depend upon the weight given by the urban planners. An example matrix is provided in Table 2.
For smaller cities without the luxury of ample data, or staff, this blog assumes that available staff have a more intimate knowledge of the key areas and could simply define them on a physical map. This requires a nuanced discussion between city leadership and public stakeholders as to the selection of prioritized areas.
The final proactive stage (stage 4) is to translate key city services and revenue into useful daily economic units. For example, the cost of repurposing city police/fire staff to respond to a site of failed infrastructure (by hour and overtime), or normalizing sales tax and PEUT that is reported on a monthly basis to a daily value.
TED for Cities Methodology – Post-failure Stages 5 through 12
The next stages in the TED methodology occur after infrastructure failures in the areas now designated as disruption-free zones. Stages 5 and 6 require the city to geospatially identify the impacted area where property damage may have occurred and if any damage to collocated assets (e.g. a water main break also damages the road and buried electric assets). Stages 7 and 8 use the key economic data of having any city services repurposed to the site of failure. And, Stage 9 can be determined from police reports whether the failure resulted in any injuries.
The most difficult post-failure data to obtain will be the actual economic damages suffered by each impacted citizen, residence, and business – Stage 10. From those experiencing direct damage to their self and property, their personal costs become the sum of any direct compensation by the utility and successful insurance claims, subtracted by the sum of increases in insurance premiums, out-of-pocket capital, health expenses not covered by insurance, and income lost during event. While this is very personal information, it is also a source of tension between those impacted and the city (regardless if the utility is to blame). Most residents and businesses that experience the economic impact of failed infrastructure, even if fully compensated, will be frustrated with the loss of services and will look for an entity to blame. The city can claim that the blame resides with a certain utility or department, but seeds of tension will be created between the city and its citizens and businesses. This tension includes even the perception of unreliable services. Residents and businesses need a venue to express, and quantify, their personal impact.
Stage 11 then is a summary of all costs that the city is paying that are not part of the utility’s ‘direct’ costs. That is, this is, TED is now a replacing the ‘indirect’ costs of infrastructure failures. The final output is the TED KPI that could be used by cities to compare and benchmark in the following ways:
Total $/year of economic impact of failed infrastructure,
Total $/sector/year of economic impact that could be used in stakeholder engagements regarding deferred maintenance,
Total Hours of Service Interruption in ‘disruption-free’ areas that can be converted to a cost paid by the residences and businesses, and
Total Public Health Impact, reported as Disability Adjusted Life Years (DALYs).
Stage 12 is the summary of how the city will communicate to the public that the status quo is to pay more-for-less and a proactive approach against future failures would be fiscally conservative.
The reality of failed infrastructure is that the economic impact is not evenly distributed due to indemnification. Loss of services, property damage, and impacts to human health and the environment are immediately felt within a limited and specific geographic area of a city, i.e. where ‘disruption’ actually occurs. While one-block away, business and residential life across the city may continue as normal. This chronic state of decay will only be qualified as a crisis if the economic impacts are quantified over time. In order to change the status quo of deferred maintenance, the quantification of TED is required for cities to better be an empowered infrastructure stakeholder in the utility-city-citizen relationship.
The city as a key utility stakeholder will find that expressing TED as an unnecessary financial burden will help move forward more proactive approaches; including replacements before repairs (Part 1b) or changing the RABID paradigm all together. After all, there are no silver bullets to reverse the course of deferred maintenance and the associated outcome of decaying (aging) infrastructure. We must first have a vision for a resilient city foundation and take the time to understand the total cost of infrastructure failures and communicate this with the public in order to define ‘the true cost of infrastructure.’
Parts to this blog:
Part 3: Defining the Total Economic Disruption of Failed Infrastructure for a City
 World Bank Group, 2019. Lifelines : The Resilient Infrastructure Opportunity Lifelines
 The Atlantic, 2019. The Toxic Bubble of Technical Debt Threatening America; https://www.theatlantic.com/technology/archive/2019/10/california-fires-and-pge-toxic-debt/600979/