Title: Public Spending on Transportation and Water Infrastructure | Congressional Budget Office
Headings: Public Spending on Transportation and Water Infrastructure
Public Spending on Transportation and Water Infrastructure
Summary

Content: and the remaining categories of water transportation and water resources accounted for 5 percent. The Role of Government in Funding Transportation and Water Infrastructure
In the United States, the public sector rather than the private sector typically provides funding for transportation and water infrastructure. Whether it is more efficient for the federal government to provide that funding depends on the type of infrastructure and the likelihood that such infrastructure will be undersupplied if its provision is left to state and local governments or to the private sector. Evidence suggests that spending for carefully selected infrastructure projects can contribute to long-term economic growth by increasing the capital stock and raising productivity. ( During a prolonged economic downturn, infrastructure spending can also mitigate losses in output and employment.) Realizing the potential gains from public spending for transportation and water infrastructure depends crucially on identifying economically justifiable projects—those with benefits to society that are expected to outweigh costs—but a variety of factors make identifying such projects difficult. In addition, the demand for infrastructure could be better aligned with the existing supply by putting a price on those services that reflects the full cost of using infrastructure, including both the cost of providing infrastructure services and the costs that one person’s use imposes on others. The federal government could make its current funding more effective by ensuring that the costs of infrastructure projects are allocated across levels of government on the basis of where the benefits are expected to accrue. Otherwise, for example, federal funding for infrastructure that provided benefits primarily at the local level could result in too many projects, or projects that are too expensive, being undertaken. In addition, individuals and businesses might consume too many infrastructure services relative to the cost of providing those services—because the federal share of that cost is largely borne not by local residents but by taxpayers throughout the country.