Between the Poles

Waste and inefficiency of US underground utility damage prevention systems estimated at $61 billion annually

The 2019 estimated national cost of damage to underground utilities estimated by the CGA is approximately $30 billion annually. In a recent report the Infrastructure Protection Coalition estimates that an additional $61 billion in waste, inefficiency, and excess cost is embedded in the system. It has proposed 13 recommendations that would eliminate $40 billion of the combined $90 billion in damage and waste  costs over a 3- to 5-year timeline. The cost of implementing the recommendations is estimated at $1.2 billion. The return on investment (ROI) for implementing these measures is estimated to be $33 for every $1 invested in improving the system.

Background

Underground utility damage is expensive. Several jurisdictions have attempted to estimate the cost of underground utility damage for individual incidents and for entire national economies. Costs can be broken down into direct costs and indirect costs. Direct costs include the costs of sending a crew to repair the damaged pipe or cable. Indirect costs include many factors that are often hard to quantify such as traffic disruption, injuries and fatalities among workers and the public, and the lost custom that local businesses experience. An important conclusion from the research into the cost of underground utility damage is that it represents a major drag on national economies.

Direct costs include the costs of sending a crew to assess and repair the damaged pipe or cable. Indirect costs include the impact of traffic disruption as a result of the strike, any injuries and other impacts on the health of the workers directly involved and the public in the immediate neighbourhood, and the lost custom that businesses experienced as a result of the traffic disruption. Research in the UK estimates that the true cost is about 29 times the direct cost.

In the US the CGA compiles information on the direct cost of damage to underground infrastructure for different types of underground infrastructure based on voluntarily submitted damage reports.  At an average cost of $4000 per hit, the CGA estimates that the direct cost to the U.S. Economy is about $1.5 billion and that the total cost to the US economy is $31 billion annually.

Return on investment (ROI) studies of the benefits of improving the mapping underground infrastructure on highway construction projects conducted since the late 1990s have consistently revealed a large return-on-investment. In 2007, the Pennsylvania Department of Transportation commissioned Pennsylvania State University to study the savings on Pennsylvania highway projects and found a return on investment of US$21.00 saved for every US$1.00 spent for Subsurface Utility Engineering (SUE).  The UK's Geospatial Commission estimates that the ROI of the National Underground Asset Register, the implementation of which has just kicked off, is £30 for every £ invested by the government.

Inefficiency in states' implementation of damage prevention system

A comprehensive, independent, in-depth examination of every state's one call system including Washington, D.C. and the city of Chicago has concluded that failures in the 811 systems cost $61 billion a year in waste and excess costs and create unnecessary hazards for public safety, particularly in states where the implementation and accountability are most lax. The reasons for the waste and cost overruns found in this study include: utilities and third-party locators sent to locate lines for construction projects that do not happen; poor instructions given to locators, causing wasted time or additional work; locate marks destroyed by construction and then requiring repeat locates; and late locates leading to contractors having to wait and delaying projects.

Thirteen recommendations have been proposed by the Infrastructure Protection Coalition on a state-by-state basis to eliminate and mitigate these costs.  It is estimated that these measures would eliminate $40 billion in damage and waste costs and that these recommendations could be implemented for approximate $1.2 billion over a 3- to 5-year timeline. The ROI for implementing these measures is estimated to be $33 for every $1 invested in improving the system.  Unquantifiable benefits such as severe damage reduction and public safety or societal benefits are not included in these benefits.

UK's Geospatial Commission estimates ROI of £30 benefit for every £1 invested in National Underground Asset Register

It is estimated that accidental underground utility strikes cost the UK economy £2.4 billion every year. A top priority of the the Geospatial Commission, an agency of the UK government tasked with extracting more value from government geospatial data, is the creation of a National Underground Asset Registry (NUAR) and to complete the national implementation of NUAR across England, Wales and Northern Ireland by 2024. The Geospatial Commission has just published the economic case for NUAR which estimates conservatively a return on investment (ROI) of £30 worth of benefits for every £1 invested in a national register for capturing and sharing digital underground asset data. The economic analysis concludes that there is a robust economic case for NUAR.

Background

Knowing the location of buried utility assets, such as cables, pipes, sewers, and ducts prior to initiating excavation, or even better, prior to design helps avoid costly damage to assets, and improves safety for workers and the general public.

Major issues in many jurisdictions including the UK are data quality and data access. Data is often privately owned and access is restricted, data is not collected consistently, the level of accuracy varies, and data is often missing or out of date. This means that outages occur more frequently and last longer than they should, projects take longer and start later, cause more disruption to the public and cost more.

In addition utility business models provide no direct incentives to improve their data at the scale required for a full solution. However, the government is able to centrally co-ordinate and invest upfront in whole scale data transformation where there is clear evidence of value to the UK economy, and it can also ensure appropriate safeguards are in place to address commercial and security concerns of efficient, digital data access.

The NUAR initiative grew out of a bottom-up collaboration among actual asset owners and the organizations involved in working on maintaining embedded asset networks in the North East of England and in Central London. Feedback from the field was that with the practices currently in place data delivered inconsistently in terms of scale and content making it difficult to integrate and interpret the data in the field. The strong message from the asset owners and those responsible for maintaining the assets was that a simpler, comprehensive, and standardized approach was required.

The NUAR project was formally initiated by the Geospatial Commission, which is part of the Cabinet Office at the heart of the UK government. While NUAR is being driven from government, this is very much picking up on a bottom-up requirement. Together in North East England and Central London some 40 utility and telecom network operators and local government agencies voluntarily collaborated to share their data using a harmonized data model and symbology to enable viewing all underground utilities on a single map. A database was created in which each data owner remained a steward of its own data, a scheme for data protection and security was implemented, and access was provided via a data hub available to all participants.

The experience of government agencies and network owners in collaborating to share underground infrastructure information using a risk-based legal approach to data protection and security on the two pilots leading up to the Invitation to Tender, suggests that it will be feasible for NUAR, which is not intended to be mandatory, to be based on a secure and trusted data sharing between the public and private sector. From a security perspective the prototype system developed for the pilots adhered to strict security standards and audit controls set by the Centre for the Protection of National Infrastructure (CPNI), and the National Cyber Security Centre (NCSC) as well as Ordnance Survey guidelines. In addition the prototype implemented data protection, for example, by restricting the size of the area for which data could be requested. This attention to data protection was key in achieving what had not been possible in previous projects with a similar objective - all 35 public and private sector organizations participating in the pilots signed data sharing agreements after review by their legal departments. 

A key feature of the prototype system developed for the pilots was support for feedback from the field.  Referred to as "observations" it made it possible for field staff to report errors by comparing the actual location of equipment with what was recorded in the database.  A more complete implementation of this important capability could become a key mechanism for improving data quality.

Return on investment (ROI) studies of the benefits of improving the mapping underground infrastructure on highway construction projects conducted since the late 1990s have consistently revealed a large return-on-investment. A U.S. Department of Transportation sponsored survey conducted by Purdue University in 1999 of quantifiable and qualitative savings estimated a total of US$4.62 in avoided costs for every US$1.00 spent on accurately locating underground infrastructure. Although qualitative savings (for example, avoided impacts on nearby homes and businesses) were not directly measurable, the researchers made the case that those savings were significant, and many times more valuable than the quantifiable savings. In 2007, the Pennsylvania Department of Transportation commissioned Pennsylvania State University to study the savings on Pennsylvania highway projects and found a return on investment of US$21.00 saved for every US$1.00 spent for SUE when elevating the quality level of subsurface utility information using SUE. This significantly higher return on investment when compared to Purdue study is the result of maturation of process and a consideration of some of the qualitative savings in the Purdue study.

Overview of Analysis

The total cost of utility strikes is estimated to be £2.4 billion per year. This is based on the assumption that there are 4 million excavations and 60,000 utility strikes per year in the UK. However, analysis by the Geospatial Commission has determined the number of excavations could be as high as 4.7 million a year. Assuming the ratio between excavations and strikes is the same, this implies that the total number of annual strikes could be 70,000. Using the average direct cost of a strike £3,371 from academic research, it is estimated that annual direct costs amount to £79 million. Using the 29x ratio reported by researchers at the University of Birmingham , indirect costs are estimated to be £2.31 billion.

To estimate the benefits of the program, it was assumed that 30% of strikes could be avoided through better data and easier access to it.  On-site project savings are derived from three areas: the cost of resuming projects after discovering unexpected underground assets, the cost of abandoning projects due to constraints from unexpected underground assets, and field efficiencies from a single, integrated view of all the underground assets. The data exchange and back office efficiency estimates are based on research commissioned by the Geospatial Commission to understand the detailed processes currently involved in requesting, collating and preparing underground asset data and how NUAR would make it more efficient. The total quantitative benefit of the NUAR program is estimated at £3.4 billion, or £347 million annually over ten years.

• Savings from reduced utility strikes, saving £240 million/year
• Data exchange and back office efficiency, saving £91 million/year
• On-site construction efficiency improvements, saving £16 million/year

In addition there are other benefits of the program that are not currently quantifiable, such as strategic improvements to street works coordination and subsurface planning.

Conclusions

The study concluded that there is a strong case for government intervention since the market has failed to fix itself.  The conservative estimate of a return on investment of £30 worth of benefits for every £1 invested in a national register is very high but is not inconsistent with previous ROI studies.   The main conclusion of the analysis is that there is a robust economic case for NUAR and that the project delivers on announced government policy.

Cost of underground utility damage represents a major drag on national economies

Underground utility damage is expensive. Several jurisdictions have attempted to estimate the cost of underground utility damage for individual incidents and for entire national economies. Costs can be broken down into direct costs and indirect costs. Direct costs include the costs of sending a crew to repair the damaged pipe or cable. Indirect costs include many factors that are often hard to quantify such as traffic disruption, injuries and fatalities among workers and the public, and the lost custom that local businesses experience. An important conclusion from the research into the cost of underground utility damage is that it represents a major drag on national economies, $50 to $100 billion annually in the U.S., £ billions in the U.K., and € 1 billion in the Netherlands.

UK

About 4 million excavations are carried out on the UK road network each year to install or repair buried utility pipes and cables.  Research at the University of Birmingham on 3348 incidents of damage to underground utilities determined the direct costs of utility damage during construction.

 

Facility	Avg cost per strike in 2016
Electricity	£ 970
Gas	£485
Telecom	£400
Fibre-optic	£2800
Water	£300-980

 

The researchers found that the true costs associated with utility strikes is much higher than this. Direct costs include the costs of sending a crew to assess and repair the damaged pipe or cable. Indirect costs include the impact of traffic disruption as a result of the strike, any injuries and other impacts on the health of the workers directly involved and the public in the immediate neighbourhood, and the lost custom that businesses experienced as a result of the traffic disruption. The research revealed that the true cost is about 29 times the direct cost. This is a startling result which indicates that the cost to society of underground utility strikes is much, much larger than is generally believed.

US

The CGA compiles information on the direct cost of damage to underground infrastructure for different types of underground infrastructure.

 

Facility	Avg cost per damage 2016
Natural gas	$5,914.00
Telecom	$3,022.00
Electric	$4,905.00
Cable TV	$2,190.00
Water	$3,003.00
Sewer	$5,163.00
Liquid pipeline	$7,711.00
Steam	$1,800.00
Average	$4,021.00

 

At an average cost of $4000 per hit, the CGA estimates that the direct cost to the U.S. Economy is about $1.5 billion (or roughly double this if the number of incidents annually is actually closer to 800,000). The CGA emphasizes that this is a conservative minimum estimate and does not include indirect and social costs.

Scott Landes, of Infrastructure Resources LLC, has compiled a comprehensive list of the direct, indirect and societal cost of damage to underground infrastructure.

 

Items that may or may not be collected

• External collection costs/agency commissions

• Barricades/traffic control

• Permits (city/county/state/provincial) to install replacement cables/pipelines

• Legal fees and litigation costs

• Exposing the damage for repair

• Materials used in repair

• Restoration of the area

• Actual cost of internal labour

• Heavy equipment used

• Generator/power equipment

• Food, lodging, and travel expense

• Emergency mobilization (contractor/locator)

Time

• Damage investigation, on-site and follow-up

• Internal staff collection efforts

• Out of service complaints

• Insurance resolution discussions

• Overtime for unexpected increases in workload

• Employee time/travel for depositions/trial

Overlooked/difficult to track

• Lost customers

• Customer loss of use (refunds/credits)

• Resolution of customer complaints

• Engineering/reengineering due to damage

• Establishing outage bridge to coordinate services interruption

• Support staff (3-20) for outage bridge

• Workload delays

• Future failure points (damage may weaken system and lead to future failure unattributed to 3rd party)

• Damage data capture and submission (software and/or manual)

• Emergency on call ticket notifications

• Facility owner records updates

• Reporting requirements (FAA, 911, PHMSA)

Soft costs

• Loss of brand confidence

• Negative public feedback

• Difficulty maintaining customer relationships, especially large businesses, with inconsistent services

Societal costs

• Loss of 911/emergency services

• Business closing

• Employee downtime

• Road closures/traffic delays

This is a very interesting list because it provides a perspective on the comprehensive impact on society of disruptions to utilities and telecom resulting from underground damage during construction.

If the ratio of total to direct cost determined by the researchers at the University of Birmingham is applicable to the US, it would mean that the total estimated impact of unknown or poorly located underground infrastructure on the U.S. economy is between $50 billion and $100 billion annually.

Netherlands

Network operators are required to report all incidents of damage to their infrastructure including location, cause and other information. Based on this and other information Kadaster publishes an annual report with statistics on underground utility damage. This information can be used to estimate direct costs of damage to underground infrastructure.

 

Damage to underground utilities in 2018
Annual excavation damage	41,169
Direct costs from damage	€ 34,500,000
Average repair cost per excavation damage	€ 838

 

If the estimated direct cost is multiplied by 29X from UK research to estimate the total cost, underground utility damage costs the Dutch economy about € 1 billion annually.

 

An important conclusion from the research into the cost of underground utility damage is that it represents a major drag on national economies, $50 to $100 billion annually in the U.S., £ billions in the U.K., and € 1 billion in the Netherlands.

 

National underground infrastructure map could deliver £245 million per year to UK

The Geospatial Commission’s Annual Plan 2019/20 describes the activities that it plans to undertake in 2019/2020 to develop the UK’s National Geospatial Strategy.  The first project announced for 2019/2020 is its intention to fund two pilots that would lead to a national rollout of a National Underground Asset Register.

The Geospatial Commission was created in April 2018 as an independent, expert committee in the centre of government. The objective is to create value for the national economy from geospatial data and to further develop the UK’s geospatial expertise for the global market.  The Geospatial Commission issued a Call for Evidence in August 2018 to identify opportunities relating to  geospatial data and technologies.

The Geospatial Commission has sought to identify low hanging fruit, the priority sectors and interventions that will provide value rapidly and where the need for government intervention is clearest. One of first that was identified is the significant value that could be released by accurate and reliable subsurface data by a National Underground Asset Register.  Such a register would lower risk for every construction and infrastructure project, because current practice is hugely inefficient and error prone as the gas explosion in 2004 in Flanders has shown.  Recognizing the risk of asset strikes with attendant danger to life, project delays, cost overruns and disruption to traffic and local economies, over the past year the Geospatial Commission has conducted a research exercise into the business of locating underground utilities.  As a result the Geospatial Commission has just announced that its first 2019/20 project is an investment of £3.9 million into two regional pilots; one led by the Greater London Authority (GLA) in London and the the other led by the Ordnance Survey in the North East of England. The GLA will focus on data conditioning and modelling, and the OS will provide the prototype platform and associated technical design and experience to test the use cases of safer digging and project and data-exchange efficiencies. This has a total estimated value of £245 million per annum. These pilots will be used to determine how to proceed with the tender for a regional build and national rollout of a National Underground Asset Register.  The Geospatial Commission has estimated that a national underground infrastructure map could deliver £245 million per year to the UK economy.

Carbon dioxide emissions from electric power generation decoupled from economic growth in US

As a rule of thumb increasing electric power generation is closely coupled with economic expansion.  Between 2005 and 2017 the U.S. economy as measured by real GDP expanded by about 20 % from $15 trillion to $18 trillion. New data from the U.S. Energy Information administration (EIA) reveals that over this same period, emissions from power generation dropped primarily because of flat demand which is evidence of a decoupling between economic growth and power generation.

Data from the EIA reveals that during this time US power generation remained flat, but the makeup of U.S. power generation changed significantly.  Generation from natural gas now exceeds that from coal and generation from wind, solar and other renewable sources now exceeds hydroelectric generation.

With respect to emissions the change is even more impressive.  In a business as usual scenario assuming that demand continued to increase as it had prior to 2005, energy intensity (the energy required to produce a dollar of GDP) had remained at its 2005 value, and the energy mix had remained at its 2005 value, the expected emissions from electric power generation would have been about 3,043 MMmt (million metric tonnes). In 2017 actual emissions were much less, about 1,744 MMmt.  About half of the drop in emissions in 2017 compared to the projected business as usual emissions was due to less demand (654 MMmt).  Since the economy expanded over this time this is attributable to a drop in energy intensity and is evidence of decoupling of economic growth from power generation.  The other important factors were switching among fuels, primarily switching from coal to natural gas (329 MMmt) and replacing fossil fuels with non-hydro renewables (316 MMmt). 

In 2017 actual emissions from power generation were 43% less than that projected in the business as usual scenario and 28% below 2005 emissions. This is important progress toward the Paris accord targets (which the U.S. has dropped out of) since emissions from electricity generation are about 28% of U.S. total emissions.

US 3D elevation project as a model for a national infrastructure map

A number of years ago an initiative was funded under the ARRA economic stimulus package to initiate what was then called LiDAR for the Nation.  This has resulted in a USGS initiative called 3D Elevation Program (3DEP) whose goal over an eight year period is to develop a 3D elevation map with horizontal resolution of a meter and vertical resolution of 10 cm for the entire U.S. and territories.  This entails LiDAR scanning the contiguous continental U.S. and Hawaii and interferometric synthetic radar over Alaska.  It also includes bathymetric data for the U.S. coastline.  To date 48% of the U.S. has been covered or scanning is underway.  An inventory of these projects is available.

At GIS in the Rockies this year Carol Lydic of the USGS gave an overview of this program and the most recent initiatives to broaden the partnerships that are instrumental in creating the national 3D elevation map.  The program is based on partnerships with federal, state, local, and tribal government agencies, academic institutions and the private sector.

In 2012 a study was completed that estimated the economic value to 27 different sectors of accurate 3D data.  The top five included in this study (National Enhanced Elevation Assessment) are

• Flood risk management                                  $295m to  $502m
• Infrastructure and construction management $206m to  $942m
• Natural resources conservation                     $159m to  $335m
• Agriculture and precision farming                  $122m to $2,011m
• Water supply and quality                                  $85m to  $156m

The total economic benefits for all sectors was estimated to be between $1.8B to $13B.   I find this to be a very conservative estimate. 

A number of years ago I remember hearing about an outstanding program by the state of North Carolina in cooperation with federal agencies that involved a statewide LiDAR scan and the creation of a database of all structures with a footprint of over 800 square feet that allowed estimates to be made of the economic impact of any type of flood anywhere in the state or of a rise in sea level along North Carolina's coastline.  This is of inestimable value in assessing any mitigation project.

In the infrastructure and construction sector, one of the largest contributors to the cost of a civil construction project such as a highway or a railway, is the amount of earth that has to be moved which can be derived from a 3D terrain model.  Having a reliable digital terrain model is of great value to any civil project for assessing alternative right of ways during the planning stage and could also be used during the design and construction phases especially if supplemented by information about the soil and geological structure of the subsurface and location of underground utilities.

I found the 3DEP project particularly interesting because it represents a potential model for creating a national infrastructure map including underground infrastructure.  Federal organizations that could be involved include USGS, National Map, US DOT, FERC, and NERC.  Partners might include NARUC (National Association of Regulatory Utility Commissioners), CGA (Common Ground Alliance), state and municipal DOTs, AGC (Associated General Contractors of America), utility and telecom network operators, general contractors, tribal government agencies, and academic institutions.

UK Mastermap to be made freely available

As part of the Prime Minister’s London Tech Week roundtable, the UK Government has announced that key parts of the OS MasterMap will be made openly available for the public and businesses to use. OS MasterMap is the definitive source of highly-detailed geographic data of Great Britain.  The government estimates that this will boost the UK economy by at least £130m each year, as innovative companies and startups use the data.  The release of OS MasterMap data is one of the first projects to be delivered by the new Geospatial Commission which I blogged about recently.

This has been a long journey.  Many have argued for years that opening Mastermap would benefit the UK economy.   A study released in February, 2008 estimated the benefits to the UK economy if spatial data were available at no cost instead of the current relatively high cost as compared to the US, for example.  The study estimated that the gross  benefits to the UK economy would be around £168 million a year while a government subsidy to the OS of something between £12 million and £85 million would be required. Overall this implied a net benefit to the UK economy of between £83 to £156 million.  There are risks associated with making the Ordnance Survey, the semi-commercial organization responsible for Mastermap a purely government agency, witness the USGS in the U.S., but there is no doubt that open data has benefited the U.S. economy and other economies.

Studies find geospatial proliferating across the world economy

The latest estimate of the annual contribution of the geospatial industry to the world economy of US$400 billion represents a substantial increase over a previous estimate of US$150-270 billion released in 2013.  Both reports agree that the total contribution of geospatial data and technology annually to the world's economy is to be calculated in trillions of US dollars.  There is evidence that geospatial's contribution is increasing.

 AlphaBeta used consumer surveys from 22 countries, big data analysis of online job postings and other analytics to determine the impact of geospatial data, technology and services on the world economy. The study (The Economic Impact of Geospatial Services, AlphaBeta, September 2017) estimates that geospatial services generated annual revenue of US$400 billion per year in 2016 - this directly contributed to increasing the world's GDP. In addition geospatial data, technology and services save time and fuel for the travelling public - this contributes to increasing labour productivity. The study estimates that these efficiency benefits save the public over US$550 billion per year. Together the contribution in efficiency gains and direct revenue are estimated to reach almost a trillion US dollars. This is viewed as a conservative estimate of the contribution of geospatial to the world economy since the study was able to quantify only a few of the ways that geospatial data, technology and services benefit the economy.  The ways that AlphaBeta was able to quantify in which geospatial contributes to the world economy include productivity gains for the travelling public, direct revenue generated by the geospatial industry, and revenue gains and cost savings in other industries from using geospatial data and technology.

Productivity - digital map data and technology shorten traveling time by 12% (estimated to be worth US$ 264 billion). It also saves US$ 20 billion in fuel. Geospatial also enables consumers to make buying decisions faster, saving more than 21 billion hours (estimated to be worth US$283 billion).

Direct revenue - the geospatial industry generates US$400 billion in revenue per year.

Indirect revenue and savings - the study suggests that the increased revenue from geospatial-enabled services is several times higher that direct revenue to the geospatial industry. For example, the study estimates that digital maps drives US$1.2 trillion of sales worldwide. Furthermore the study estimates that geospatial technology improves revenues and costs by at least 5 percent in sectors contributing more than 70 percent to global GDP, for example, retail and mining. This has an estimated value of about US$2.7 trillion.

Other non-quantified benefits - other benefits that are difficult to put a price tag on include creating 4 million jobs, reducing automobile emissions by 1,686 million metric tons, reducing emergency response time by up to to 20% in some countries, and improving emergency preparedness.

To put this in context, according to a report prepared by the Boston Consulting Group (BCG) in June 2012 the geospatial services industry in the United States generated annual revenues of $75 billion. The BCG report estimated the economic impact of the geospatial services industry on government, business, and consumers to be $1.6 trillion in revenues (greater efficacy) and $1.4 trillion (about 8.7% of the U.S. GDP) in cost savings (greater efficiency).  In 2013 Google released a report What is the economic impact of Geo services ? prepared by Oxera Consulting Ltd. Global revenues from geospatial products and services as defined by Oxera was estimated to be $150-$270 billion per year. The $270 billion estimate was computed by scaling up the BCG estimate for the United States to the world economy.  The latest report considerably increases the estimated direct revenue to the geospatial industry, but is inline with the 2013 report in estimating that the total benefits of geospatial to the economy lies in the range of several trillions of US dollars.  The improvements in revenue and costs in all industries which use geospatial data and technology is estimated to amount to roughly 3% of the world's GDP.

For comparison the most quoted estimate of geospatial data an technology to a national economy is a 2008 a report prepared for the CRCSI & ANZLIC by ACIL Tasman estimated that the spatial information sector contributed between 0.6% and 1.2% of the Australian GDP in in 2006-2007.  The recent Google results suggest that the proliferation of geospatial data and services has increased the penetration of geospatial in the world's economy.

There is other evidence that geospatial is proliferating in the world's economy.  McKinsey has estimated that by 2020 the benefits (difference between willingness to pay and the cost of applications) that customers, consumers and businesses, will enjoy from location-based applications will reach as much as US$700 billion/year. Most of this, about 70 %, will be the consumer benefit from time and fuel saved by using GNSS navigation systems including those with real-time traffic information and mobile LBS applications. The remaining 30 % of the benefits will be through location-enabled applications such as geo-targeted mobile advertising.  Smart navigation applications are estimated to provide $500 billion in value to global consumers in time and fuel saved by 2020. Geo-targeted advertising could represent more than 5 percent of total global advertising spending by 2020.

A major industry where geospatial is already having a significant impact which may accelerate is construction.  Globally construction is expected to grow by almost 70% from $7.2 trillion today to $12 trillion by 2020.   Construction productivity has been stagnant in many advanced economies for decades.  It has been slow to adopt process and technological innovations and its R&D spending has lagged other industries. In a recent report, Imagining construction’s digital future, McKinsey suggests compelling reasons why the construction industry is ripe for disruption and how digitization might contribute to its transformation.  Two of the technologies that McKinsey identifies that will be key in the anticipated transformation are geospatial and BIM. 

Third year of decoupling emissions from global economic growth

According to the IEA, even thought the world's economy grew in 2016, energy-related carbon dioxide emissions remained constant.  This is the third year in a row of "decoupled emissions", economic growth that did not generate more emissions.  The IEA ascribes the flattening of emissions to growing renewable power generation, switches from coal to natural gas, improvements in energy efficiency, and economic factors.  The IEA estimated that energy-related emissions in 2016 amounted to 32.1 gigatonnes, the same as the previous two years.  In 2016 the global economy grew 3.1%. Carbon dioxide emissions declined in the United States and China and were stable in Europe, offsetting increases in most of the rest of the world.  According to the IEA in the United States, carbon dioxide emissions dropped by 3% while the economy grew by 1.6%.

Low carbon climate-resilient infrastructure requires private funding

A Report by the Global Commission on the Economy and Climate has recommended that since more than 60% of the world’s greenhouse gas (GHG) emissions are sourced from the world's existing stock of infrastructure, ensuring infrastructure is built to deliver sustainability is the only way to meet the COP21 goal  of keeping warming below 2°C and to guarantee long-term, inclusive and resilient growth. Infrastructure underpins core economic activity and is an essential foundation for achieving inclusive sustainable growth.  Investing in sustainable infrastructure is key for reigniting global growth and reducing climate risk.

The Global Commission is chaired by former President of Mexico Felipe Calderón and co-chaired by the climate economist Lord Nicholas Stern.

The report estimates that $90 trillion in sustainable infrastructure investment will be required over the next 15 years.  It stresses that this will require a shift in the world's construction and financial sectors to ensure that this money, which will be increasingly private, is spent on low-carbon, energy-efficient projects. 

Change in infrastructure spending required for a 2°C scenario (percentage change in expenditure over 2015-2030 compared to Business-as-usual)

The report has adopted a broad definition of infrastructure which includes both traditional types of infrastructure; energy, public transport, buildings, water supply, and sanitation and also natural infrastructure; forest landscapes, wetlands and watershed protection.  Infrastructure underpins core economic activity and is an essential foundation for achieving inclusive sustainable growth. It is indispensable for development and poverty elimination, as it enhances access to basic services, education and work opportunities, and can boost human capital and quality of life.

Investment is needed to replace ageing infrastructure in advanced economies and to accommodate higher growth and structural change in emerging market and developing countries. This will require a significant increase globally, from the estimated US$3.4 trillion per year currently invested in infrastructure to about US$6 trillion per year. The Global Commission found that it does not need to cost much more to ensure that this new infrastructure is compatible with climate goals, and the additional up-front costs can be fully offset by efficiency gains and fuel savings over the infrastructure lifecycle.

Importance of private infrastructure financing

Transforming the financial system and its intermediaries is essential to scaling up sustainable infrastructure finance.  Public finance and investment will continue to play a critical role, particularly in low-income countries.  But large amounts of private capital are needed and this will only flow if the right market signals are present within the financial system. The report suggests that reforms are needed in the financial regulatory system as well as other policy reforms, specifically, to price carbon to level the playing field between sustainable and unsustainable options in order to encourage private investment in sustainable infrastructure.

Private investment requires financial returns.  Efficiency in construction and operation and maintenance of infrastructure is essential. Increasing productivity drives technological innovation. Many governments as well as private sector engineering and construction firms have identified building information modeling (BIM) as a key foundation for increasing construction productivity.  Owners are beginning to recognize the benefits of full lifecycle BIM especially when augmented by geospatial technology.

Energy

The report estimates that energy infrastructure will require investment of US$25 trillion, or nearly a third of total core infrastructure investment over the coming 15 years. In addition energy efficiency will require investment of about the same magnitude.  Building sustainable energy infrastructure encourages economic growth, reduces air pollution and greenhouse gas emissions, and plays a key role in building resilience.

Energy efficiency

The report found that energy efficiency is a highly cost-effective way to manage demand and reduce the investment requirements for overall energy supply. Increasing energy efficiency in industry, buildings and transport could achieve up to half of the emission reductions needed globally to peak greenhouse gas emissions by 2020 according to the IEA.  Energy efficiency investments in IEA member countries since 1990 have avoided US$5.7 trillion of energy expenditure.  The IEA estimates further investments could boost global GDP by US$18 trillion by 2035, increasing growth by as much as 1.1% per year.  Energy efficiency measures are estimated to create up to three times as many jobs as fossil fuel supply investments per dollar of investment.

A key recommendation of the Global Commission’s 2015 report was to scale up commitments by development banks working with governments and the private sector to invest at least US$1 trillion per year by 2030 in clean energy, including energy efficiency.

Air pollution

Outdoor air pollution, much of which is associated with fossil fuels, is linked to nearly 4 million premature deaths per year. In China, it is estimated that air pollution killed around 1.6 million people in China in 2013. In India, the air pollution toll in 2013 stood at 1.4 million deaths.  In Europe, coal plant emissions account for more than 18,200 premature deaths, about 8,500 new cases of chronic bronchitis, and over 4 million lost working days each year.  Analysis for the Global Commission shows that the health and mortality burden of air pollution amounts to as much as 4% or more of GDP in some countries. Recent analysis by the OECD has found that globally air pollution-related healthcare costs alone are projected to increase from US$21 billion in 2015 to US$176 billion in 2060.

Cities

It is estimated that by 2050, two-thirds of the global population will live in cities, and over 70% of the global demand for infrastructure over the next 15 years is expected to be in urban areas.  How cities develop is important both for growth and for climate change.  The report emphasizes that investment in sustainable infrastructure is essential to make cities inclusive, safe, and resilient.

Global Commission

The global commission is supported by governmental and private sector leaders: Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC), Australia; Suma Chakrabarti, President, European Bank for Reconstruction and Development (EBRD); Helen Clark, Administrator, UN Development Programme (UNDP); Former Prime Minister of New Zealand; Jamshyd Godrej Chairman and Managing Director, Godrej & Boyce Mfg Co. Ltd., India; Stuart Gulliver, Group Chief Executive, HSBC Holdings plc and Chairman of The Hongkong and Shanghai Banking Corporation Limited; Angel Gurría, Secretary-General, Organisation for Economic Co-operation and Development (OECD); Chad O. Holliday, Chairman, Shell, United States; and Sri Mulyani Indrawati, Finance Minister of Indonesia