
Federally funded infrastructure plays a critical role in Americans’ daily lives: it’s the roads we drive on, the trains and buses we ride, our water supply and power grid systems, and much more. But not all infrastructure has the same effects on cities, neighborhoods, and people. Public transportation might reduce greenhouse gas emissions and improve residents’ health, whereas highway construction can displace—and sometimes permanently fracture—entire communities.
These impacts, both direct and indirect, are referred to as externalities and can have short- and long-term effects on the surrounding community. Expanding an urban rail line could have the direct externality of reducing air pollution by lessening car traffic but also the indirect externality of gentrification spurred by increased property values near new stations. Federally funded infrastructure investments rooted in patterns of historical disinvestment and systemic racism have led to externalities that perpetuate racial inequities. People of color are more likely than their white counterparts to live near newly expanded highways or major roadways and in communities with less-developed pedestrian infrastructure from previous federal investment choices.
With hundreds of billions of dollars of new investments in federally funded infrastructure each year, policymakers have the power to either continue contributing to these inequities or to help dismantle them. The Biden administration has begun efforts toward the latter through its Justice40 Initiative, which aims to direct 40 percent of the benefits from certain projects to historically disadvantaged communities, as well as a new Reconnecting Communities Pilot Program to restore communities that have been disproportionately “burdened by past transportation infrastructure decisions.”
To continue these efforts, policymakers must keep racial equity considerations at the forefront of discussions pertaining to federal infrastructure investments. Researchers, federal agencies, federal officials, and the state and local policymakers managing these projects on the ground must understand racial disparities in project impacts and incorporate accommodations for these burdens into the funding decisionmaking process.
Every federally funded infrastructure project produces a myriad of positive and negative community impacts
When considering the distribution of federal infrastructure funds, it’s critical to understand how projects can benefit and harm residents and communities. Because many infrastructure projects entail long building processes, externalities—both positive and negative—can be caused by construction and operation.
Consider a highway expansion project. While the operation of the final product may boost the local economy through an increased movement of people and goods, it will also increase air and noise pollution. The construction of the project can add jobs but could also fracture existing communities.
People of color are disproportionately affected by the negative externalities of infrastructure projects
Different types of infrastructure have different racial equity implications. Let’s stick with the highway expansion project. Throughout the past century, highways have been built more often through communities inhabited predominantly by people of color—slicing up their neighborhoods, displacing residents, increasing pollution, and disrupting local economies. This disparity persists today. In recent research on the distributional equity of federal infrastructure investments, we find federally funded road capacity expansions are located in census tracts with higher shares of people of color than other census tracts in the same county.
Because people of color are more likely to live near highways, they are also more likely than their white counterparts to face adverse health effects from air and noise pollution. A recent study found that compared with the US average, Asian American, Black, and Hispanic people are exposed to 34, 24, and 23 percent higher levels of fine particulate matter.
Including racial equity implications in discussions and decisions related to federal infrastructure investments
In addition to federal investments, nonfederal funding finances a great deal of US infrastructure, underscoring the need for state and local governments to also prioritize racial equity in infrastructure planning. Researchers and federal, state, and local policymakers can take the following steps to ensure racial equity implications are factored into the distribution of federally funded infrastructure investments.
- When deciding which infrastructure projects to fund, federal officials can use thorough, equity-focused benefit-cost analyses (BCAs). Some federal agencies, including the US Department of Transportation, already require jurisdictions to submit BCAs as part of grant applications. Though jurisdictions are encouraged to consider a wide variety of positive externalities in their BCAs (including safety, reduced greenhouse gas emissions and noise pollution, and faster commute times), the project costs they are instructed to consider are largely economic and may not encompass key negative externalities tied to racial equity, such as residential segregation, gentrification, or disproportionate levels of pollution. Moving forward, federal officials and the jurisdictions applying could account for all types of project benefits and costs in grant award decisions.
- Federal agencies can provide resources to awarded jurisdictions to assist in mitigating the costs. In practice, a grant application for a road capacity expansion project in a predominantly Black community should not be rejected solely because of the pollution and traffic it would generate. Rather, the administering agency could account for negative externalities before the award, so the agency issuing the grant and the local government receiving it could lessen the negative effects where possible. This assistance may take the form of additional grant funds provided to the jurisdiction to construct the road expansion using hybrid technology, rather than diesel engines.
- Collect and analyze demographic data related to project effects. Researchers and policymakers can also collect data on the demographics of the places affected by projects, including race, ethnicity, and income level. Officials could collect data on the shares of a funded jurisdiction’s residents who are of each racial and ethnic group to better understand who may be more or less affected by the externalities of the given infrastructure project. Collecting more in-depth data up front may also help with measuring community outcomes over the life of the project.
Federally funded infrastructure investments amount to hundreds of billions of dollars each year, presenting an opportunity to improve conditions in historically disadvantaged and disinvested communities. To seize this opportunity, it’s critical to consider how projects could close or widen racial disparities when making decisions about the federal funding of infrastructure projects.