California-and the rest of the U.S. for that matter-need look no further than Canada for inspiration. Though the Canadian economy is slightly smaller than California's; private investment in infrastructure in Canada is about $1 billion higher than all of the private investment currently in the United States. Geoff Heekin of AON suggests: "Canada is about one-tenth the size of the U.S. in population and GDP. This year Canada will invest about $4 billion in private money into public projects. Next year they're scheduled to do $8 billion with just 10 projects. That's $8 billion in Canada and only $7 billion in the U.S. next year."
Heekin's point: "The U.S. could-and should-reach investment levels of about $80 billion if we were building at the same rate of market share as Canada. They've got it right-they're the best in the world at it-they go out to the private sector and hire lawyers and technical advisers and financial advisers and they all work inside Infrastructure Ontario (a province-owned entity that repairs, rebuilds and renews infrastructure across Ontario, [and] is responsible for overseeing public-private partnerships in the region). They've got competency to sit across the table from the private sector and do it with the credibility and expertise necessary to ensure the public interests are being preserved." As does Canada, so too should the private sector.
AIG's Grandmaison anticipates the changes coming as P3s are more widely adopted: "We are thinking about this as a sea change for the industry, for our customers and owners and DOTs and all those who have a role in P3 in the future." Grandmaison also notes that, "we'll continue to monitor and develop new products and services to satisfy the needs of the stakeholders involved in a P3 today and going forward. As we embark on this sea change or paradigm shift, neither we at AIG nor anyone else have it all buttoned up or have all the answers. We as an industry are going to need to learn from our mistakes and recognize when a mistake is made and adapt and make necessary changes so that they don't happen again and things are properly managed on a macro basis."
Hurricane Sandy's devastating forces of wind and water demonstrated three key needs that are dictating P3 development in infrastructure: new standards for robust structures capable of surviving manmade and natural disasters; upgrades to aging infrastructure; and the development of sustainable infrastructure that preserves resources. "The Hudson River was literally pouring into the Ground Zero site with such a force we were worried about the structure of the pit itself," said New York Governor Andrew Cuomo.17"We have a 100-year flood every two years now. We have a new reality when it comes to these weather patterns. We have an old infrastructure and we have old systems and that is not a good combination."18
Super storms of the future threaten inland states which are going to have to reconsider their infrastructure needs. Hurricane Sandy's 1,000-mile breadth was wider than the state of Texas. Wind, water and snow wreaked havoc over nearly half of the states in the U.S. Robert Puentes, Senior Fellow and Director of the Brookings Institution's Metropolitan Infrastructure Initiative, explains Sandy's public and private ramifications: "It will spur action, not necessarily just in terms of huge federal outlays, but in deciding what the infrastructure needs are for a 21st century economy, and what is needed to withstand the kinds of storms we're seeing."19
Amid fiscal uncertainties and global economic challenges, the nation's infrastructure is quickly decaying. Infrastructure preparedness is vital in order to withstand 100-year storm conditions currently happening with alarming frequency. The imperative need for increased utilization of public-private partnerships has arrived in the U.S. and AIG remains ready to engage these projects with the proper mindset to provide comprehensive property, casualty, professional and specialty insurance solutions to assist in successful P3 delivery across the United States and Canada.
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17 Daniel Geiger, "Cuomo assesses damage of WTC site," Crain's New York Business, http://www.crainsnewyork.com/article/20121030/REAL_ESTATE/121039991,accessed 29 March 2013.
18 Darren Goode, "Hurricane Sandy update: Cuomo notes weather's new reality, toll on states," http://www.politico.com/news/stories/1012/83055.html#ixzz2P3ziJ6ER, accessed 29 March 2013.
19 Andrew Ross, "Sandy highlights fragile infrastructure," San Francisco Chronicle, http://www.sfgate.com/business/bottomline/article/Sandy-highlights-fragile-infrastructure-4001695.php, accessed 29 March 2013.