As the COVID-19 pandemic continues to take a toll in terms of lives lost and economic damage, governments worldwide are advancing emergency aid and stimulus packages. “Despite these Herculean efforts, financial markets remain skittish, fearful of how much this will cost,” writes Mike Burke, chairman and CEO of AECOM. “It is impossible to predict the full economic impact of the coronavirus because we still don’t know how long we will have to fight it, and how much resources the effort will consume.”

Beyond the headline figures in efforts such as the $2.2-trillion package enacted by the U.S. Congress, there are considerations of how to spend the money. Burke points to a time-honored method of providing an economic lift: infrastructure spending.

“The injection of income leads to more spending, which creates more income and so on – the so-called ‘multiplier’ effect,” Burke writes. He cites a modeling study conducted for Business Roundtable, an association of CEO at America’s leading companies, which found that modernizing highways, bridges, airports, and waterways will produce big returns.

“Every $1 invested in infrastructure returns roughly $3.70 in additional economic growth over 20 years,” writes Burke, citing the modeling study by the University of Maryland. That represents a nearly 4:1 ratio of ROI.

During a recession, he adds, infrastructure investment is often deficit-financed, “meaning it can have an even greater effect.” At the same time, spending on infrastructure boosts economic prospects in the medium and long-term through much-needed improvements to facilities and connectivity.

The opportunity to provide a quick economic lift comes at a time when it’s needed anyway—and not only to boost the economy. “In the U.S., current infrastructure spending at federal, state and local level is at an all-time low, and is already insufficient to meet both maintenance and expansion needs,” Burke writes. “The $4.6-trillion backlog of deferred projects is estimated to be limiting economic growth by $3.9 trillion over the next five years.”

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