Please join us at our Water in the West seminar on July 19, 2019 at 11:00 am in Y2E2 300. Peter Adriaens, Director of the Center for Digital Infrastructure Finance and Professor of Engineering, Finance and Entrepreneurship at the University of Michigan, Ann Arbor, will be presenting "Efficient Financing of Smart Infrastructure: Will Digital Finance Open the Floodgates? A 'Moneyball' approach to closing the $2 trillion infrastructure finance gap.
The U.S. is underinvesting in infrastructure, resulting in macro-economic impacts for cities and regions. The American Society for Civil Engineers estimates that the finance gap will be $4.5 trillion by 2025, resulting in a loss of 2.5 million jobs. Deferred maintenance and inadequate funding models have resulted in demographic inequalities of access to quality infrastructure, further exacerbating economic disparities. Globally, $5.4 trillion of capital earmarked for infrastructure sits on the sidelines because of mis-matched business and risk-return models. According to a recent Organization for Economic Cooperation and Development (OECD) study, less than 1 percent of pension funds are invested in infrastructure as an asset class. How can we unlock this capital through data?
The definition of infrastructure in the digital age is changing, asset ownership is becoming blurred, and new data-driven operating and financial models are emerging. By “twinning” infrastructure into digital assets, informational inefficiencies can be uncovered that change how we design, value, price and invest in infrastructure assets. So-called ‘infratech’ models have been piloted in private financing of infrastructure, but they are trickling down into public-private partnerships and public finance. Cities and States can harness the power of information to identify new cash flows and equity value from improved operations or new derivative products and services. Tomorrow's intelligent infrastructure supplemented with remote sensing is providing new kinds of data and insights that can be integrated in performance bonds, asset-backed securities, risk transfer instruments, data auctions and digital financing models. As a result, the value of this information will eventually outstrip that of the physical asset itself, as infrastructure is going ‘tech’. We are working with incubators, public finance managers, investors and public officials to ‘play MoneyBall’ and advance data-driven financing innovations in the public sphere.