COVID-19 ISO Insights

COVID-19 Delays Could Jeopardize Construction Projects Designed to Protect Against Climate Change

June 15, 2020

By: David Geller, CPCU, SCLA

The National Conference of State Legislatures (NCSL) website includes information indicating the decline in revenue that U.S. states may experience as a result of COVID-19.

Unsurprisingly, cities and states across the country are facing enormous shortfalls (cities alone are facing a $360 billion loss from 2020-2022, per a May National League of cities report) that could trigger subsequent budget cuts. This trend could have consequences across a wide range of areas, including the fortification of aging infrastructure. In the long run, this inability to fund projects that could have mitigated the potential impacts of climate change instead may serve to amplify costs incurred by its citizens and businesses in severe weather events in the years to come.

In 2016, reports the New York Times, the Obama Administration allocated $1 billion for states and cities to fund large-scale construction projects in order to protect against climate-related disasters. The goal of the program, which was called the National Disaster Resilience Competition, “was to encourage new ideas for coping with the accelerating consequences of global warming, by funding the best ideas and providing models for other parts of the country.”

Four years later, the Times notes that “[s]tates and cities have been moving swiftly in the design phases and to secure permits since the Obama administration awarded the funds in 2016.” In some locations, the projects are underway. In others, permits have been received and plans to break ground have been set for 2021.

However, the Times has reported that, because of delays caused by COVID-19, different projects are in jeopardy of not being completed by an established deadline of the fall of 2022. If the money is not spent by then, the projects reportedly forfeit the remainder of the money, leading to unfinished work that would do little to protect against emerging climate change trends.

Given the roadblocks posed by COVID-19, the Times has reported that officials will be asking Congress to extend the deadline for construction by three years.

The dam breaches in Michigan that transpired in May reflect the dangers that may exist if infrastructure is not maintained appropriately. In addition to federal funding potentially being at risk due to COVID-19, it is also possible that the aforementioned drop in revenue may prevent other related projects from being financed.