IS IT WORTH IT? - Bridges - page 96

only $60. The NPV is in the negative by more than $3 million. The NPV
is even worse at the 5 percent discount rate. By our discounting methodol-
ogy, it is not worthwhile to pay an extra 63 percent to build a bridge lasting
three times as long.
The Romans may have been great at stone construction and gladia-
tor sports but were evidently handicapped in the noble art of cost-benefit
analysis. Many analysts do hold that it makes little sense to extend the
analysis far into the future, because traffic, maintenance cost, interest rate,
and even choice of transportation mode (car, bus, walking, cycling, mopeds,
street cars, and whatever else comes along) become increasingly dubious the
farther we project. Yes, technologies change fast, travel patterns change, and
business conditions fluctuate. In private business, investors would be rightly
skeptical about tying up their money for a hundred years.
But should the same wariness extend to civil infrastructure, and to
bridges in particular? Cities will still exist in a hundred years, even a thou-
sand years we hope, and if they do, mobility will continue to be a human
essential, even if it happens with electric sedans or hydrogen streetcars,
and pedestrians will still want to get to the river's other side, so a graceful
bridge will still be appreciated, maybe more than it was when still young.
By discounting the far future through the cost-benefit method, and letting
that analysis drive the decision, we may well be investing in planned obso-
lescence. We may be turning civil infrastructure into a species of disposable
goods—garage-sale bridges for future generations.
EXTERNAL COSTS AND BENEFITS
Our study of bridge effects has dealt so far only with internal costs and
benefits; these consist of costs to the bridge owner and benefits to its users.
These internal effects are sometimes also known as direct effects or primary
effects. Complex as it has been, this enclosed realm of internal effects is
intellectually safe. Outside it lies a conceptual jungle, to which this topic
can be only a rudimentary guide. This world of external effects equally
goes under the name social effects. These effects also have divisions with an
even more complex nomenclature that includes indirect economic effects (also
known as economic impacts, they're divided into secondary impacts, tertiary
impacts, etc.), neighborhood effects, economic development effects, environmental
effects, and intangible effects, which have overlapping and often ambiguous
meanings.
Let's consider indirect economic impacts. Recall that the costs the city
bears and the benefits users enjoy each count as the direct (internal) impacts.
Because it has borrowed for the bridge, the city may be told that it cannot
borrow more without a change in its rating; our bridge will then impose