Brownfield projects refer to development and renovation of existing infrastructure. The term brownfield is used to distinguish the projects from “greenfields.” Often such projects are funded through Private Public Partnerships.
Q. So this term follows up on our previous guest, and relates to infrastructure investing. It doesn’t actually sound all that pleasant…
A. Well, it’s meant to be the opposite of “greenfield.” Brownfield is a renovation of exiting infrastructures, like bridges and tunnels– the focus in developed countires; new infrastructure projects are called “greenfield”… the focus in developing countries.
Q. And obviously there’s a lot of work to do here in the US on brownfiled projects…
A. I’ll say. We currently rank an embarrassing 24th on the world infrastructure quality list. The work that needs to be done just on our bridges and tunnels is overwhelming.
Q. And overwhelmingly expensive. What is the expectation for how all this transportation brownfield stuff gets funded? It’s not like building out a new energy project where you can rely on utility contracts to pay the costs.
A. Right. So we’ve talked before about “public private partnerships” and that’s going to be how a lot of this gets done. Here’s a picture of the new Jordan Bridge in South Hampton Roads, Virginia. The thing was a rusting wreck that the city couldn’t afford to even tear down. But they sold it to a private company, which took all the risks and built the new facility… in exchange for the right to collect tolls for many years.
Q. So, what’s the cost to taxpayers there?
A. Aside from higher tolls – $2 instead of the old 50 cents – nothing. Pretty good deal all around – people got employed in the rebuilding, the folks who actually take advantage of the bridge are paying for it, and private company takes the risks and, if they’ve figured everything out well, makes a profit.