Infrastructure: How to Define It and Why the Definition Matters

Abstract

In past government budget policy discussions, the term “infrastructure” has been used to describe spending that mostly pertains to transportation, particularly roads and highways. It has also been used to refer to spending on water projects, environmental improvements, energy, broadband, public lands, and public housing. Critics are correct in noting that some of the spending proposed as part of the American Job’s Plan, such as spending for home care workers, should not be considered infrastructure. But the plan also includes some things that many people might not consider to be infrastructure that they should, such as communications networks and the electricity grid. After discussing the role and importance of infrastructure, this policy brief explores alternative definitions of infrastructure, noting how they differ and what they share in common. Then it considers how using a nontraditional definition can lead to unnecessary expansion of the federal government’s role. Following that, it summarizes some important principles about infrastructure policy, emphasizing the advantages of private ownership and of relying on user fees to fund infrastructure.