Vulnerability of Concentrated Critical Infrastructure: Background and Policy Options

Publication Date: September 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Economics

Type:

Abstract:

"Critical infrastructure" consists of systems and assets so vital to the United States that their incapacity would harm the nation's physical security, economic security, or public health. Critical infrastructure is often geographically concentrated, so it may be distinctly vulnerable to events like natural disasters, epidemics, and certain kinds of terrorist attacks. Disruption of concentrated infrastructure could have greatly disproportionate effects, with costs potentially running into billions of dollars and spreading far beyond the immediate area of disturbance. Hurricanes Katrina and Rita demonstrated this kind of geographic vulnerability by disrupting a substantial part of the U.S. energy and chemical sectors in 2005.

Congress has been examining federal policies related to the geographic concentration and vulnerability of critical infrastructure. In the 109th Congress, the Energy Policy Act of 2005 (P.L. 109-58) facilitated the construction of new liquefied natural gas import terminals in diverse ports. Provisions in the Pipeline Safety Improvement Act of 2006 (P.L. 109-468) require studies to identify geographic areas in the United States where unplanned loss of oil pipeline facilities may cause oil shortages or price disruptions. The 110th Congress is overseeing implementation of these measures and considering additional policies to address concerns about infrastructure concentration.

Geographic concentrations of U.S. critical infrastructure typically have developed through some combination of market influences including resource location, agglomeration economies, scale economies, community preferences, and capital efficiency. Congress and federal agencies also have adopted policies affecting the capacity and location of critical infrastructure, including prescriptive siting, economic incentives, environmental regulation, and economic regulation. Some federal policies have been developed specifically to address perceived threats to critical infrastructure. These influences often have been in place for decades, gradually driving critical infrastructure to its geographic configuration today.

Some analysts may argue that little government intervention is necessary to alleviate geographic vulnerabilities of critical infrastructure because the private sector will adjust its practices out of its own financial interest. However, if Congress concludes that federal intervention is needed, it may employ a number of policy options to encourage geographic dispersion (including eliminating policies that encourage concentration ), ensure survivability, or ensure that effective infrastructure recovery capabilities are in place to mitigate impacts of concentrated infrastructure disruption. Addressing geographic vulnerabilities may call for a combination of options. Congress may also consider whether other legislative proposals with the potential to affect critical infrastructure development--directly or indirectly--are likely to relieve or exacerbate geographic vulnerability. The economic efficiency of public critical infrastructure and the efficient use of federal funds for infrastructure development may also be important considerations.

This report will not be updated.