Article from Barrons

By Judith Rodin

New federal infrastructure dollars will be aimed at projects that are “shovel worthy, not shovel ready,” Transportation Secretary Pete Buttigieg told an audience recently.

That’s a critical distinction, because the law passed in November raises federal infrastructure spending to its highest share of GDP since the early ’80s. Will the money help make the country more environmentally resilient and industrially competitive, as the legislation promises? And how should the financial markets and decision makers determine what makes an investment shovel worthy? The choices investors and policy makers make now will determine how effective this once-in-a-generation investment will be.

Investors piled into infrastructure stocks after the bill passed the House. But three factors suggest that a critical and significant strategy shift is needed.

First, following the COP26 United Nations climate summit, investors say they want to ratchet up blended finance, with public funds spurring private investment. Much of the infrastructure funding earmarked in the law provides great leverage for sustainability-focused investor capital. But there must be significant innovation in how government and the private sector work together to create the desired multiplier effect.

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