Week 9

Lecture notes

The Darkside of microfinance video:

• help with poverty with small loans in developing worlds

• has turned negative in many instances

• predatory microfinancing

• forcing women to sell property

• suicides are being linked to microfinance loans

• public money is being given to these people who are exploiting the impoverished communities

• Muhammad yunus economists pioneered this form of lending in bangladesh

• victimization by loan sharks

• by making the institutions profit seeking many people will want to exploit it and scale up the business

• asking for loans to pay loans; starts to snowball quickly

• LOLC microfinance institutions

  • Sri Lana’s most profitable company

  • uses pressure tactics, particularly on women

  • Bought Prasac

• cambodia is the poster child for what can go wrong with microfinance 

•  People will starve themselves to save money to pay these loans

• humans rights organizations are starting up to protect people from violations from these loan sharks

• microfinance loan sharks are still preferable to the standard loan sharks

Grameen I and II videos:

• fear and intimidation is common practice; even the interviewer 

• has even recommended selling their children

• Debt trap

• taking loans to pay other loans

• selling organs

• people are disappearing?

• The owner himself states this is completely illegitimate and fiction

  • he states there is no punishment for not paying back

  • Says that the negative stories are produced out of jealousy of his company

• Look at how capital is trying to be improved in your community for PARO

• issues with for profit industries meant to do social good

Built capital lecture slides

• the permanent physical installations and facilities supporting productive activities in a community

• the physical infrastructure and structures that are created and maintained by by human beings to support economic activities and improve quality of life

  • buildings, road, bridges, utilities (water, electricity, gas), communication systems, public facilities, and transportation networks etc,

• these assets enable the functioning of businesses, governments, and social institutions

• categories:

  • inclusive; available to all users 

  • exclusive; particular groups or individuals denied access

  • joint; if one person uses a good or service, others can use it also

  • rival consumption; if one person uses a good or service, others cannot use it

  • cultural capital affects these categories; eg. some cultures view access to certain built capital as communal

  • group discussion; think of different built capitals that may fit these categories and explain

• Built capital characteristic

  • Durable: in general, has a long lifespan, depending on maintenance and technological upgrades

  • tangible: unlike financial or human capital you can see, touch, and measure built capital

  • depreciable: degrades over time and requires regular maintenance

• Types of built capital

  • trans[prtation infrastructure: roads, railways, ports, airports, etc.

  • energy infrastructure: power plants, electrical grids, renewable energy facilities, etc

  • water and sanitation systems: water supply systems, sewage treatment plants, stormwater drainage

  • buildings: residential, commercial, industrial, etc.

  • telecommunications: broadband networks, communication towers, satellites

  • public spaces: parks, rec areas, and other public amenities

  • each of these have a significant impact on economic activity, public health, and social well-being

• role of built capital in development 

  • energy and transportation: construction of and transport systems can improve well-being and contribute to economic growth

  • Equity, quality of life and well-being: affordable housing, hospitals, and schools, ass well as access to clean water can promote equity and overall well-being

  • improved education: built capital in the form of schools improves education and employment opportunities

  • economic growth: infrastructure, such as roads, trains, etc., supports trade and economic development by facilitating efficient transport and communication

  • enabling social and cultural development: cultural infrastructure, like museums, theatres, etc. support social cohesion, cultural development, etc.

• challenges to built capital

  • needs to combined with investment/improvement inhuman and social capital

    • build a tourist industry without local capacity to run industry and bring in tourists

  • deteriorates and needs to be maintained (costs)

  • ownership (collective/communal vs individual) and access

  • private (for profit) vs public (not for profit)

The 407 Controversy video:

• much of it is owned by overseas interests

• very expensive due to private ownership with no caps on rates

• maximize shareholder values by maximizing cash flows

• made over a billion dollars in 2022

• it was sold for 3.1 Billion dollars on a 99 year lease

• Mika Harris sold the highway

• tolls were initially meant to be lifted during its development 

• Conservative Party sold it

  • claimed privately owned they would be more efficient

  • was actually sold for optics to hide the deficit 

  • tried to keep support for the upcoming election

• Bought mostly by Quebec and a spanish company

• Political reactions:

  • The lack of safeguard against toll hikes

  • only rule was to guarantee a number of drivers

  • burlington to Oshawa one way is 60$

  • most amount of money offered upfront was why it was sold to those companies

• tolls increased by over 300% after being sold

  • deny to license plate renewals for those who didn’t pay tolls

• even Doug ford thinks it was a big mistake

Lecture summary:

The Impact of Microfinance

Financial Landscape and Microfinance Growth

• Microfinance has gained attention due to the potential for profit and financial returns.

• Average Team Efficiency: Teams spend only 50% of their time on productive work; the rest is often tied up in administrative tasks, impacting overall financial performance.

• The influx of capital into the microfinance sector promises the potential for greater social good but often entails expectations for high returns.

• In 2020, over $50 billion was committed to microfinance from various international organizations, signaling a peak in interest and investment.

Case Study: Sri Lanka's Microfinance Sector

• LOLC Holdings: Originated as a leasing company in the 1980s and evolved into a leading microfinance lender in Sri Lanka, thriving with support from development banks.

• Criticism of Borrowing Practices: Many women borrowers face coercive repayment tactics, leading to despair and unmanageable debt cycles.

• Profit vs. Social Responsibility: Microfinance institutions, like LOLC, prioritize profit, often at the expense of borrowers' welfare, causing ethical concerns regarding their operations.

The Cambodian Microfinance Crisis

• Cambodia has become emblematic of microfinance pitfalls where high loan amounts contribute to widespread debt among poor populations.

• Over 20% of adults in Cambodia hold a microfinance loan, highlighting the potential for financial exploitation in a vulnerable economy.

Critique of Microfinance as a Solution to Poverty

• Many defend microfinance as a better option than predatory lending through loan sharks; however, the argument falls short in justifying the vast sums invested with minimal evidence of sustainable poverty alleviation.

• Investigations reveal that microfinance often perpetuates systemic issues, trapping individuals in a cycle of debt.

• Rashida's Experience: A borrower from a microcredit institution highlights the challenging repayment terms, which can reach up to 30% interest, making it tough for borrowers to escape the poverty line.

Grameen Bank and its Controversies

• Microfinance Pioneer: Founded by Muhammad Yunus, Grameen Bank has been lauded for its microfinance model but criticized for creating debt dependency among borrowers.

• Allegations against Yunus include improper diversion of funds and negligence towards harmful banking practices.

• Debt Recovery Tactics: Reports indicate that pressure tactics used by loan collectors include irresponsible advice, such as selling personal assets to repay debts.

Broader Implications of Microfinance on Society

• The powerful narrative of microfinance as a tool for empowerment is challenged by evidence of detrimental long-term effects.

• Critics argue the focus on profit margins leads to neglecting the genuine needs of the impoverished.

• Regulatory frameworks are often lacking, allowing microfinance entities to operate with minimal oversight and accountability.

The Case of Highway 407

Overview of the Sale of Highway 407

• The 407, designed to alleviate traffic congestion around Toronto, was sold for $3.1 billion in 1999 based on a 99-year lease agreement.

• The highway was developed as a toll road utilizing an automated collection system, negating traditional toll booths.

• The government’s rationale for privatization was framed as efficient management, but the sale primarily benefited party optics.

Economic Fallout from Privatization

• Critics argue the privatized tolls quickly escalated, increasing over 300% from their original rates, negatively impacting commuters.

• Lack of protective measures against excessive toll hikes has led to financial strain on average drivers.

• Public reassurances regarding reasonable toll increases contradicted by actual pricing trends post-privatization.

Long-Term Consequences and Criticism

• The ongoing profit from Highway 407 raises ethical questions about public asset management in profit-driven frameworks.

• Ontario's decision to hand over a vital public service exemplifies broader concerns of privatization yielding poor community outcomes.

• Recent political admissions question the wisdom of the sale, emphasizing the government’s retreat from its responsibilities toward public goods.

Conclusion: Lessons from Microfinance and Public Infrastructure

• Both microfinance and the sale of public infrastructure underline the perils of aligning social endeavors with profit maximization.

• The need for scrutiny and ethical governance in sectors operating at the intersection of social good and profit is critical as underperformance and exploitation can undermine their original missions.

• Ultimately, addressing capital deployment in poverty alleviation requires balancing profit with genuine community support and sustainable financial practices.

Chapter 8 Built Capital notes

• In Knott County, Kentucky, the local water system is unreliable, often forcing Sara Johnson to buy water for daily tasks, and she must travel 20 miles to do laundry due to lack of access to basic services.

• The local water system, originally installed by a coal company and now owned by an out-of-state private company, frequently malfunctions.

• In Hebron, Nebraska, Carl Jones faces added costs and travel time after a bridge collapse forces him to take a longer route to deliver vegetables to the farmers' market.

• The county has not yet replaced the bridge, increasing Carl’s gasoline costs and reducing his profits.

• Emily Bailey and Jim Smothers, who moved to Scottsburg, Indiana, to run their business, are unable to access reliable internet services due to the area's reliance on outdated dial-up and the refusal of large telecoms to expand services to rural areas.

• Sara and Carl’s limited incomes make the additional costs of water or travel critical to their financial independence.

• Emily and Jim may have to leave Scottsburg if they cannot access standard business equipment like reliable internet.

• Knott County struggles to attract businesses due to unreliable services like clean water.

• Hebron faces decline as small farmers cannot market their produce effectively.

• Scottsburg cannot capitalize on new technological opportunities without upgrading its infrastructure.

• Rural communities' success in the new economy depends on available infrastructure like water services, bridges, and broadband.

• Built capital refers to infrastructure that supports human activity and community life.

• Rural development often focuses on built capital, but neglecting social capital can lead to issues like sprawl or gentrification, making areas unaffordable for original residents.

• Built capital can exclude certain groups and divert funds from other investments.

• A study of upstate New York communities showed that built-capital investments in tourism, funded by HUD, could lead to unintended consequences for local populations.

• Public and private investments in tourism facilities can positively impact local economies, but community capacity (social and human capital) is crucial for long-term economic success.

• Small towns have invested in built capital like ethanol plants, prisons, and natural gas extraction, hoping to bring jobs and economic growth.

• Many rural communities have offered tax incentives for ethanol plants, prisons, and oil extraction, expecting job creation and economic multiplication.

• However, prisons often don’t employ locals or buy from local vendors, and towns like Rush City, Minnesota, saw little benefit beyond becoming a bedroom community.

• Built capital alone has limits; for example, ethanol plants increased land costs, making it harder for new farmers to afford land.

• Fracking in states like Montana and Texas brought jobs and investment but also caused water-quality issues, increased crime, and social disorder.

• The growing population in McKenzie County, North Dakota, due to the shale oil boom has strained water supply and other infrastructure.

• Fracking has raised concerns about water quality, but the immediate issue is a lack of affordable housing for the influx of workers.

• By 2012, 50 oil rigs were operating in the county, generating 6,000 jobs in a population of just over 6,300.

• Gene Veeders, a local rancher, emphasized the need for housing for essential workers, like teachers and cops, who aren’t part of the oil boom.

• Long-time residents and those on fixed incomes are at risk of being priced out of their hometowns.

• The oil industry heavily drains groundwater, and while oil companies invest in water systems for fracking, the challenge is to ensure infrastructure also serves broader community needs.

• The goal is to create long-term infrastructure that can help attract new businesses once the oil industry leaves the area.

• Some view these issues as a positive problem in a recession, but the community faces challenges in balancing growth and sustainability.

• The oil boom in Stanley, North Dakota, has created significant inequalities between residents who own oil rights and those who do not.

• Falling oil and gas prices could lead to an economic bust, leaving communities with unused infrastructure and potential pollution issues.

• Built capital includes physical infrastructure like roads, utilities, schools, and communication networks that support productive activities in a community.

• Built capital facilitates production, such as roads for transporting goods and power plants for electricity.

• While built capital is necessary for economic development, it alone cannot ensure the well-being of a community; people must be able to use it productively.

• Access and consumption are two key dimensions in how people use community-built capital.

• Goods and services can be exclusive-access, where specific groups are denied access, or inclusive-access, available to all.

• Utilities like water, electricity, and phones are often exclusive, while roads and public parks are usually inclusive.

• Whether access is exclusive or inclusive depends on factors like the ability to control access and how services are organized.

• Joint consumption means multiple people can use a service simultaneously (e.g., roads, radio signals), while rival consumption means one person's use prevents another's (e.g., electricity, clean water).

• Some goods or services may support joint consumption in some situations and rival consumption in others.

• Cultural capital also influences how built capital is viewed; for example, in Hopi cultures, a washing machine is considered open access, while in European American cultures, it is more private.

• Built capital can be categorized based on access and consumption, leading to four types: private goods, toll goods, common-pool goods, and public goods.

• Private goods: Characterized by exclusive access and rival consumption. Example: landfills where access is restricted and one household’s waste limits another’s capacity.

• Toll goods: Exclusive access but joint consumption. Example: toll roads, long-distance telephone lines, and fiber-optic systems, where multiple people can use the service simultaneously after paying a fee.

• Common-pool goods: Inclusive access but rival consumption. Example: public school buildings, where everyone has access but limited capacity.

• The public or private sector control depends on the type of good or service and its impact on access and consumption.

• Common-pool goods: Inclusive access but rival consumption. Example: school buildings, where use by one child limits another’s opportunity.

• If demand exceeds capacity, more buildings or expansion may be needed.

• Collective goods: Inclusive access and joint consumption. Example: streets, roads, public sidewalks, or schools operating multiple shifts.

• Cultural capital influences how different communities classify built capital; different cultures view access and consumption in various ways.

• Some believe private goods drive innovation, while others argue common-pool goods offer greater potential for all members of society.

• Public and private sectors provide built capital in various ways; public schools and roads are publicly funded, while private schools and roads have private investments.

• Some utilities, like electricity, can be publicly owned or privately provided, with decisions based on equity, efficiency, and the role of government.

• Communities must decide how to balance public versus private provision of infrastructure based on local values and needs.

• Private and toll goods or services can be provided by either the private or public sector, depending on historical, economic, or fiscal factors.

• Examples of private goods provided by both sectors include bridges, housing, water supplies, recreational facilities, and fire protection.

• Some public-built infrastructure can be converted to private or toll goods, like land in industrial parks or speculative buildings.

• Common alternatives for providing built capital: private development/maintenance, public development/maintenance, and public development/private maintenance.

• Natural monopolies are common in rural areas, where a single company controls services like water, electricity, and fire protection.

• Monopolies can be public or private and form for efficiency, accepting government regulation in exchange for exclusive rights to operate.

• Deregulation in the 1990s led to mixed results: competition in telephone services, but collusion and higher prices in electricity sectors.

• Some monopolized services, like fire protection in colonial Maryland, were once provided by competitive private companies.

• In the past, fire protection was provided by insurance companies, and only those with policies received service.

• This system was inefficient and unsafe, prompting communities to establish uniform fire protection services.

• Communities either hired salaried firefighters or organized volunteer fire departments, making firefighting a monopolized service in built capital.

• Some rural communities use built capital to generate income, such as Bethel, Maine, which charges surrounding towns for fire protection services.

• Bethel's fire department charges availability fees and rental fees for equipment, increasing revenue and providing better protection.

• Scottsburg, Indiana, created its own wireless network to provide high-speed internet after private companies refused to invest.

• Rural communities face challenges in funding services like fire protection and must decide between public or private support, profit vs. non-profit models, and volunteer vs. full-time staff.

• Questions arise about state intervention, training requirements, and funding through property taxes or assessments.

• Collective goods and services are typically provided by the public sector and are accessible to all, free of charge.

• Public goods are a right of citizenship or residency, with no exclusive ownership.

• Semipublic goods and services are partially funded by fees and often include facilities like municipal pools, libraries, and landfills.

• Common-pool goods and services can be made exclusive by charging access fees or limiting use based on criteria such as age or race.

• Exclusive access examples include the Virginia Military Institute, the Citadel, and Augusta National Golf Club, which have historically denied certain groups access based on gender or race.

• In the 1960s, protests and legal challenges led to the end of racial discrimination in public services, ensuring equal access to built capital.

• Some goods previously considered private, such as restaurants, were redefined as semipublic after legal challenges.

• Decisions about whether the public or private sector should manage built capital depend on community values and decision makers.

• Max Weber identified two types of logic in decision-making: formal rationality (focused on profit and loss) and substantive rationality (focused on social, cultural, or political values).

• Local governments make decisions based on the community's perceived needs and available resources.

• Communities might prioritize infrastructure like landfills, schools, or industrial parks based on what is seen as a right of citizenship or residence.

• When private investment is too risky or unprofitable, local communities may fund infrastructure themselves.

• In the past, federal involvement helped fund infrastructure considered a right, such as clean water and sewage treatment.

• Federal involvement has decreased since the 1980s and 1990s, shifting the financial burden to state and local governments.

• These decisions impact both the community and other levels of government.

• Water systems are key infrastructure, but in rural areas, urban growth threatens water availability for rural communities.

• Water access can be seen as a right (substantive rationality) or as a source of profit (formal rationality).

• Rural communities face challenges as outdated water infrastructure from the 1930s and 1950s needs replacement.

• By the 1990s, many rural water systems were over 50 years old, with high costs to upgrade (estimated $31.2 billion over 20 years).

• Small rural communities still lack modern water systems, waiting for necessary pipeline replacements.

• Water can be accessed through private wells or public/shared systems, which may be publicly or privately owned.

• Water is a finite resource, making it subject to rival consumption, where use by one individual reduces availability for others.

• The need for water conservation (e.g., watering patrols) has become more noticeable in recent years.

• Rationing during droughts shows how water is increasingly seen as a resource subject to rival consumption.

• Wastewater treatment and storage have become significant issues in rural areas due to outdated infrastructure.

• Toxic wastewater can have severe consequences, highlighting the need for proper management.

• Due to exclusion and rivalry, water distribution at the local level could be privately controlled, but rural areas often rely on private wells.

• Urban areas generally have public water management.

• The belief in the right to clean water has led to public control or regulation, prioritizing substantive rationality over formal rationality.

• In places like Knott County, the issue is water quality, not availability, with contamination from industrial, agricultural, and chemical runoff affecting water sources.

• Wastewater is the result of daily water use, with the average U.S. person using 75-100 gallons per day.

• 73% of the population uses centralized wastewater systems, while 27% rely on septic systems.

• Wastewater contains disease organisms and hazardous substances that need treatment before being returned to the environment.

• Outdated infrastructure in rural areas increases the risk of contamination and bacteria entering drinking water.

• Maintaining wastewater treatment systems is challenging, and funding is often inadequate.

• Coliform bacteria, which cause gastrointestinal diseases, are common in rural water supplies.

• Rural areas often lack the resources for regular water testing and quality assurance, especially when using private wells.

• After 9/11, water systems became more vulnerable to physical, cyber, biological, chemical, and radiological threats.

• The EPA allocated $23 million to improve small and medium drinking water facilities, highlighting the need for security and emergency preparedness.

• Extreme weather events have increased the need for secure, reliable water systems in small communities.

• Low-quality drinking water in rural immigrant communities may hinder efforts to reduce sugary beverage consumption.

• Water systems in low-income agricultural areas may have contamination levels exceeding federal guidelines.

• Negative perceptions of tap water, especially among Latino populations, correlate with higher sugar-sweetened beverage consumption.

• Improving rural water systems and communicating the results to communities would benefit underserved populations.

• The Rural Community Assistance Program helps small communities improve water infrastructure and ensure water quality.

• Citizens in areas like Knott County push for private water companies to invest in maintaining water quality.

• Citizen groups in some communities work to enforce clean water laws and prevent contamination by tracing it back to its source.

• Citizen groups act as watchdogs to prevent private companies from disposing of waste at public expense.

• In McKenzie County, North Dakota, the McKenzie Water Resource District was created in 1996 to improve water quality due to contamination from sulfates.

• The district worked with local and state agencies to secure funding for pipeline replacements, improving water access for many areas.

• Solid waste disposal has become a significant issue, with urban areas sending waste to rural areas due to limited space in cities.

• Waste disposal involves exclusionary access (fees for dumping) and rival consumption (land used for disposal cannot be used for other purposes).

• Rural areas sometimes dispose of waste casually, leading to contamination of land and rivers, further limiting their use.

• Dunlap Road residents organized the "Making the Link Environmental Health Awareness Walk" to raise awareness about the health impacts of toxic chemicals from the local landfill.

• Hidden cost 1: Natural capital – Loss of clean air, soil, and water for residents, difficult to quantify in dollar terms.

• Hidden cost 2: Human capital – High rates of cancer in the community linked to the landfill's environmental damage, including groundwater contamination.

• Hidden cost 3: Financial capital – Decreased property values on Dunlap Road due to health risks, discouraging potential buyers.

• Concerns raised about the lack of outdoor air monitoring and potential vapor intrusion into homes, with residents unsure of the extent of exposure.

• Hidden cost 4: Cultural capital – Odor issues impact residents' quality of life, causing them to stay indoors on certain days.

• The event was supported by local organizations like Billups Grove Baptist Church, Northeast Georgia Children’s Environmental Health Coalition, and MICAH’s Mission.

• Dunlap Road residents walked with Athens-Clarke County Commissioners Kelly Girtz and Doug Lowry to express concerns about the landfill expansion.

• Dr. Richard Field, ACC environmental coordinator, attended to hear the citizens' concerns.

• Hidden cost 4: Political capital – Residents have spent decades asking for fair treatment, often ignored, leading to emotional and time losses.

• Charles Nash, a community leader, led the walk which reached the Oglethorpe County line, highlighting the shared landfill agreements between Athens-Clarke and Oglethorpe counties.

• Questions raised about contamination migration into Oglethorpe County and whether both counties will adopt better waste reduction and recycling measures.

• Hidden cost 5: Financial capital – High costs in legal fees and settlements for ecological damage caused by the landfill.

• Commissioner Carl Jordan noted the poor maintenance of Dunlap Road, exacerbated by heavy truck traffic from the landfill.

• Hidden cost 6: Human capital – Health impacts from pollution caused by the waste-hauling trucks, including long-term health effects.

• The poor planning of the built environment placed a landfill in the middle of a residential community in 1976.

• Social capital: Dunlap Road residents question how many children died prematurely due to the landfill's presence.

• Hidden cost 7: Human capital – The emotional and physical toll of losing loved ones due to environmental factors linked to the landfill.

• Political capital: The ongoing struggle and injustice faced by Dunlap Road residents for three decades, with hopes that democracy will provide a platform for their voices.

• In 2010, US residents, businesses, and institutions produced 250 million tons of municipal solid waste (MSW), roughly 4.4 pounds per person per day.

• MSW going into landfills has declined slightly since 2008, partly due to the Great Recession, though per capita waste generation has remained fairly flat since 1990.

• Recycling has risen from 10% to 34% of total solid waste in the past 25 years.

• Landfill waste declined during recession periods (1990–1995, 2000–2005, and 2005–2010).

• The data excludes hazardous or toxic wastes, which are even more challenging to dispose of.

• Waste disposal is both exclusionary and rival, with potential for high profitability, drawing private interests into providing this built capital.

• Rural communities are increasingly viewing waste disposal as an economic venture.

• Jerry Wharton, an independent strip miner, created the Kim-Stan Landfill Company in Virginia after coal mining operations ceased.

• The landfill made substantial profits by accepting out-of-state garbage in its last two years, with little regard for waste management or environmental impact.

• In May 1990, the Commonwealth of Virginia shut down the landfill after dangerous contaminants were found in the Jackson River.

• Kim-Stan Landfill declared bankruptcy, leaving the public (Virginia taxpayers) to bear the $30 million cleanup cost.

• The EPA listed the site as a Superfund location, with taxpayers covering 90% of the cleanup costs.

• In 2010, after the cleanup was finished, the EPA sued three companies for a $1.9 million payment related to the toxic waste they sent to the landfill.

• Private landfills, including those using strip mine sites, are common, with some companies profiting by accepting out-of-state garbage.

• Three miles from Welch, McDowell County, West Virginia, a poor rural community debated a proposed landfill.

• The developer promised to build a sewer system to clean up the Tug Fork River in exchange for landfill permits.

• Supporters viewed the landfill as an opportunity for good jobs and economic growth.

• Opponents were concerned about pollution and health risks, particularly due to past mining activities beneath the proposed site.

• Protest groups formed and by the late 1990s, the company, Capels Resources Ltd., withdrew its permit application.

• The county imposed restrictions, reducing the landfill's size from 500 acres to 35 acres, leading to the proposal's abandonment.

• Despite protests, some in the community regretted the lost opportunity for job creation and economic development.

• Such conflicts over capital priorities often lead to long-term divisions in rural communities.

• Waste disposal impacts not only natural capital but also human, social, and financial capitals.

• Inadequate government oversight has made waste disposal more profitable for private firms than beneficial to society.

• Government responses include regulating private companies or directly managing waste disposal.

• Governments can choose to retrieve cleanup costs or integrate them into private landfill operations, but this can be difficult.

• Alternatively, governments can regulate firms to protect the environment, requiring them to take precautions, with costs passed to customers through higher disposal fees.

• Regulations would ensure costs reflect the true societal impact and be cheaper than cleaning up toxic waste later.

• If the second option is chosen, governments and the public must address social and physical disposal costs, with more focus on recycling, landfill selection, and proper disposal of toxic waste.

• State or federal governments may step in if local governments lack technical capacity.

• Solid waste is recognized as a collective problem that communities can solve through organization.

• NIMBY groups and other community coalitions often form to protect interests or promote solutions, such as blocking landfill approvals or promoting recycling.

• In Greenup, Kentucky, the group GROWL formed to block a landfill over groundwater contamination concerns.

• Some groups protest out-of-state waste acceptance or the construction of toxic waste incinerators, while others seek delays to educate the public.

• Recycling is a common response to reduce waste, with community programs being successful in reducing disposal volumes.

• Participation in recycling can be voluntary or mandatory, depending on the locale.

• Recycling programs are costly and are typically implemented to reduce waste, not to generate revenue.

• Communities recycle due to environmental concerns rather than for profit, and recycling costs are part of the decision-making process.

• As waste disposal costs rise and regulations require true disposal costs, recycling could become more economically rational for both individuals and communities.

• Over time, recycling programs may shift to the private sector if demand for recycled materials offsets recycling costs.

• Governments can increase demand for recycled products by purchasing them for public institutions.

• Recycling grew in the U.S. until 2000, leveling off in 2007; materials like car batteries are recycled at high rates, but plastic bottles have a low recycling rate.

• All stages of a product's life cycle contribute to greenhouse gas emissions, with waste disposal in landfills releasing methane.

• Waste reduction (prevention and recycling) offers significant potential for reducing greenhouse gas emissions.

• Rural areas face isolation from markets and information, but built capital like transportation and communications technologies help reduce this isolation through public-private partnerships.

• Rural communities are responsible for local infrastructure but rely on connections with other networks, often through private companies for services like telecommunications.

• Federal government involvement in maintaining infrastructure has decreased, placing more responsibility on local governments due to low-tax ideologies and antigovernment rhetoric.

• Public sector-built capital in rural areas is deteriorating, with much of the existing infrastructure dating back to the 1930s.

• During the Great Depression, public programs and private initiatives helped rural communities build essential infrastructure like roads, public buildings, and utilities.

• The American Recovery and Reinvestment Act of 2009 (ARRA) aimed to boost jobs and infrastructure through federal investment, including in transportation, clean water, sewage systems, and public land upgrades.

• It is difficult to determine how much of ARRA funds went to rural America, though fund distribution can be tracked online.

• Rural transportation systems face four main issues: inadequate new construction, deferred maintenance, insufficient fiscal infrastructure, and financing challenges.

• The 2007 collapse of the I-35W bridge in Minneapolis highlighted the fragile state of U.S. infrastructure.

• In 2010, 23% of National Highway System (NHS) bridges were structurally deficient or functionally obsolete, while 30% of local and rural "off system" bridges were deficient.

• Despite stimulus investments, 19.4% of NHS bridges were still deficient by 2010, compared to 25.4% of non-NHS bridges.

• Rural areas face a large gap between the cost of infrastructure replacement and available funds, leading to tough choices like abandoning or sharing resources, or reducing specifications to make them affordable.

• Many rural bridges, built before World War II, are over 65 years old, past their intended 50-year lifespan, leading to deteriorating infrastructure and transportation difficulties.

• Maintenance costs are rising due to inflation and the increasing deterioration of infrastructure, with rural roads and bridges needing attention due to heavier traffic, including farm equipment.

• Investments in transportation infrastructure are crucial for rural states, linking to human capital and rural health concerns.

• Although rural highway fatalities fell 27% from 2003 to 2012, rural areas still account for 54% of U.S. highway fatalities, despite only 19% of the population living in rural areas.

• Fatalities in rural areas are 2.4 times higher per 100,000 miles traveled than in urban areas.

• Rural non-interstate road fatalities remain a significant concern according to a TRIP report.

• Non-interstate road fatalities increased from 15,668 in 2011 to 16,161 in 2012.

• A report lists states with the highest non-interstate road fatalities, highest fatalities per 100,000 vehicle miles traveled, and those with the highest percentage of rural roads in poor condition.

• Table 8.3 ranks states for poor road conditions, deficient bridges, and fatalities per 100,000 miles traveled.

• The closing of rail lines and other public transportation has led to increased traffic, compensating for the decrease in travel caused by the Great Recession.

• More information is available from the TRIP 2014 report.

• State governments face pressure to upgrade roads while maintaining fiscal austerity, often privatizing road maintenance through concessions to for-profit firms.

• Federal deregulation of transportation has decreased rural access, leading to abandoned railroad lines and isolation of rural communities producing low-value, high-volume products.

• Communities like Garden City, Kansas, invested in their own infrastructure, while others couldn’t fill the gap left by private sector withdrawal.

• Public transportation in rural areas, already limited, has diminished further, with railroads abandoning passenger service and Amtrak running on private tracks with unreliable schedules.

• The interstate bus network has reduced service, with public roads maintained but private companies providing transport.

• Before 1982, bus service regulations linked profit with service to ensure rural access, but the 1982 Bus Regulatory Reform Act shifted to formal rationality, reducing rural routes in favor of profitability.

• Deregulation of the airline industry also affected rural access, eliminating routes to communities without air or rail service.

• The U.S. started highway concessions in the mid-1990s with projects like the 91 Express Lanes in California and the Dulles Greenway in Virginia.

• Some early Greenfield toll roads in South Carolina and Virginia failed due to insufficient traffic.

• In the 2000s, long-term leases for highways like the Chicago Skyway and Indiana Toll Road attracted global investors.

• The trend continued with toll road concessions in California, Texas, and express toll lanes added to existing freeways in Florida, Texas, and Virginia.

• By the 2010s, bridge replacements and more express toll lane projects were authorized as long-term concessions, with Puerto Rico leasing a toll road in 2011.

• Global highway projects: 367 planned in Europe, 117 in the U.S., 35 in Canada; U.S. projects funded: 61 with a cost of $34.6B, Canada: 30 with a cost of $20.2B.

• Deregulation initially reduced airfares, but fewer carriers remain due to economic failures, leaving fewer options and services for rural areas.

• Essential Air Service, a federal program, helps maintain some rural flights.

• Information technology is crucial for rural businesses to compete, but many rural areas lack affordable or reliable internet access.

• In 2011, 70% of urban residents had broadband compared to 57% of rural residents.

• Internet Service Providers (ISPs) are often reluctant to serve rural markets due to high costs and limited customer base.

• In Scottsburg, Indiana, locals had to create their own ISP and fight against policies limiting local public-private partnerships.

• The Telecommunications Act of 1996 aimed to break monopolies and increase competition, improving service and pricing in rural areas.

• The Universal Service Fund was created to ensure rural areas had access to telecommunications through a surcharge on phone bills.

• Between 2003 and 2007, government subsidies to wireless phone companies in rural areas increased tenfold through the Universal Service Fund.

• Government involvement is essential for rural telecommunications development, but subsidies can become entitlements for firms exploiting them.

• Private companies prefer densely populated areas, making rural communities less attractive for infrastructure investment.

• Wireless technology and publicly subsidized satellites have reduced costs, but subsidies for wireless companies remain similar to those for wired services.

• Both state and federal governments play a role in funding telecommunications infrastructure in rural areas.

• Water and sewer systems, roads, bridges, and public buildings now mainly fall under local governments' responsibility.

• Rural communities often finance infrastructure improvements through tax-exempt municipal bonds (general-obligation or revenue bonds).

• General-obligation bonds rely on increased taxes, while revenue bonds depend on higher user fees to repay the bond.

• Many rural communities struggle with financing due to declining tax bases and small populations, making per capita costs high.

• Collaborations like the Northwest Missouri Water Partnership are formed to address infrastructure financing challenges.

• Twelve counties maintain independence but share water sources and treatment through collaborations.

• High per capita costs in rural areas are due to low population densities, unfavorable economies of scale, and serving residents over greater distances.

• Lack of broadband access in rural and remote areas is often attributed to these high costs.

• In some cases, simpler technologies or individual solutions, like septic tanks or private wells, reduce infrastructure costs.

• Fewer streets and less traffic in rural areas reduce some infrastructure costs, but overall, built capital is more expensive per citizen to build and maintain.

• Some rural communities use alternatives like special districts or impact extractions to finance infrastructure improvements.

• Special districts in Kentucky allow infrastructure costs to be paid only by those directly benefiting from improvements.

• Impact extractions shift development costs from the public to developers, as seen in Bethel, Maine.

• Rural sprawl in Missouri has led to small towns growing faster than nearby cities, raising issues like wastewater treatment capacity.

• In Oronogo, Missouri, the town's wastewater plant reached full capacity, leading to a halt in new development, but the ban was later overturned as the town grew significantly.

• Communities and governments provide infrastructure based on capacity and conditions, with motivations varying by context and needs.

• Communities like Knott County may insist on adequate water and sewer facilities when faced with pressure or necessity.

• Communities like Hebron may need to mobilize to convince county authorities to repair infrastructure like bridges.

• Private telecom companies may be motivated to provide affordable internet in remote areas based on demand, market potential, or public pressure.

• Community choices regarding infrastructure reflect both collective needs and influence from local elites.

• Built capital refers to the physical installations supporting productive community activities, such as roads, bridges, and utilities like telephone, Internet, and water systems.

• Access to infrastructure can be exclusive (limited to some) or inclusive (available to all), and consumption of services can be either joint (simultaneous use) or rival (use by one diminishes use by another).

• These two factors create four types of built capital: private, toll, common-pool, and collective, each with different implications for ownership and access.

• Private and toll goods/services can be provided by either the public or private sector, while collective and common-pool infrastructure is typically provided by the public sector.

• The choice between public or private provision of infrastructure is made by the community, influenced by two types of rationality:

  • Formal rationality focuses on profitability and quantitative assessments.

  • Substantive rationality is based on values other than profit, often guiding federal or state support for local infrastructure

• Key categories of built capital—water distribution, solid waste disposal, transportation, and telecommunications—illustrate rural infrastructure challenges.

• Water availability and quality are major issues influencing water services, with state and federal governments involved in water rights.

• Water services are generally under public control, focusing on distribution and quality.

• Solid waste disposal can be privately controlled due to exclusionary access and rival consumption.

• Government intervention is needed to protect the environment and address social and physical costs of disposal.

• Transportation and communication technologies require state and federal involvement.

• E-commerce is increasingly vital for businesses, but rural communities struggle with accessing affordable Internet.

• In an unregulated environment, many rural communities lack access to services at reasonable prices.

KEY TERMS

Built capital in a community includes permanent physical facilities and services needed to support business and community life (e.g., roads, bridges, telephone service, and schools).

Collective goods are infrastructure that involve inclusive access and joint consumption (e.g., roads and public sidewalks).

Common-pool goods are infrastructure that involve inclusive access and rival consumption (e.g., a public building with a defined capacity).

Exclusive access is a characteristic of built capital where individuals can be denied access to the good or service (e.g., utility companies).

Formal rationality applies to decisions based on economic calculation of profit or loss.

Inclusive access is a characteristic of built capital where there is unrestricted access for all who want to use it (e.g., public roads).

Infrastructure is the foundation or supporting framework needed for a structure or organization.

Joint consumption is a characteristic of built capital where the use of a good or service by one person does not diminish its availability to another.

Monopolies are single enterprises that have sole control over the sale and distribution of a particular class of goods or services in a particular geographic area.

Private goods are infrastructure that involve exclusive access and rival consumption (e.g., local landfills becoming private).

Public goods and services involve forms of built capital that are provided to the entire community at no cost.

Revenue bonds are a type of municipal bond where principal and interest are secured by revenues such as charges or rents paid by users of the facility built with the proceeds of the bond issue.

Projects financed by revenue bonds include highways, airports, and not-for-profit healthcare and other facilities.

Rival consumption is a characteristic of built capital where the use of a good or service by one person diminishes or eliminates its availability to another.

Semipublic goods and services include forms of built capital supported in part by fees collected from the user.

Substantive rationality applies to decisions based on values rather than on economic calculation.

Toll goods or services are forms of infrastructure that involve exclusive access and joint consumption (e.g., toll roads).

Chapter 8 summary:

Introduction to Built Capital

• Inhabitants in rural impoverished areas face significant infrastructure issues.

• Sara Johnson's Water Trouble in Knott County, Kentucky:

  • Sara struggles with her local water system, which is often dysfunctional.

  • Consequences: She must buy bottled water and drive to a laundromat, incurring extra costs and losing time.

  • The local water system's ownership changed multiple times: initially by a coal company, now by a private entity from another state.

• Carl Jones in Hebron, Nebraska:

  • Expands his delivery route by forty miles due to a collapsed bridge, adversely affecting his vegetable business.

  • Hesitation about the county's plans for bridge replacement increases costs and burdens his income.

• Emily Bailey and Jim Smothers in Scottsburg, Indiana:

  • Moved from Chicago to enjoy rural life, but face challenges with inadequate dial-up internet, hindering their business capabilities.

  • Major telecommunications providers do not find sufficient profit in rural expansion, leaving residents without modern services.

Challenges Connected to Built Capital

• Economic implications: Extra expenses (for water and travel) threaten individual financial independence.

• Communities face challenges:

  • Knott County struggles to attract businesses due to lack of basic services.

  • Hebron’s vegetable farmers can't efficiently market their produce due to infrastructure issues.

  • Scottsburg falls behind technologically, unable to capitalize on new opportunities.

• Definition of Built Capital:

  • Refers to community infrastructure such as water systems, roads, and technology that affect daily life and economic health.

  • Quality and availability of this capital play a vital role in how communities function in the new economy.

Built Capital Dynamics

• Impact of Built Capital and Social Capital:

  • Concentrating on just built capital while neglecting social capital can lead to issues like rural gentrification, making it unaffordable for long-time residents.

• Case study from upstate New York (1990s):

  • Built capital investments in tourism negatively impacted local communities if community capacity to strategize and adapt was ignored.

• Government and Private Investments:

  • Rural towns incentivized construction of ethanol plants and prisons as economic strategies without guaranteed local benefits.

  • Job creation and economic growth promises are frequently unfulfilled, as observed in Rush City, Minnesota, where a prison did not support local businesses.

Issues Related to Boomtowns and Built Capital

• Example from McKenzie County, North Dakota:

  • Fast population growth due to oil boom complicates the need for adequate water supply and housing.

  • Strain on existing infrastructure leads to high costs for living and essential services.

Built Capital Definition

• Definition of Built Capital:

  • Comprises permanent physical installations and facilities necessary for productive community activities.

  • Includes infrastructure like transportation systems, utilities, water supply, public buildings, and recreational spaces.

• Role of Built Capital in Economic Health:

  • Infrastructure must support actual economic needs for communities to thrive; mere presence is not sufficient.

Access and Consumption

• Two key dimensions in Built Capital:

  • Access: Can be exclusive (limited access) or inclusive (available to all).

  • Consumption: Can be joint (multiple users simultaneously) or rival (one user limits use by others).

• Examples:

  • Exclusive access: Utilities like water and electricity.

  • Inclusive access: Public parks.

  • Joint consumption: Public goods like streets; rival consumption: clean water.

Types of Built Capital

• Classification of Built Capital:

  • Four categories based on access and consumption:

    • Private Goods: Exclusive access, rival consumption (e.g., landfills).

    • Toll Goods/Services: Exclusive access, joint consumption (e.g., toll roads).

    • Common-pool Goods: Inclusive access, rival consumption (e.g., schools).

    • Collective Goods: Inclusive access, joint consumption (e.g., public parks).

• Community Choices:

  • Decisions on providing built capital reflect the community's values, economic capabilities, and priorities.

Public vs. Private Provision

• Differences in Provision:

  • Built capital can come from public or private sectors, affecting control and access.

  • Local governments often provide essential services to maintain public health and safety—like water supply and waste disposal—but may also partner with private entities.

• Challenges with Monopolies:

  • Issues arise with monopolies controlling services, potentially leading to inefficiencies and lack of competition.

Provision Types of Built Capital

• Public vs. Private Delivery:

  • Each has implications for how services are provided and funded.

  • Private firms aim for profitability, which may limit access in lesser populated areas.

Solid Waste Management Challenges

• Solid Waste as Built Capital:

  • Includes collection and disposal; often sees a shift from public to private control due to increased demand and profit opportunities.

• Economic Ventures in Waste Disposal:

  • Increased participation of private firms leads to potential conflicts with local residents over health risks and environmental pollution.

Common-Pool and Collective Goods

• Only the Public Sector Typically Provides:

  • Collective goods, as they are universally accessible and not profitable to private entities.

  • Common-pool goods can be exclusive if a fee is imposed, limiting access.

Community Choices and Values

• Community Decision Making:

  • Reflect the values of local decision-makers regarding public and private sector roles.

  • Emphasizes both profit-driven (formal rationality) and values-based (substantive rationality) perspectives on infrastructure choices.

Water Systems as Public Good

• Public perception of Water Access:

  • Expected to be available as a right; can be manipulated by market forces.

• Maintenance of Aging Systems:

  • Many rural water systems are decades old and require updates; estimated funding needed exceeds budgets available.

Water Quality Concerns

• Quality Issues in Knott County:

  • Contamination of water supplies from industrial runoff and poor infrastructure leads to health risks for residents.

Wastewater Treatment and Challenges

• Wastewater Complexity:

  • The treatment process is critical for community wellness and environmental standards; rural areas struggle with outdated systems.

Community Involvement in Water Quality

• Citizen Advocacy:

  • Local groups push for better management practices for water quality improvement and enforcement of clean water laws.

Local Responses to Waste Management

• Community Definitions of Waste Management:

  • Various local groups attempt to negotiate their waste disposal needs against rising costs and environmental concerns.

The Hidden Costs of Landfill Operations

• Case Study on Dunlap Road, Georgia:

  • Reports from local residents on health impacts and environmental risks reveal ongoing community hazards due to poor waste management practices.

Municipal Solid Waste Statistics

• Generation and Recycling Data (2010):

  • Increase in recycling efforts, yet solid waste generation remains problematic and requires systemic change.

Waste Disposal as an Economic Venture

• Utilization of Abandoned Lands for Landfills:

  • Examples illustrate both the profitability and risks associated with developing landfills in rural settings.

Environmental Responsibility and Waste Management

• Financial vs. Environmental Costs:

  • Private companies face incentives to minimize their financial responsibilities while communities shoulder the long-term costs.

The Ongoing Evolution of Waste Management

• Community Responses to Waste Disposal:

  • Opportunities for communities to organize against private waste management decisions and advocate for local control.

Rural Communities and State Support

• Policies Affecting Built Capital:

  • Rural areas increasingly rely on state and federal support amidst declining local tax revenues, challenging the sustainability of rural infrastructure.

The Importance of Transportation Infrastructure

• Transportation Critical for Rural Economy:

  • Issues folks face regarding bridges and roads impact accessibility for transporting goods and services.

Public Transportation Decline

• Transportation Deregulation Effects:

  • Deregulation has hurt access to public transport, leading to economic isolation among rural residents.

Telecommunications and Connectivity Challenges

• Internet Access Disparities:

  • Rural areas lag significantly behind urban areas in broadband access, leading to economic disadvantages.

Federal and Community Roles in Telecommunications

• Government Intervention Critical:

  • The public sector must step in to support telecommunications infrastructure in rural communities.

Funding Infrastructure Projects**

• Local Governments' Financial Challenges:

  • Rural areas often lack the economic base to support necessary infrastructure investment.

Collaborative Approaches to Infrastructure Funding

• Examples of Successful Partnerships:

  • Creating special districts or shared resources can alleviate some financial burdens on small, rural communities.

Motivation for Local Infrastructure Development

• Community Engagement and Advocacy:

  • Communities must actively engage in seeking improvements for essential services.

Built Capital Summary

• Built capital encompasses infrastructure supporting community productivity (e.g., roads, utilities).

• Infrastructure must be maintained and developed to ensure long-term community viability.

Types of Built Capital

• Four types are identified: Private, Toll, Common-Pool, and Collective—each with unique access and consumption characteristics.