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Shovel Ready Meets NIMBY

Sigma Investment Counselors

October 30, 2020

It is generally accepted that the U.S. has a significant infrastructure problem.  Addressing this problem has the potential to provide a significant number of jobs and be an important part of an economic recovery.  Politicians on both sides of the aisle have periodically called for supporting infrastructure projects, particularly those that are “shovel ready”.  Investopedia defines shovel ready as a construction project that is considered to be at an advanced enough stage of development for building to begin soon.  The term generally implies that planning is more or less complete, approval permits are in place, and laborers can get to work once sufficient funding is secured.

NIMBY, an acronym for the phrase “not in my back yard” is a characterization of opposition by residents to proposed developments in their local area.  The NIMBY concept may also be applied to people who may generally approve of some proposal as long as implementing it doesn’t affect their lives or require any sacrifice on their part.  While not entirely comparable, it can also be applied to objections based on personal beliefs.

When shovel ready meets NIMBY, delays, and in some cases cancellations, become an impediment to the benefits contemplated with the proposed project.

Investors should consider that, while the timely pursuit of major development programs can be an important factor for the economy and specific companies, the potential for delays makes forecasting more difficult and could mitigate some of the anticipated benefits.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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