September 10, 2000
©The Register Guard - Used With Permission
AS WILD SALMON stocks returning to the Snake River have plummeted, many have proposed breaching or bypassing the four federal dams on the Lower Snake River between Lewiston, Idaho, and the confluence of the Snake and Columbia rivers.
Proponents argue that breaching the dams - removing the earthen mounds adjacent to the concrete portions of the dams and letting the river run free - would restore endangered wild salmon, return traditional sites and fisheries to Indian tribes, improve water quality, reduce taxpayer subsidies to corporate irrigators and barging companies, and comply with numerous laws and treaties. Opponents claim that breaching would prove prohibitively costly.
This issue has politicians, interest groups, and citizens choosing sides. Unfortunately, some of our leaders are making statements that muddy the waters - or worse, mislead the public.
In a July 27, 1999, speech, Sen. Slade Gorton, R-Wash., claimed that "removing the four Snake River dams in southeast Washington would be an unmitigated disaster and an economic nightmare." In February of this year, Texas Gov. George W. Bush followed with, "Breaching the (Snake River) dams would be a big mistake ... . The economy and jobs of much of the Northwest depend on the dams." In a May 1 editorial, The Oregonian likened breaching the dams to "taking a sledgehammer to the Northwest economy."
Unable to resist jumping on this befuddled bandwagon, the Clinton administration and Vice President Al Gore recently decided to leave the dams in place while we try other salmon recovery programs.
If only their memories were a bit longer. Just 10 years ago, many politicians offered similar predictions about the disastrous effects of protecting the northern spotted owl. "We'll be up to our neck in owls, and every millworker will be out of a job," predicted President George Bush in 1992. "It is time we worried not only about endangered species, but endangered jobs."
At the time, Bush and many other politicians embraced the simplistic logic of owls vs. jobs, just as some today frame the dam-breaching debate as salmon vs. jobs: We can protect endangered jobs, or we can protect endangered species, but not both.
Recent history has proved them wrong. The sky didn't fall. Indeed, the Northwest economy has boomed, consistently outperforming the national economy, whether measured by jobs, income, or sheer exuberance, throughout the 1990s.
Ten years ago, those who predicted disaster at least had an excuse: This region had never experienced widespread economic changes to protect a species. Today that excuse is gone.
In the highly charged atmosphere that surrounds the debate over the dams, it is easy to forget why they were built in the first place. The primary reason was to allow barges to reach Lewiston, Idaho, and secondarily to provide water for irrigation and hydropower. It's also important to keep in mind what these dams actually accomplish. Aside from promoting barge traffic, they help just 13 corporate farming enterprises irrigate 37,000 acres in Western Washington, which is less than one-half of 1 percent of the total irrigated land in Washington, Oregon and Idaho, and they supply only about 4 percent of our region's low-priced electric power.
To make a wise, responsible decision about the future of the dams, private citizens and public servants alike should be well-informed about the economic consequences of breaching. Two of the most important questions that arise when considering this or any other public investment or policy issue are: (1) How will jobs and income be affected, and (2) What are the true costs and benefits?
In February, the Army Corps of Engineers released its "Draft Lower Snake River Juvenile Salmon Migration Feasibility Report/Environmental Impact Statement," which, among other things, estimates the economic effects of breaching the four dams. This report is being widely quoted and will undoubtedly play an important role in any congressional and White House decisions on the issue.
Over the past two years, my colleagues at ECONorthwest and I have carefully reviewed the corps' work, partly in response to a request from two environmental organizations, and we continue to study the issue. Both then and now we've found that the corps got it wrong. Specifically, the corps has failed to put job losses and costs in perspective, based its analysis on absurd assumptions, and consistently overestimated costs and underestimated benefits, all of which give their results a bias against breaching the dams. Given the far-reaching implications of this decision and the likely irreversible effect of a decision not to breach the dams (i.e., wild Snake River salmon would become extinct), it's important to get the numbers right.
Impacts on jobs
Let's first look at what the corps says about jobs. The corps estimates that breaching the dams would cause a net loss of 1,081 long-term jobs in the Pacific Northwest (4,200 jobs gained, 5,281 jobs lost), with the largest losses occurring in irrigated agriculture, the operations of the existing dams and locks, and reduced spending caused by increased electricity rates.
But these lost jobs would amount to about one-fiftieth of 1 percent of all jobs in Washington, Oregon and Idaho. For the 25 counties near the lower Snake River, the corps estimated a net loss of 711 long-term jobs, less than one-fifth of 1 percent of the employment in these counties. "Disaster"? "Nightmare"? "Taking a sledgehammer to the Northwest economy"? Nonsense.
And even these estimates - 1,081 long-term jobs for the region and 711 for the local economy - don't measure anything close to reality. To arrive at its numbers, the corps took a "snapshot" of the economy in 1995 and then based its estimates of the impact of breaching on the assumption that "the long-run effects are permanent and continue for the 100-year period analyzed in this study."
In other words, the corps assumed that the basic structure of the economy would remain stuck in its 1995 form, unchanged for the next 100 years. Using a Brownie instead of a Sony tells us little about how a real economy will react to the breaching of four dams or anything else.
As if that weren't enough, the corps also assumed that for the next century, those who lost their jobs from the breaching of the four dams would never work again; local and regional firms that would have sold goods and services to those who lost their jobs wouldn't find replacement sales; owners of the 13 affected farming enterprises would take all 37,000 acres of their farmland out of production and wouldn't switch to any other economic activities; the region's electricity customers would have to pay for an estimated $271 million in new generation facilities out of their pockets and would take no conservation actions in response to higher electricity rates; and everyone throughout this chain who lost his or her job would also never work again.
Such absurd assumptions ignore all the dynamic adjustments that economies undertake all the time, and render the corps' estimates meaningless. As University of Montana economist Tom Power puts it, this is like driving by looking in the rearview mirror.
The corps committed this error, in part, because it confused jobs with people. A job may disappear for 100 years, but the person holding that job doesn't remain unemployed for 100 years. A recent study by the U.S. Department of Labor found that of all U.S. workers who lost jobs in 1995-96, half found replacement jobs in less than eight weeks and 83 percent found work by February of 1998. More than half the workers displaced from full-time jobs who subsequently obtained full-time employment were earning at least as much as they did before displacement. So if we look at the people rather than their jobs, we find that the negative impacts are small and temporary.
In addition to overestimating job losses, the corps has underestimated job gains. For the impact on quality of life, the corps estimates 1,475 to 3,126 new recreation-related jobs - that is, jobs stemming from angling, hiking, rafting and kayaking. But this barely begins to capture the quality-of-life impacts of restored salmon runs and 140 miles of free-flowing river in a spectacular canyon.
Urban and regional economists in the Pacific Northwest widely agree about the importance of our region's reputation for a high quality of life, and specifically our phenomenal natural environment. Indeed, a 1999 Oregon Employment Department survey found that 44 percent of new residents listed the state's quality of life as the primary reason for moving here. A free-flowing Lower Snake would add to the quality of life that attracts and retains talented workers, even if they never catch a fish, take a hike or paddle a kayak. These jobs, and the spending and investment they would generate, are likely to be the biggest economic benefit of breaching the dams. But the corps doesn't address this impact. In fact, it doesn't even mention it.
Estimates of benefits and costs
Now let's consider the corps' oft-cited estimate that breaching would cost $300 million per year. Even if the Pacific Northwest had to pick up the full tab for bypassing the dams, which it wouldn't, then the cost would amount to one-tenth of 1 percent of Oregon, Washington, and Idaho's total personal income of $303 billion. It's simply silly to predict that a 0.1 percent effect would cripple the Northwest economy.
Moreover, the $300 million figure overestimates what the actual net cost would be. A net cost - costs minus benefits - of $300 million is actually the corps' lowest estimate of net benefits. What those citing this figure fail to mention is that the corps' high estimate of net benefits is $1.3 billion per year.
But neither of these dollar amounts reflects an accurate range of the costs and benefits of breaching the dams, because the corps has overestimated the costs, especially for replacing the electric power generated by the dams, and underestimated the benefits. The corps has failed, for example, to include either the vast bulk of tribe-related benefits or what the corps calls passive-use benefits.
Tribe-related benefits include regaining access to sacred and traditional sites and ceremonial fisheries, and the resulting changes in mortality, morbidity, and spiritual well-being.
Passive-use benefits come not from using the resources that breaching would restore - the salmon and the river - but from knowing they exist and that future generations will get to enjoy them. These values aren't trivial. For many, perhaps most, Americans, the salmon is a symbol of the Pacific Northwest. Economists working for the corps estimated that the passive-use values of the salmon and the free-flowing river range from $486 million to nearly $1.3 billion. If these were incorporated into the corps' estimates, the range of net benefits would change from a low of $186 million to a high of $2.6 billion.
Learning from the 1990s
By ignoring the dynamic nature of the economy, neglecting to put numbers in perspective, overestimating costs, and excluding major categories of benefits, the corps misinforms rather than informs the debate and seems determined to repeat the mistake that others committed in the early 1990s when they viewed the spotted owl as a feathered apocalypse. The corps' technicians have squinted at the punctuation and failed to notice the story unfolding around them.
Unlike most other Americans, Northwesterners have not only read this story, they've lived it very recently. And they know it can have a happy ending.
Not everyone, of course, will be happy if the dams are breached. We can and should provide targeted and effective assistance to farm workers, barge workers, and dam operators to find new jobs as well as to businesses to recoup investments based on their expectations that the dams would remain forever.
Breaching the dams would be no small undertaking. It would yield both economic benefits and economic costs, but it would clearly not yield a "disaster," "nightmare" or "sledgehammer" for the Northwest economy. And if I'm right about the overlooked benefits of breaching, then not breaching will certainly have negative, long-run impacts on the economy.
The story told by the 1990s in the Pacific Northwest offers valuable lessons. We have only to learn and apply them.
Ed Whitelaw is a professor of economics at the University of Oregon and president of ECONorthwest, an economics consulting firm. This is a condensed version of an article that appeared in the autumn edition of Oregon Quarterly.