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Corps Releases Report on Channel Deepening Economics

by Mike O'Bryant
Columbia Basin Bulletin - September 13, 2002

The U.S. Army Corps of Engineers released this week a report prepared by a panel of seven economists that largely said the Corps' economic analysis of its plan to deepen the Columbia River navigation channel by three feet is reasonable and prudent.

The report stems from a review Aug. 5-9 by the economists of the Corps' draft Supplemental Integrated Feasibility Report and Environmental Impact Statement, which the agency released for public comment July 10. The Corps convened two groups of technical experts, one group to look at the project's benefits and the other to look at its costs. The report records these proceedings and outlines the economists' findings.

This is the second time the Corps has evaluated the economic justifications for the project. It released its economic analysis of the costs and benefits of the original project in 1999, but had to begin consultation over again when the National Marine Fisheries Service rescinded in August 2000 its earlier decision to grant a no-jeopardy opinion of the project. In September 2000, the two states denied the Corps the water quality permits it would need before it could begin the project. It began working on the supplemental economic analysis in January 2002 and released the new analysis in July.

The Corps said it will review all the comments, but had yet to incorporate the economists' comments into the final EIS and at this point is unsure how the comments would change the EIS.

"We know there will be changes based on what we heard during the panel's briefing in August. We just don't know what those exact changes will be," said Col. Richard W. Hobernicht, district engineer for the Corps' Portland District. "We will know more as we digest the contents of this report just released to the Corps and the public today."

"We respect the opinions of all the panel members and will consider their individual and collective comments as we finalize this report, which will be available later this year," Hobernicht continued.

As the economists were completing their review Aug. 9, they outlined their thoughts, now caught in the report:

While the panel of three economists that reviewed the Corps' cost analysis said the extensive cost analysis is good, they also said the agency needs to reconsider the amount of dredged material it expects to remove from the river, an item that could increase the total cost. They also said the Corps should consider a good portion of the dredging activity to be more like its annual maintenance dredging activity, which is easier and faster and could lower the total cost.

Some areas where costs could be adjusted include overdepth quantities (cost could be lower), quantities along the channel slope (could cost more), cleanup factor (cost could be lower) and hopper dredge costs (could be lower).

The four economists that reviewed the benefit analysis also said the report was adequate for what it attempted to do, although it lacked detail in some cases that support its conclusions, and that in many cases the Corps' assumptions about benefits are conservative. However, they suggested that the report would benefit from a broader multiport analysis that looks at the dynamics of shipping competition between ports. They also said that a technical review earlier on in the process might have steered the Corps towards the more comprehensive analysis sooner.

"Some assumptions and methodologies in the context of reduced container vessel operating costs for Portland through greater departure depth and utilization tend to raise the estimate of transportation cost savings," the report says. "In particular, the attribution of benefits to light-loading vessels significantly increases the apparent cost savings. A revised analysis with similar scope would likely yield lower benefits, while a broader, multi-port analysis that captured the inland cost issues…may reveal other categories of benefits."

Between the first and most recent analysis, the Corps completed three years of research on juvenile smelt and white sturgeon, as well as gathering additional information about Dungeness crab. It also added six restoration projects. While doing this, it reduced the project's cost from $196 million in 1999 to $149 million today. (The six sponsoring ports have asked for additional restoration work that includes other upland disposal sites. The ports will foot the additional $7 million cost, bringing the actual total project cost to $156 million.)

The Corps cut the project's cost primarily by reducing its estimates of how much rock it would have to blast to clear some areas of the channel and by reducing the amount of dredged spoils its contractors would have to remove and dispose.

Cost Review Team:

Benefit Review Team:

Related Sites:
U.S. Army Corps of Engineers

Mike O'Bryant
Corps Releases Report on Channel Deepening Economics
Columbia Basin Bulletin, September 13, 2002

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