WJ Editorial
WJ Editorial

Calculating Benefits Of The Waterways

What’s the best way to calculate the many benefits of our inland waterways system to businesses and communities?

The recent Waterways Symposium held in Pittsburgh had many highlights. One of the most closely followed was a presentation by Hilary Mercer, lead executive on the Shell ethane cracker plant in Monaca, Beaver County, Pa.

The more than $6 billion project has brought many benefits to the city and region. The ripple effects are considerable. During construction, the project is employing up to 6,000 workers at a time. In anticipation of the project, Steamfitters’ Local 449 invested $18 million in a new training facility for welders and pipefitters.  The union hopes it will prepare skilled workers not only  for work at the Shell facility itself, but for the building and manufacturing boom the union hopes will materialize as a result of the Shell facility’s location. Pipefitters and welders in the Pittsburgh area earn up to $60,000 a year.

Besides direct and indirect employment, the shale boom has resulted in the region having some of the lowest electricity prices in the nation, saving families billions. Local leaders hope cheap electricity will attract new businesses and investment.

A report by IHS Market said the region could support up to four more ethane cracker facilities, given the proximity of the Marcellus Shale deposits and projected demand. Local officials hope the Monaca plant, and any possible future projects, will help keep graduates of the advanced plastic engineering programs at Lehigh University and Penn State in the region instead of moving elsewhere.

Mercer emphasized several times during her presentation that the proximity of a reliable waterway system was absolutely vital to the Shell project’s site selection. At least 60 percent of all its heavy equipment was moved by water, including a quench tower that was able to be installed in one piece instead of the usual two because it was able to be shipped by water instead of by rail or truck.

And yet, when the Corps of Engineers calculates potential benefits to waterways improvements, it does not include the many effects of projects like this. One Corps study assumes flat or only slightly increased waterways traffic on a portion of the U.S. waterways for the next 50 years. A report prepared for the U.S. Department of Agriculture by IEG Vantage and released this summer used different and broader criteria to calculate benefits of waterways transport. The difference led one Corps presenter at the Waterways Symposium to joke that he wished he could hire USDA’s economists.

On one level, it’s perhaps understandable why a formal process of calculating costs versus benefits cannot assume the development of large projects like this, which take a long time to put in place. But it seems equally wrong to leave them out entirely. If even one more of the four ethane projects being considered come to fruition, what will the effects be on barge traffic in the region? Would the Corps have to recalculate the costs and benefits of  waterways improvements and maintenance in the region? Couldn’t there be a way for the Corps to at least refer to projects like this in its cost/benefit analyses?

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