COLUMBIA ESTUARY - Foreign firms operating oceangoing vessels may net more benefits from deepening the Columbia River - and they're not likely to pass the savings on to local shippers and farmers, a panel of economic experts assembled by the U.S. Army Corps of Engineers has found.
The deepening project could lead to larger vessels calling on Columbia River ports less frequently, said Daniel Smith, a consultant who analyzed the project's benefits.
"The problem here is the transportation savings are in increased efficiency, not increased capacity," he said. Essentially, fewer ships would leave fuller. Foreign ocean carriers have less incentive to cut rates for shippers when their vessels are full. Furthermore, shippers would have fewer departures to choose from.
A panel presented its analyses of potential costs and returns of the dredging project in Portland Friday. The Port of Portland and other Columbia River ports are seeking to have the Corps dredge an extra three feet from the existing 40-foot channel from Astoria to Portland to accommodate vessels with deeper drafts.
Ernie Niemi, vice-president of ECONorthwest, has been following the channel deepening debate and was in the audience Friday.
"There's a significant probability that the benefits from this project will accrue to parties outside the U.S. economy," Niemi said.
The Corps' analysis failed to take the complicated decisions of ocean carriers into account, the experts said. This was not because of flaws in the method, but rather lack of scope.
"It's with hindsight that we're looking back and saying the analysis probably could be broader," Smith said. "The world has gotten more complex and the issues surrounding Corps projects have gotten more complex."
All agreed that a "multi-port analysis," which would examine the dynamics of channel deepening in regard to activity at other West Coast ports, such as Seattle and Tacoma, is needed. Smith called such an undertaking "enormously complex."
Corps deepening project economist Brian Shenk said that in the early 1990s when the economic study was first planned, "it was viewed at the time as reasonable not to do a multi-port analysis." Such an analysis is now "well within what we could do," he said.
The experts found further fault in the Corps' benefits calculations for "light-loaded" vessels, which leave at less than the maximum departure depth - usually 38 to 39 feet.
"We did not believe allowing benefits for a vessel leaving at 36 to 37 feet is reasonable because if they're using less than the available draft, then there must be another reason [other than channel depth] for the delay," consultant Smith said.
On the costs side, experts found the Corps analysis to be reasonable. They noted, however, that some areas of the channel may need to be dredged an extra half-foot beyond what the Corps has estimated. The panel said this left an open question of how increased dredged volume might impact disposal area capacity.
ECONorthwest's Niemi said the panel failed to mention costs outside of construction related expenses. Many area residents, especially those living on the Lower Columbia River, are very concerned about these external costs, such as damage to the environment, commercial and recreational fishing industries and other economic costs associated with changes in the ecosystem, he said.
All three of the experts charged with reviewing the deepening project's costs were either current or former Corps employees. This raised the ire of Corps critics, who pointed to a recent National Academy of Sciences recommendation, which said the Corps should seek independent reviews of its most costly, complex and controversial planning studies. External review panels should not be selected by the Corps or include Corps staff, the report said.
Smith said the fact that he was hired for the analysis by the Corps had no impact on his work.
"I'm not wearing a Corps hat yet," he said. "I'm a professional consultant. I'm entirely comfortable giving the client bad news."
Project manager Laura Hicks said the Corps would have some internal meetings and wait for the panel's written report, due at the end of this month, to move forward.
The Corps planned this external economic review after its estimates for the economic benefits of the $156 million channel deepening project were questioned in a series in The Oregonian in March.