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NW Fishletter #224, December 20, 2006

Study On Economics Of Dam Breaching Takes Another Hit

A three-year old letter surfaced last week that undercuts "Revenue Stream," a recent report by environmental groups claiming the region could save billions of dollars by removing the lower Snake River Dams and replacing the barge industry with mostly rail lines.

The January 2004 letter from BST Associates to American Rivers' Northwest regional office complained that the results of a BST study commissioned by American Rivers and other groups were misrepresented in a press release that minimized impacts and ignored "many cautions in the body of the report."

BST said eliminating barge transportation on the Snake would yield a less efficient system, and replacing it with rail would be fraught with problems caused by capacity constraints.

Further, even if there were interest in expanding the rail-based short-haul business to overcome the constraints, higher rates would likely result because of the huge capital costs of the expansion, the consultants said.

The letter also said it was uncertain whether alternative transportation systems could accommodate diverted cargo volumes.

These findings are a far cry from those characterized in "Revenue Stream," which said, "recent studies" found that the barge navigation channel created by the dams "could be affordably and effectively replaced by upgrading the Northwest's railroad lines (see NW Fishletter 223). The report cites the BST study in a footnote.

BST's letter said rail constraints in Washington, along with more passenger trains along the I-5 corridor, were straining the system's capacity. "Under the circumstances, it may be prudent to divert more cargo from rail to barge to alleviate congestion," it said.

Brian Willingham, BST's senior economist, told NW Fishletter that the same conditions exist today, nearly three years after the letter was written. He also said his firm was not even aware of the new report by enviro groups.

The original BST study concluded that switching from barge to rail could cost more than $1.4 billion. "Revenue Stream" pegs the cost of upgrading railroads between $18 million and $231 million.

At the time, BST asked American Rivers to post its letter on the conservation group's website, but in its response, the group said it would be 'unnecessary" and "inappropriate" to do so.

At last week's meeting of the Northwest Power and Conservation Council, members voted to have the Revenue Stream report reviewed by the independent panel of economists that have performed such tasks in the past. Their review is expected to be finished before the council's next meeting in January. -B. R.

The following links were mentioned in this story:

Letter on Revenue Streams

NW Fishletter 223

American Rivers' response

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