Recent Economic Analyses of the Lower Snake River Dams
Below are links to a series of five recent reports and analyses examining, and in some cases re-examining, the costs and benefits of the lower Snake River Dams.
Introduction: On May 4, the U.S. District Court in Portland invalidated the federal government’s new plan for protecting endangered salmon and steelhead in the Columbia/Snake rivers for the fifth time in a row since 2000. The Court was clear: the government’s proposed measures did not comply with the Endangered Species Act (ESA) nor the National Environmental Policy Act (NEPA). The Court is requiring federal agencies to produce a new Biological Opinion informed by a full NEPA process: information development and analysis, full consideration of all recovery options including lower Snake River dam removal, and public participation and input. This memo summarizes a number of reports completed in the last several years by different Northwest experts that reflect the dramatically changing economic landscape inhabited by the four federal dams on the lower Snake River. These reports do not purport to offer the final word on these dams’ ledger, but rather provide a substantive, informed insight into their likely costs and benefits today.
I. Lower Snake River Dam Navigation Study
Rocky Mountain Econometrics. September 2015.
• Rail’s flexibility to go to alternate destinations, the lower Snake River navigation channel’s lack of reliability, and shipping benefits dropping from $19.4 million per year to about $7.6 million have all contributed to reduced demand for commercial navigation, an expanding rail network and increased use of rail.
• The cost of maintaining the four lower Snake River dams and mitigating their impacts has risen significantly. It is now approximately $227 million per year representing an annual increase of roughly 4.5 percent in recent years.
• Maintaining the lower Snake River navigation now costs around $18 million per year.
• The Benefit-to-Cost Ratio of navigation on the Snake is now at a shutdown level of .43:1, and this figure excludes the cost of mitigating the lower Snake River dam’s adverse fish and wildlife impacts.
• The $7.6 million benefit of lower Snake commercial navigation is now dwarfed by the $24+ million it costs to maintain and mitigate the channel.
II. Restoring wild salmon: Power system costs and benefits of lower Snake River dam removal. NW Energy Coalition. August 2015.
• The costs to maintain the four lower Snake River dams and associated infrastructure are far greater than the U.S. Army Corps of Engineers’ 2002 estimate of $56 million per year. A more realistic estimate is nearly five times as great - $269 million annually.
• The costs (net of avoided expenses for maintaining those dams) of replacing the power from the lower Snake River dams with a mix of utility-scale solar and market electricity purchases would be nearly imperceptible to the average public power consumer – close to $1 per month.
• This does not investigate the economics of navigation, flood control, irrigation, fisheries, or the outdoor industry nor the costs of physical dam removal.
III. Lower Snake River Dam Alternative Power Costs.
Rocky Mountain Econometrics. June 2015.
• The lower Snake River Dams (LSRD) account for less than 3 percent of the total system-wide energy generation. The system is currently running at about 84% of capacity with approximately 4,600 aMWs of surplus energy. If these dams were decommissioned today and their energy not replaced with alternatives, capacity utilization would increase slightly – to roughly 86.5%.
• Jim Waddell, recently retired Army Corp of Engineers (ACOE) engineer, calculates that it will cost $312.9 million annually to maintain these four dams, 90 percent of which, $281.6 million, is attributable to power generation.
• The simplest way to replace the lower Snake River dam power would be through purchase on the open market. If this had been done from 2009 through 2014, ratepayers would have experienced a net annual savings of about $19 million.
• If utility scale photovoltaic energy were developed and used in combination with market purchased energy to replace the power from the lower Snake River dams, Northwest ratepayers could expect to enjoy an annual savings of $21.7 million.
IV. National and Regional Economic Analysis of the Four Lower Snake River Dams: A review of the 2002 Lower Snake Feasibility Report/Environmental Impact Statement Economic Appendix (I)
Earth Economics. February 2015
• The current state of the four Lower Snake River dams yield a yearly benefit-cost ration of 0.15, well below a positive return on investment.
• A free-flowing river yields a yearly benefit-cost ratio of 4.3 in terms of National Economic Development (NED). These benefits are not realized with the current state of the river.
• With the possible exception of navigation and irrigation water supply, the current benefits would not be lost, but rather increased, if the dams were breached.
• Wild salmon are keystone species in trophic webs from the North Pacific Ocean to the far reaches of the Lower Snake River and tributaries. They are important for food provision, cultural value, and for sustaining other key species throughout the Pacific Northwest.
V. The Costs of Keeping the Four Lower Snake River Dams: A Reevaluation of the Lower Snake River Feasibility Report
James Waddell and Linwood Laughy. January 2015.
• A professional reevaluation of the 2002 report—correcting earlier cost projections with now available actual costs and addressing omissions, errors, miscalculations and faulty assumptions—demonstrates the Walla Walla District understated the true cost of keeping the dams in place by a staggering $160.7 million on an average annual basis.
• The reevaluation corrects the assumptions and cost estimates used in the Lower Snake River Juvenile Salmon Migration Feasibility Report (LSRFR) and confirms the estimates based on actual cost over the past 15 years. It then projects the costs over the entire life-span of the project.
• If the ACOE’s Walla Walla District had conducted a thorough, honest economic analysis in its 2002 LSRFR, the four lower Snake River Dams would likely have been removed by now.