Monday, June 16, 2014

Canal Corp. Calculations . . .

The NYS Canal Corp. claims that it generates over $6 billion dollars in non-tourist economic activity in a new study that has just been released.

The study examined the economic benefits associated with 9 business sectors.  Other than the obvious "Commercial Shipping for transport of goods and materials," the remaining 8 involve "water used" by Industries, Research and Development, Agricultural, Hydroelectric Facilities, Quarries and Mining, Public Water Supply, Waste to Energy Facilities, and Golf Courses (!).
"The economic impact (benefits) of all businesses, industries and farming operations that rely on the Canal System for its abundant, reliable and inexpensive supply of water has been totaled in terms of the economic output values consisting of direct employment, total employment, total personal income, tax revenues and total economic impact."
Canal Corp estimates almost 9,000 jobs are at businesses that directly rely on the Canal System and over 26,000 jobs when "indirect and induced effects" are included; that these jobs generate almost $1.7 billion in personal income and $702 million in state, local and federal taxes -- for a grand total of over $6 billion in economic impact!
"These impacts were measured using the IMPLAN economic model.  Direct employment was used as the input into the model . . ."
Redflag! Warning!  Computer model involved!  IMPLAN uses "multipliers" and various assumptions about how money moves through the economy.  Here, the "direct employment" was input into IMPLAN, and the computer "model" generated all the other numbers in the "study" that are sure to impress people with the "benefits" of the Canal Corp.

This all sounds suspiciously similar to another computer model in the news recently (the one that produced a "hockey stick" graph no matter what data was input).   Like that other computer model, key pieces of information are being left out of the Canal Corp's study that would place the study's findings (assuming the findings are correct) into a perspective that would be meaningful to most people.

The canal "water used" to create jobs is water that is available in the environment anyway.  The water could still be used whether or not the canal exists if the users build appropriate facilities. (E.g. MVWA would not need Canal Corp's Hinckley Reservoir if it had its own "compensating" reservoir.)  Should not all these water "users"  pay for the facilities they need to get the water?

There is no mention of the 500+ employees of the Canal Corp., what they cost, and the costs of parts, equipment and materials to keep the canal operational.  There is also no mention of the revenues to the Canal Corp., nor where they come from.  Most people would want to know costs and revenues in deciding whether or not Canal Corp. is worth keeping around.

And shouldn't the revenues be paid by those reaping the so-called benefits?  That does not seem to be the case.

It is understood that the Canal Corp. cannot make ends meet on its own, and that a significant part of its operating budget comes from Thruway Tolls. "Thruway" is no where to be found in the study. Thruway users get no benefit from the portion of their Tolls that are used to buoy Canal Corp.

Computer models can cut both ways.  Where is the estimate of the negative "multipliers" associated with Tolls on an interstate highway that in most other states would be free?  How many truck-shipping jobs have been lost to the tolls?  How many manufacturing jobs have been lost to the tolls? How many jobs that would otherwise have been "induced" have also been lost?  How about value of potential farm products made unsaleable because New York's truck-transportation costs have been increased to pay for a Canal Corp that is on the dole?

The Canal Corp study is merely there to present numbers that will make people "feel good" about the Canal System and distract them from the numbers that really count: costs and revenues.
You know what you can do with the Canal Corp Study!

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