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Rand Report Stirs Dam Breaching Issue Back to Life by Bill Rudolph NW Fishletter, September 13, 2002

A report released last week by the country's oldest think tank has stirred the remnants of the dam breaching debate in the Northwest. The RAND Corporation report, commissioned by the Pew Charitable Trust, says the four dams on the lower Snake River could be removed "without negative consequences to economic growth and net employment." But Northwest critics of the $75,000 report say the findings are skewed by many assumptions, especially the future cost of natural gas. The report, which took eight months to complete, also does not deal with the biological consequences of breaching on ESA-protected salmon and steelhead stocks.

Environmental groups, along with RAND experts, fielded questions about the findings at a Sept. 4 press conference. But without a prior glimpse at the results, it was hard for mainstream reporters to separate the media hype from the report itself. Touting a future of clean air, saved salmon and new jobs, dam breaching advocates from Trout Unlimited, the Northwest Energy Coalition and Save Our Wild Salmon lined up to comment on the results. They did not mention the huge salmon returns from the past few years, which resulted primarily from improved ocean conditions that boosted many smolt-to-adult return rates tenfold or better.

"This treasured regional icon and economic mainstay of the Northwest continues to spiral towards extinction," the groups said in a press release issued on the same day that nearly 20,000 fall chinook were counted passing Bonneville Dam. Overall chinook counts are only a few thousand shy of last year's huge numbers, when over 600,000 spring, summer and fall chinook had been tallied by now.

The bounty has found its way to Idaho as well, where dam-busting rhetoric has been severely muted by the hundreds of thousands of salmon returning to that state as regional agencies struggle to put together the 199 "reasonable and prudent actions" called for in the 2000 hydro BiOp that gets the hydro system temporarily off the hook for jeopardizing ESA-listed salmon and steelhead.

But fish weren't part of the equation in the RAND study. Principal author Mark Bernstein was focused on power issues. Speaking at the press conference, he said as demand for electricity grows, alternatives to hydroelectric power will have to be developed, with the bulk of future power plants expected to be fueled by natural gas. Given such a future, the report developed three different scenarios. One called for meeting 20 percent of the new demand expected to be served by natural gas with energy efficiency and renewable energy; another looked at the impact of removing the lower Snake River dams and replacing the power they generate with either natural gas-fired generation, energy efficiency or wind power; and a third considered how to meet the power needs of direct service industries by "doing more energy efficiency to meet their demands."

"What we found," Bernstein said, "is that you can shift a moderate amount away from future business-as-usual expectations and have no impacts on the economy. In other words, one can take 20 percent of the new natural gas generation that's expected to come on line, and with that and energy efficiency and wind or solar power, and basically have no impact in the economy."

The RAND study used the US Army Corps of Engineers' environmental impact statement on the lower Snake dams to obtain estimates of costs and economic benefits from taking out the four dams. Depending on assumptions about costs, results would be slightly positive or negative, Bernstein said. "But in the big scheme of things, the differences that we're talking about--about plus or minus 2 percent of the gross regional product--we can't say that's any different than zero."

Job creation was a theme the environmentalists pushed in their press release on the RAND study, but the report itself was more cautious. Net employment impacts are in the range of 20,000 jobs by 2020, the report estimated, which would amount to only one-third of one percent of the potential jobs available in the region by then.

The study's methodology has raised some serious questions. "I had higher expectations for the level of review," said PNGC spokesman Scott Corwin. The RAND study "has little or no input from experts on Northwest power issues," he pointed out.

Corwin also had questions about the theoretical macro-economic impacts reported in the study. "If dams are breached, a specific set of industries will take the brunt of the hit," he said. "The links between those industries and the rest of the economy must be investigated. Just look at what has happened to the rural economy with the 50-percent rate hike."

"BPA agrees with RAND's primary conclusion that the Northwest should diversify its resource portfolio with energy conservation and renewables," said Lynn Baker, a spokeswoman for the power agency. "We're doing that now." But Baker said environmental claims that the report provides a "clear road map" for salmon recovery are "greatly overblown." She said BPA stands behind the Corps of Engineers' analysis and NMFS' assessment that dam breaching by itself won't recover the listed stocks, and pointed out the federal agencies are coordinating a huge effort that addresses all aspects of salmon survival--habitat, harvest, hydro and hatcheries.

BPA believes the RAND assumption that replacement power from renewable sources could be on line two years after the four Snake dams are removed is "unrealistic," Baker said, especially with the increasing difficulty in siting large-scale wind projects in the region. She said the study itself says it has "not attempted to assess whether the outcomes are achievable or how they could be achieved."

Baker also noted the difficulties in making assumptions about future resource supply. "Many natural gas plants proposed for the region when wholesale prices soared in 2000 to 2002 have since been cancelled or postponed," she said.

Economic Assumptions Questioned
NWPPC spokesman John Harrison said the report doesn't deal with a fundamental issue--whether power prices will support much of a switch to renewables. "If you can't make money, you aren't going to get a loan to build a plant," he said.

Future natural gas prices are an important factor, Harrison said, and they are likely to be much lower than modeled in the RAND study, which uses an economic model that estimates natural gas prices will more than double in 20 years, to $6 per million Btu. That's a far cry from the April forecast numbers, used in the NWPPC's latest analysis, which predicts natural gas prices will gradually increase to $3/mmBtu by 2005 as new gas-fired power plants come on line. After 2005, prices are expected to increase at an average annual rate of 0.5 percent through 2025, which is closer to a 14 percent increase from present prices.

Don Sampson, executive director of the Columbia River Inter-Tribal Fish Commission, said the RAND report verifies CRITFC's own tribal energy vision that the future lies in diversity, conservation and renewables. Sampson said there are huge economic benefits to restoring tribal fisheries that weren't mentioned in the report. "Our belief is that the river's prosperity, from our perspective, has been siphoned off and shipped away for too long."

Sampson said the tribes continue to support the restoration of normative river conditions through "strategic" dam removals and enhanced flow and spill that is critical to salmon rebuilding. He said implementing recommendations in the RAND analysis "would go a long way to realizing the vision of the Northwest Power Act's mandate of an equitable treatment to fish and wildlife."

Nancy Hirsh, policy director for the NW Energy Coalition, said the RAND study "helps provide a marker for the NW Power Planning Council as it develops the fifth electricity demand forecast and sets a new vision for the region for the next 20 years, and for Bonneville as it looks at allocating federal power in the next period of 2006."

Hirsh called the study "very conservative" in its cost estimates and assessments of the potential for efficiencies and renewable energy. She thinks positive economic benefits, including job growth, could be even greater if the region displaced future gas generation by more than the 20 percent modeled in the RAND study.

"We're going to need strong proactive policies to promote renewable energy as a resource" at both state and federal levels, said Hirsh.

Trout Unlimited's Steve Moyer said the breaching debate is not going to disappear. "This study today shows the issue has not gone away and is not going away. It's going to be there and get louder and louder again, just as it did in 2000 when the Clinton Administration put out its 2000 biological opinion.

"We're going to come to these checkpoints here on the salmon recovery plan in 2003 and 2005, and when that happens, we think that the government and the politicians in the region are really going to have to face up to the fact that they haven't gotten done nearly the number and the kind of things that were promised in the Clinton plan, which this administration has essentially adopted," Moyer said. "So the pressure is going to increase on the administration and Congress in the coming months and year, and when they face that pressure this study will be there to remind them that there is a way to get out of this and that they ought to move on to more sustainable energy production mechanisms."

Pat Ford, executive director of the Save Our Wild Salmon Coalition, said Northwest fishing and conservation businesses are still continuing to build public support for restoring Columbia and Snake River salmon by "the means necessary. And our work will continue and is continuing, and what will stop the momentum towards removing the lower Snake dams and the only thing that will stop it is restoration of salmon without removal of those dams.

"If the federal government and states can provide that success story, then the cause of lower Snake dam removal will go away," Ford said. "We don't think they'll provide that because we don't think the scientific basis is there for that, nor is the money to implement the plan, nor is the will to implement the plan, but that's what will be needed for the efforts to do what is needed finally to restore salmon."

Ford's group even trotted out former Interior Secretary Bruce Babbitt, who said the RAND report shows that removing the dams would not hurt growth and would help create more jobs. "There is no conceivable reason for further delay in removing the dams," Babbitt said.

Ford said the people of the Northwest will demand the restoration of salmon, especially knowing that the economy will not be harmed. What he didn't say was that his organization received a $1.34 million grant last year from the Pew Charitable Trust for "supporting efforts to significantly strengthen the public constituency needed to breach the four dams of the lower Snake River in Washington state."

A RAND spokesman said his company had actually responded to a request for proposals from the NW Energy Coalition in a bid to produce the report. The coalition had not responded to questions for clarification of the PEW funding issue by the time NW Fishletter went online.

Paul Norman, senior vice president for BPA's Transmission Business Line, said his agency talked to RAND officials Sept. 12 via conference call to express concerns about the report. "We told them it was so poorly done that we urged them to pull it back until they could do a professional job," Norman told NW Fishletter. "They took it under advisement," Norman added. "We also urged them to issue a clarification of RAND's view of the interpretation of their report by certain other groups," Norman said. He said RAND agreed with BPA's assessment of the report that found the highest level of future job creation if the dams were left in place, with enough energy efficiencies developed to equal the amount used by the region's direct service industries, principally, the aluminum industry. The RAND report estimated that such a strategy could generate up to 55,000 new jobs in the Northwest.