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Economic and dam related articles

Columbia Dredging Benefits
Could Fall Short

by Amy Hsuan and Scott Learn
The Oregonian, April 24, 2010

The Columbia River channel deepening project will finish by the end of the year, bringing to close a $178.4 million project thatŐs removed 15.6 million cubic yards of sediment from the river. At 43 feet deep, the channel will allow vessels carrying exports to load more fully, making ships departing for markets overseas more efficient. PORTLAND, Ore. -- Twenty years ago, a massive dredging effort to deepen 103 miles of the mighty Columbia River held the promise of securing Oregon's connection to the rest of the world.

At 43 feet, the channel - otherwise too shallow to compete with deep-water ports - could play host to today's larger vessels and more efficiently send Northwest wheat and steel to markets around the globe.

But with the Columbia River Channel Improvement project drawing to a close by the end of this year, the environmental and economic promises of the now $178.4 million project could fall short of the taxpayer investment, especially in an economy that's resulted in an unprecedented decline in international trade, a review by The Oregonian found.

The cost of the project, estimated at $134 million in 2003 to calculate its cost-benefit, has grown by 33 percent and taken years longer to complete than expected.

Many of the restoration projects promised as environmental sweeteners at the outset of the project fell through, although there's no evidence of the project harming fish.

The economic benefits of channel deepening have been jeopardized by a global recession that's driven down ship traffic. The shipping vessels Oregon and Washington leaders were counting on may not arrive.

Port officials from Portland to Longview have long said deepening the Columbia River, which stoked controversy and a flurry of environmental lawsuits, is a matter of survival for upriver ports struggling to compete against bigger, more accessible ports in Seattle, Tacoma and Vancouver, B.C.

But in the drive to become more efficient, shipping companies are likely to build ever-larger vessels, sparking a boom in dredging activity worldwide as ports race to land lucrative shipping contracts.

Ultimately, the Columbia River may still be too shallow.

"I don't think the final chapter has been written on the big ships," said Bill Wyatt, the Port of Portland's executive director. "The measure of success won't come for years."

The Columbia River, one of the world's most important trade routes for grain, has never been deep enough in the eyes of the shipping industry.

As far back as 1878, the channel was dug to 20 feet, then to 40 feet by the 1960s. But as overseas trade rose in the late 1980s, oceangoing vessels grew even larger to carry more cargo.

"There's historically been a problem with water depth," said Barry Horowitz, a Portland-based international trade consultant. "We're the only major river port on the West Coast."

Northwest exports - wheat, steel and minerals - tend to be heavier than items arriving from overseas - shoes, clothing and tires. Local exports require greater river depth to fill vessels to capacity.

At 40 feet, ships loading at Columbia Grain, a major exporter at the Port of Portland's Terminal 5, can only take up to 60,000 tons, even on ships built for 70,000 tons, said the company's president, Tom Hammond.

"At times, it makes our shipping costs higher," he said.

Losing business on the river would be devastating, said advocates of the project. Exporters would have to transport goods by truck or train to other ports at a higher cost.

In 1989, Portland and five other ports - Vancouver, St. Helens, Woodland, Kalama and Longview - asked the U.S. Army Corps of Engineers to conduct a feasibility study. The costs fluctuated over the course of the next decade as the scope of the project changed.

From the outset, the ratio of estimated cost to estimated economic benefit - the key decision point on whether the corps should do a project - was close to not making financial sense.

In 2003, the project got the green light with an estimated $134 million cost for two years of construction, which would provide a return of $1.71 in economic benefits for every taxpayer dollar spent. Washington and Oregon, which used state lottery bonds, each contributed $27.7 million. Federal taxpayers picked up the rest.

Under corps policy, project estimates used to calculate cost-benefits and to win congressional approval are based on budgets and timelines reflecting ideal conditions. In reality, corps projects typically take years longer to complete, driving up costs.

In 2003, corps staff asked Congress for $148.8 million for two years of construction starting in 2005. But by 2005, when construction started, the price tag rose to $151 million and the economic cost-benefit fell to $1.66.

"It's an ideal estimate," said Laura Hicks, a project manager for the corps. "Ultimately, we had to complete the project in a less efficient manner based on the dollars appropriated."

Corps officials say the estimated cost to complete the project in 2010 is $184.7 million and they will likely finish lower.

John Martin, a Pennsylvania-based expert and supporter of channel deepening, said corps cost estimates are usually off the mark.

"By the time they start construction, it's based on 5- or 6-year-old data," Martin said. "They don't go back and look at the true benefits. The process is completely broken."

A big fear before the project began was that dredging would cause a host of environmental woes, from directly harming fish to boosting salt-water intrusion to increasing contaminants in the river's estuary.

Regulators say it's too early to tell - monitoring will continue for another three years. But so far, contamination has been low and fish damage minimal.

Other environmental aspects of the dredging haven't gone as well.

Initially, the corps agreed to 736 acres of mitigation work to compensate for dumping dredged sand and rock onto farmlands, forests and wetlands. In the end, only 352 acres were completed.

The agency also agreed to roughly 4,000 acres of restoration work, separate from projects to address damage to marshes and other fish habitat from past dredging. The Columbia is home to 13 endangered or threatened salmon and steelhead runs.

To date, only 700 of those 4,000 acres have been restored or are in process. Another 600 acres were dropped. And the remaining 2,700 acres are pending. It's not clear if they will be completed.

The problem: After regulators approved the corps' plans, the projects started falling by the wayside amid opposition from fishermen, landowners and state and federal agencies.

Sport anglers opposed converting a bay on Washington's Martin Island, near Woodland, Wash., to tidal marsh.

Farmers, landowners and diking districts opposed projects to convert farmland to wildlife habitat on Martin Island and nearby Woodland Bottoms.

Gill netters and others opposed work on fishing grounds near Lois, Miller Sands and Pillar Rock islands near Astoria, saying it would harm fishing.

Only one in five proposals to retrofit tidegates to allow fish into 38 miles of Columbia River tributaries has gone through.

In response to the opposition, the corps and the ports switched gears on the mitigation work, shifting in 2008 to restoring wetlands and forests for endangered Columbia white-tailed deer on port-owned Cottonwood Island near Rainier.

By its own calculations, the corps still covered its obligation to restore at least as much habitat as the amount damaged by the project's dumping.

Perry Lund, a supervisor with Washington's Department of Ecology, said the Cottonwood Island plan is better than some of the abandoned projects because it doesn't require management of dikes and water flow.

"But I'm not even sure I could tell you if the (new mitigation plan) is better or worse," Lund said. "The corps' math showed it worked, and we said, 'Fine, let's get out there and finally start doing something.'"

The migitation work includes improving a bay between two islands and retrofitting tidegates to let fish into 92 acres at Tenasillahe Island. But a 2008 report on that project found access "limited" for young salmon.

The mitigation projects address specific damage and were legally required. The restoration projects weren't, said Robert Anderson, a fish biologist with the National Oceanic and Atmospheric Administration.

Proposing a lot of restoration makes controversial river work "more palatable to the public," Anderson said. But in the end, it isn't mandatory, he said.

Dianne Perry, senior project manager for the Port of Portland, said there are promising restoration projects still being planned.

"We proposed projects, we were willing to pay for them and we worked hard to make them happen," she said. "What else could we do?"

Even with a channel 43 feet deep, the Port of Portland will never be the ports of Seattle, Tacoma or Vancouver B.C., which have naturally deeper channels.

In a recession, shipping companies save money by minimizing port calls and using smaller ships. Container traffic, dependent on consumer demand, is down by as much as 30 percent.

Columbia Grain and other bulk exporters will be able to load their holds more fully once the project is done. But there's no guarantee shippers will pass along the savings.

Officials say new investments along the river show that a deeper channel will lure new business. When the project was first pitched in 1989, China wasn't in the World Trade Organization yet. Asian demand for American soybeans was nonexistent.

Now, the soybean trade is driving projects like a new $200 million grain terminal in Longview, a joint venture backed by Japanese and Korean investors, the country's first in 25 years.

"It's doubtful they would have made that investment without the deeper channel," said Ken O'Hollaren, the Port of Longview's executive director.

But ships could get larger with the expansion of the Panama Canal in 2014. And the Columbia channel can't get deeper anytime soon.

"Would I rather have a 50 foot channel?" said Wyatt. "Yeah. But we're going to make 43 feet work."


Amy Hsuan and Scott Learn
Columbia Dredging Benefits Could Fall Short
The Oregonian, April 24, 2010

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