Benefits and Costs of Channel Deepening: Who Gains and Who Pays? Case Study of Proposed Delaware Channel Project

초록

Dredging of ports to accommodate larger vessels can create substantial national economic benefits. However, how individual states fare economically with dredging often is unclear and can be an important issue for affected states. This paper examines the benefits and costs to Delaware residents of dredging, using the recent, major proposed deepening of the Delaware Bay and River main federal channel as a case study. Benefits include (1) the lower transportation costs residents might receive on imported goods, (2) the profits residents would realize if cost savings (e.g., on refinery products) are not passed forward to Delaware users, (3) the project costs residents would bear as federal taxpayers, and (4) benefits residents would realize if the use of dredged sediments for planned beach renourishment created savings to the state. Sensitivity analyses are used to reflect uncertainty in outcomes. We find that the net present value to Delaware ranges from $15,528,393to$14,195,700. This is the estimated value to Delaware, today, of all future annual quantifiable benefits and costs over 50 years at 5 7/8%. Stated another way, the quantified net benefits for Delaware imply a benefit-cost ratio ranging from 2.07 to 1.89. Hence, for every dollar of the $7.5millionDelawarewouldpayasanon-federalco-sponsor,estimatedquantifiablenetbenefitstothestaterangefrom$2.07 to $1.89. We note that some benefit and cost estimates are vehemently debated between interested parties, and not all benefits and costs can be quantified.