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Could Siskiyou County benefit economically from dam removal?

By Charlie Unkefer, Mount Shasta Area Newspapers February 17, 2010
Yreka, Calif. - One of the issues surrounding the possible removal of four hydroelectric dams on the Klamath River is the potential for economic benefit to Siskiyou County.

A 2006 report titled “Preliminary Economic Assessment of Dam Removal,” concludes that Siskiyou County could see millions of  additional dollars flowing into the local economy.

The report, produced by  Kruse and Scholz of Eco Trust, estimates that dam removal might bring as much as $170 million into the area, in addition to the $250 million earmarked in the current restoration agreement for the “remediation and restoration of affected sites” and the additional $20 million slated to go to the county for “economic development.”

County’s perspective  

The Siskiyou County Board of Supervisors have a different take on the situation. In a recent interview, county counsel Thomas Guarino characterized the Kruse and Sholz report as “speculative,” citing the  inherent flaws of cost-benefit analysis studies. 

He did, however, acknowledge the fact that there could be a short term economic benefit from such a process. “But we are not looking for a boom or bust cycle in Siskiyou County,” said Guarino, asserting the Board of Supervisors’ position that the short term benefit to the local economy would be a “bump in the road” at best.

While the physical removal of the three dams within Siskiyou County is estimated to cost $73 million, Kruse and Scholz argue  that there may be an additional $97 million in expenditures due to indirect and induced effects of the dam removal work. “Indirect effects” refers to goods and services that support the deconstruction project  itself, such as maintenance of heavy equipment and construction  vehicles.

Guarino said it is the county’s belief that the project also poses a great economic risk. He referred to a study completed by Camp, Dresser and McKee, which attaches a cost of anywhere from $466 to $837 million to the project.

That amount, said Guarino, comes woefully short of the $270 million currently allocated in the agreements for the County. “We could be stuck with the liability,” he said.
Donna Boyd of the environmental group California Trout, says the Camp, Dresser and McKee study does not identify benefits or attempt to do a cost-benefit analysis but only looks at worst-case scenario costs.

The CDM report, she said, was intended to be useful during the stakeholder negotiations so that the liabilities could be minimized as a final plan for dam removal was developed.
She said, for example, that there is up to $350 million designated to cover the cost of trucking sediment rather than managing its flow downstream, but that the current assumption is that sediment would be managed without trucking.  

Siskiyou County’s supervisors stand firm in their belief that the CDM study, which was authored by the Department of the Interior, is a critical document and, in the words of Guarino, “frames the ballpark... It is the only non-biased, broad based report done so far,” he said.

Still questioning the science

Guarino stressed, too, that the county has long held the position that the scientific studies done to date have been largely insufficient and that the county is being asked to sign an agreement before the CEQA and NEPA environmental review processes have been completed. 

“There is a concern that signing the Agreements could be considered a violation of CEQA and NEPA because the commitments in the Agreements are being undertaken with no (completed) environmental review,” he said.

By signing on to the KHSA and KBRA agreements, Guarino said the county stands to lose its right to sue and petition for environmental mitigations, which he characterized as risky for the county.  

Guarino also noted that neither of the agreements address the impacts on recreational use, such as whitewater rafting, and that dam removal could negatively affect the county’s tax base, as land held by Pacific Power becomes annexed by the federal government.  Though it is difficult to assesses this loss, Guarino estimated that it “could be a couple of million a year.”

Contractor speculation

Buzz Knight, president of Mount Shasta-based construction company Timberworks, acknowledges that it is unlikely that a Siskiyou County firm would win the contract for dam removal; however, he believes there will be significant opportunities for subcontracting, both labor and materials, for local firms.

“This will be the most significant construction project in Siskiyou County since the dams were built,” said Knight. “We would encourage the Supervisors to find ways to insure that a good portion of construction dollars stay in Siskiyou County with local businesses.”

Chris Marrone of Marrone Construction in Mount Shasta has, to date, been involved in small dam removal and construction projects. Marrone agreed that there is a chance that  sub-contracts to local firms could come out of the current negotiations, though he said that it is still too early to tell.

Boyd notes that the KBRA budget  identifies $50 million, distributed as $5 million annually, for  habitat restoration on the Shasta and Scott rivers from 2012-2021.  

Dave Webb of the Shasta Valley Resource Conservation District posits that this money could fill a critical need for SVRCD baseline funding as well as provide support for projects that are large and have significant development requirements, two areas that are often difficult to fund. Immediate restoration funding is focused on improving habitat conditions to sustain and improve fish numbers until dam removal.

Job estimates

The Kruse and Scholz reports also explain dam removal in terms of jobs. Using construction industry estimates of 21.5 direct jobs for every $1 million in construction dollars, the $73 million spent on dam deconstruction might create over 1,500 construction jobs.  Likely there would be additional indirect and induced jobs as well.  

All jobs related to dam removal are project-related and would disappear when the dams are gone.  

There are estimates in the Kruse and Scholz reports about the revitalization of fish populations and the resultant increase in jobs and dollars related to the expected improvement in fishing as a result of dam removal. 

Kruse and Scholz estimate that each fish caught by a recreational fisherman is worth $200 to the local economy. If the number of fish caught was doubled, for example, it would add an estimated $4.4 million annually to the local economy. Their estimates also suggest a doubling of fish numbers  would create 71 permanent jobs related to the fishing industry, 48 in the recreation industry and 24 jobs in commercial industry.    

“Granted, much of this is hard to quantify, but the studies make the case for how improvements in river and fish health could benefit the local economy,” said Boyd.

County grapples with issue

“The county wants it to be known that it is legitimately grappling with this issue,” said Guarino, noting that it has been challenging for the county to have its voice heard. “We are now perceived as much more legitimate.”

County supervisor Grace Bennett said that the board of supervisors has constituents on both sides of the issue. “We listen to both sides.” she said.

Bennett said the supervisors are not wedded to any particular outcome, but they do want their decision to support (or not support) the agreements to be rooted in the best available science.

The supervisors are not holding out for promise of   economic benefit for the county and are expressing their concern over potential liability to the county. 

On Feb. 18, a   ceremony is scheduled for the signing of the Klamath Hydroelectric Settlement Act and the Klamath Basin Restoration Agreement, the two primary documents in question.  It will take place in Salem, Ore. 

Secretary of the Interior Ken Salazar is expected to be there, as well as California Governor Arnold Schwarzenegger and Oregon Governor Ted Kulongoski.  Also expected are representatives from the many stakeholder groups that have already announced their intention to sign.

Those stakeholders who will not be signing on Thursday have an additional 60 days in which to sign.
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