Resource Development Council

Independent economic analysis

Annual impact of proposed beluga whale

critical habitat could reach $399 million

An independent study commissioned by RDC estimates that the potential economic impact of proposed critical habitat designations for the Cook Inlet beluga whale could range from $39.9 million to $399 million annually.

Late last year the National Marine Fisheries Service (NMFS) proposed designating 3,000 square miles of Cook Inlet as critical habitat for the whales. Within the proposed critical habitat areas are numerous oil and gas facilities, major port operations, shipping lanes, power projects, commercial fishing operations and major transportation projects, including the proposed bridge over Knik Arm near Anchorage.

In its proposed rule designating critical habitat, NMFS concluded the designations would have only minor economic impacts of approximately $600,000 over the next decade and that the anticipated benefits outweigh the anticipated costs. RDC commissioned its own independent economic analysis because it believed the federal agency significantly underestimated the economic impacts by focusing primarily on the incremental administrative cost of considering critical habitat.

“While administrative expenses are no doubt a cost, they are certainly not the only cost of the designation, nor are they the only cost that is capable of being readily quantified,” said RDC Executive Director Jason Brune.

RDC’s study gathered information from its members of the anticipated impacts of critical habitat designation. That analysis identified a number of other economic impacts of the designations, including monitoring requirements, project slippage, loss of production, uncertainty, non-market costs and project modifications. The analysis examined the potential impacts to a broad range of industries operating within or adjacent to the designations. The report also included an analysis of potential secondary impacts in the regional state economy.

The data collected conservatively supported a production loss for Southcentral Alaska industries of at least one percent to as high as 10 percent. Moreover, the monetized economic impacts do not include those impacts that may occur if projects such as the Knik Arm Bridge are abandoned because of critical habitat restrictions and added costs.

Over the course of a decade, the region could suffer a potential loss of as much as $3.4 billion, resulting from the reduction in direct production output. The loss of total employment ranged from 149 jobs to 1,487 jobs. The loss in payroll ranged from $9.6 million to $95.7 million.

In his 28-page comment letter opposing the proposed critical habitat designations, Brune requested NMFS revise and reissue its “fundamentally flawed economic analysis” to more accurately reflect the real economic threat posed by the federal proposal.

Brune said the proposed rule outlining the designations is not justified based on available data and is inconsistent with the Endangered Species Act’s clear standards and congressional intent. He said NMFS should reissue a new rule that is based on the best available science, that properly identifies the locations and features of any purported “critical” habitat, that limits any such habitat to areas where special management is necessary, and that properly weighs the benefits of a designation against the benefits of exclusion.

“Only by taking these steps will the Service afford RDC and other members of the public an opportunity to meaningfully comment on the Service’s proposal,” Brune said. He said the benefit of critical habitat designations for the beluga is insignificant and unproven.

The economic analysis was conducted by Resource Dimensions of Gig Harbor, Washington. The report, as well as RDC’s comments on the proposed critical habitat designations, are available at:

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