11.03.2012

Water Ways

http://static.libsyn.com/p/assets/2/7/7/9/27796be1f0483c03/pennfuturelogonew.jpgIt was pretty remarkable timing to have a hearing in City Council on the establishment of a 50-foot buffer along all waterways within the City of Philadelphia the day everyone came back from Sandy.  And yet, then it was, and there I was, giving testimony on behalf of PennFuture, which had hired us a couple of years back to study the economic benefits of greenways along Philadelphia's rivers.  I've enclosed my testimony below.

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My name is Lee Huang and I am a Director at Econsult Corporation, an economic consulting firm based in Philadelphia.  Econsult was engaged by PennFuture in 2010 to estimate the economic and fiscal impact of a fully connected waterfront greenway – or “buffer” – in Philadelphia, and has looked at the benefits of green infrastructure in a number of studies since then, both here as well as outside this region. 

I’m aware that Bill No. 120654 merely allows for the possibility of a fully connected waterfront greenway in the future., and neither calls for the building of waterfront trails on private land nor allowspublic access on private property. Whether the City seeks to create a fully connected waterfront greenway will be a decision for future policy makers. The bill simply keeps that door open by implementing a development setback along our rivers and streams.

As economists, we understand that when it comes to finite things like money and land, there are always trade-offs.  Money spent investing in buffers or greenways means it cannot be spent elsewhere.  And land dedicated to one use may encroach on it being available for other uses.  The purpose of my remarks is not to make these tough prioritization decisions, but rather to inform the process by which those decisions are made, by identifying and quantifying the benefits associated with waterfront buffers.

Many here today will speak of the environmental benefits of buffers, of which there are many. I will focus my testimony today on the economic impacts that buffers provide were the City to make the policy decision to seek a fully connected waterfront greenway. I’ll organize our findings into four, largely non-overlapping categories: (1) impacts from initial investments and ongoing increases in visitor spending, (2) impacts from increased property values, (3) impacts from increased usage, and (4) impacts from increased commuting options.

First, impacts from initial investments and ongoing increases in visitor spending.  Green infrastructure investments, such as greenways along our waterways, provide a one-time boost to the local economy by employing people, who in turn circulate their spending dollars locally, and by increasing local demand for the various goods and services that go into an infrastructure project.  There aren’t yet any hard estimates as to how much in new infrastructure investment is being contemplated, but those amounts would have a multiplier effect within the local economy, in terms of business activity, job creation, and tax revenue generation.

Those investments would then continue to stimulate the economy by attracting visitor activity.  Tourism is, of course, big business here in Philadelphia, and it is particularly impactful for our local economy because it is capturing outside dollars for the benefit of local merchants, local employment, and local tax revenues.  We conservatively estimate that a fully connected waterfront greenway would increase annual visitor spending by over $50 million per year and generate about $2 million per year in local tax revenues.

Second, impacts from increased property values.  Green infrastructure and waterfront trails are increasingly valued as an amenity that people are willing to pay a premium to live near.  A fully connected waterfront greenway would therefore generate increased household wealth for nearby property owners.  We conservatively estimate this property value increase to be about $800 million over a thirty-year period.  If this property value increase is properly accounted for in property assessment, that would be an additional $12 million per year to the City and School District.

Third, impacts from increased usage.  A fully connected waterfront greenway would increase access to outdoor amenities and therefore lead to two, somewhat overlapping gains.  One gain is the value users derive from enjoying a recreational activity.  They may not be paying to do that activity, but that doesn’t mean they aren’t gaining something of value; and, through willingness-to-pay surveys, we can put a dollar amount on each new use.  We estimate that a fully connected waterfront greenway would make recreation newly accessible to about 100,000 new residents, yield about 15 million new uses per year, and generate about $28 million per year in direct use value.

Another gain is the health care cost reduction that occurs as a result of people exercising and therefore becoming healthier.  There is a growing literature that quantifies the cost reduction associated with access to recreational amenities.  Even using low-end estimates from this literature, we estimate that a fully connected waterfront greenway would yield 7,000 new exercisers and about $20 million in annual health care cost reduction.

Fourth, impacts from increased commuting options.  Philadelphia has been making a big push to become more bicycle and pedestrian friendly, and a fully connected waterfront greenway would make it even easier for people to not drive.  We conservatively estimate that we would see 1,500 more bicycle commuters and 1 million fewer miles driven as a result.  This will reduce CO2 emissions by 440 tons and is the equivalent of about 50,000 gallons of gasoline and about 2,500 barrels of oil not consumed.

These estimates are necessarily rough in nature, as actual impacts would depend on whether, where, and of what quality greenway space is built.  These estimates may or may not be useful in deciding on buffer width, shape, or configuration, since in some cases, size and location will make a difference in terms of the magnitude of impact, while in other cases, it will make very little difference.  What we hope to do in presenting these findings is having them become part of the weighing of pros and cons that goes into making the decisions that are before you.  Thank you for your consideration.




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