Friday, August 9, 2019

Tolling for the Mobile River Bridge is a symptom, not the problem

The largest public outcry over the planned Mobile River Bridge and Bayway is over the proposed $3 to $6 toll on the interstate route between the Virginia St interchange in Mobile and the US 98/90 interchange in Daphne.

But the toll plan is a symptom of a deeper and complex problem. Tolling causes the greatest public angst in the same way that pain causes the greatest personal objection to a deteriorating knee or hip joint. If you treat the symptom you might alleviate some of the pain for a little while.

If you don't get treatment for the real problem--you will never really be free of the pain it's causing you.  Sometimes, addressing real problems means making a sacrifice or two, and facing some hard decisions about what you want vs what you really need.

The real problem with the Bridge & Bayway plan is a poorly executed feasibility investigation and an unnecessary belief that 100% of risk can be avoided with overbuilding. 

There are less costly alternatives that have not been evaluated. There is a level of storm surge vulnerability that we are willing to accept that is well below what might happen in the 100-year storm with 100 years of sea level rise driving it.

This project's problem isn't the toll. This project's problem is a failure to meet a basic NEPA requirement to evaluate a full range of alternatives. It won't be the tolling pain that kills the project. It will be the NEPA failure.

By now, it should be clear that nowhere in the public process of preparing the necessary NEPA documents is it stated that this project's economic benefits are equal to or greater than its costs. 

The Benefit-Cost Ratio is a mathematical expression of a project's worth to taxpayers. A BCR greater than 1-to-1 means that the project will improve our economic well being. A BCR less than 1-to-1 means that the project will harm our economic well being. A toll would only make our state's agony worse.

Until this project's BCR is proven to be greater than 1.0, the statement "the cost of doing nothing is too high" is patently false.

Even if a Federal Leprechuan drops a $2.1 billion pot o' gold in the heart of Crichton, it will still only finance a bridge and Bayway that is overbuilt and unnecessary. 

Reformulate your plan Madam Governor, and you will cure the problem.

Read on for a little sophomore-level economics geekiness.

So, why hasn't the BCR been shown to be favorable?

A part of the answer is on the cost side of the BCR. For some reason, the engineering side of the planning team has adopted a belief that 100% of risk can and should be avoided, and that it's possible to design, build and operate a risk-free system.

In this case it's storm surge risk caused by hurricanes and tropical storms. The planning team has decided that the existing Bayway "is vulnerable to storm surge." The team has also decided that to solve this problem, a new Bayway will be built and elevated, designed to withstand the 100-year flood event that could occur after 100 years of sea level change.

The 100-year flood has a 1% chance of occurring any year. The 100-year sea level rise is expected to occur between now and 100 years into the future. So, we are being asked to pay for a new Bayway designed to hold up in a 1% chance storm that might occur up to 100 years from now. 

That's expensive.

Another part of the answer is that the planners have never truly attempted to investigate the full range of potential beneficial economic effects. Natural resource and public infrastructure economists have developed many tools to measure project benefits, from travel cost savings to risk reduction and from improved labor productivity to more enjoyable recreation experience. All of these are measurable (or at least estimable). 

But no serious investigation of economic benefit has ever been done. There have been reconnaissance level look-and-see efforts, but no real seeking of the answer to the question of why this is a good idea. Simply asking us to accept that it's a good idea is not good enough to ask us to pay more than $1,000 each year.

Engineers and politicians are lousy economists. They are better off finding qualified economics professionals and letting them do that heavy lifting. Then, the engineers and politicians can ask them how they can (and cannot) tell the public why their plan is a better idea than doing nothing.

A couple of other theoretical points that should make sense to most folks:

Proposing a toll system operated by a third party frees the planner from the incentive to consider system total costs. The planners are indifferent to rising costs because their budget constraint is minimally affected. 

Overbuilding--also referred to as freeboarding--frees planners from making a tough decision on what is an acceptable and affordable risk. Mandating that a third party adhere to a design standard that avoids all but insignificant risk frees the planner from responsibility to achieve that level of performance. 

Risk seekers or risk buyers will load that system up to the cost of carrying the risk of very low frequency events. This means that the third party will hedge their bets. They will try to meet the standard, but they will also price in the costs of system failure. 


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