Monday, March 31, 2008

BHI testifies on Cape Wind proposal

On March 13, 2008, BHI researcher Michael Head testified before the Mineral Management Services hearing at the University of Massachusetts, Boston. His testimony follows:
I am Michael Head from the Beacon Hill Institute, the research arm of the Economics Department at Suffolk University. My testimony will focus on those sections of the DEIS that deal with economics.

Still no Cost-Benefit Analysis
The DEIS does not include a social cost-benefit analysis that would systematically weigh the social costs against the social benefits of the project, a serious omission. Presidential Executive Order 12866 states that “each agency shall … propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The Cape Wind proposal should not be exempt from this test.

Our updated research shows that the Cape Wind project is not economically viable, showing that the economic costs would exceed the economic benefits by $700 million in 2008 dollars.

Tourism could well be hurt
The DEIS asserts that “the proposed action is located far offshore and is not expected to affect tourism.” This conclusion is too optimistic and in the context of Cape Cod, which is heavily dependent on tourism would, on balance, be hurt by the Cape Wind project. In our 2003 study 62% of a sample of tourists surveyed believed that the turbines lessened the area’s appeal as a vacation destination.

Property Values May Decrease
The DEIS states that “currently available information does not support any firm conclusion with respect to the wind facility’s effect on property values.”

However, based on surveys undertaken by the Beacon Hill Institute in 2003:

• Home owners believe that the windmill project will reduce property values by 4.0%, and waterfront property by 10.9%
• Forty-nine percent of area realtors also expected property values to fall.
This translates into between a $1.76 and $2.54 billion loss in property values.

Employment Effects
DEIS also predicts secondary induced employment benefits resulting in an additional 206 to 622 jobs in Massachusetts. These effects are overstated.

In fact, the reduction in tourism brought about by the Cape Wind project would lead to a reduction in employment of about 700 jobs.

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