In his Sept. 29 My Turn, Bruce Abel questions the assertion that the proposed Juneau Access Project (“The Road”) would yield benefits worth only 28 cents for each dollar invested.
“Where was this number ginned up?” Ablel asks.
The number comes from a 2014 study prepared for the Alaska Deptment of Transportation and Public Facilities by the McDowell Group. The study, “User Benefit, Life-cycle Cost, and Total Project Life Cost Analyses,” is found in the department’s Draft Supplemental Environmental Impact Statement, Appendix FF. The McDowell economists used the highway cost-benefit methodology developed by the American Association of State Highway and Transportation Officers.
When choosing between alternative highway projects the standard is to dismiss projects with benefit-to-cost ratios less than 1: It doesn’t make sense to invest in projects when the costs outweigh the benefits. According to the McDowell Group, the proposed Juneau road has a benefit-to-cost ratio of 0.28. From an economic standpoint the authors concludes that the road makes no sense:
“The significant findings from this study are [that] none of the ‘action’ alternatives are worth more than they cost, considering all resources (State and federal) required to build and operate the project. This is true under all sensitivity cases, as well as the base case.”
Bottom line: none of the alternatives the state studied beat the existing ferries in terms of net public benefits.
Gregg Erickson,
Juneau and Bend, Oregon