$1 of Highway Spending Creates $2 of Economic Activity

Economists at the Federal Reserve Bank of San Francisco studied the effects of unexpected grants to states for Federal-Aid Highways affected gross state product (GSP, or the gross domestic product (GDP) of a state).  They found that an unexpected $1 increase in federal highway grants to a state resulted in a $2 increase in GSP.  The economic effect was double the amount of the grant.  In the short term, effects on GSP were even greater.

You can read the unpublished paper here→ or read a summary here→.  Additional posts and articles related to the impact of infrastructure investment include:

American Infrastructure: An Expense We Need to Pay (Infrastructure Watch, Nov. 1, 2012)

Invest in Water Infrastructure (Infrastructure Watch, Sept. 13, 2012)

STUDY: Every $1 Of Infrastructure Spending Boosts The Economy By $2 (Kawa, L., Business Insider, Nov. 3, 2012)

Barge Traffic Threatened on Missouri & Mississippi Rivers

Levels on the Missouri and Mississippi Rivers continue to drop.  One of the consequences of low river levels is the dangers it poses to navigation, especially to barge traffic.  Low levels have exposed rocks and sand bars on both rivers.

Barges on these rivers transport a lot of goods, especially commodities.  This is a significant part of the economy of states along these rivers, especially those on the lower Mississippi River.  For instance, in Missouri the Missouri Economic Research and Information Center estimated that nearly $3 billion in Missouri commodities, mostly agricultural products, are shipped on water.  Water freight generates an estimated $388 million annually in gross state product (GSP) in Missouri.

To some degree, flow in these rivers is controlled by dams operated by the U.S. Army Corp of Engineers.  Officials and businesses along the Mississippi River have asked the Corp to release more water.  The Corp agreed, and on December 15 began releasing water Carlyle Lake (a little more than 50 miles east of St. Louis) on the Kaskaskia River, which flows into the Mississippi River a few a few miles downstream of Ste. Genevieve, Missouri.

The Corp has tried to tame these rivers for more than a century, managing them for navigation, flood control, and other purposes.  It may not get any easier.  Many are predicting that climate change will result in more droughts and flooding along with more frequent extreme high and low levels of water in the rivers.

A couple of days ago, IW was quick to draw knives on a proposal to pump water from the Missouri River to the Colorado River through a pipeline that would run from Leavenworth, Kansas, to Denver, Colorado.  Recently Interior Secretary Ken Salazar admitted that this was not a practicable plan and that western states need to seek solutions elsewhere.

Related articles and posts

Climate Change Pits Sioux Against Barges for Scarce Water (Bjerga, A., Bloomberg, Dec. 17, 2012)

Drought expands, concerns mount about wheat and rivers (Gillam, C., Reuters, Dec. 6, 2012)

Four stories to keep an eye on in 2013 (Miller, M., Southeast Missourian, Dec. 18, 2012)

In Two Weeks, the Mississippi River Could Shut Down (Goldenberg, S., The Atlantic, Dec. 14, 2012)

Officials meet to tackle drought-ravaged Mississippi River, shipping concerns (Currier, J., St. Louis Post-Dispatch, Dec. 17, 2012)

Pump water from Leavenworth to Denver? Highly unlikely, U.S. concludes (Helling, D., Kansas City Star, Dec. 13, 2012)

Will the Missouri River be the Next Colorado River? (Infrastructure Watch, Dec. 14, 2012)