Dennis Wagner says work of former colleague Jim Waddell made critical errors
A retired U.S. Army Corps of Engineers economist says the work of another retired corps employee, which found the agency underestimated the cost of keeping the lower Snake River Dams by $160 million a year, is worthless.
Economist Dennis Wagner recently critiqued the work of his former colleague, Jim Waddell, who spent three decades in the corps as a civil engineer. Earlier this year, Waddell said his agency got it wrong when it decided in 2002 that breaching the dams to save salmon would be too expensive.
Waddell, who oversaw the 2002 Lower Snake River Feasibility Report, recrunched the numbers, fixed what he said were errors and found the dams are costing the country far more than his agency said. Waddell is campaigning to have the dams removed to save both Snake River salmon and endangered orca whales in Puget Sound.
But Wagner, who also worked on the 2002 report, said Waddell lacks the economic chops to review the 2002 report and made critical errors in doing so. Wagner compiled his findings in “The Snake River Dams: Analysis of Cost Claims,” a report he wrote for the Pacific Northwest Waterways Association, an industry group that supports the dams. The report is available at http://bit.ly/1IPsk1f.
“The Waddell report produces no creditable findings that can be used to compare against the results produced in the (2002 report), due to serious deviations from proper evaluation procedures as provided by the corps’ principles and guidelines,” he wrote.
“Accordingly, the Waddell report should not be relied upon by decision makers, the press, or members of the public who are interested in the accurate costs associated with maintaining the authorized project purposes of the four lower Snake River dams.”
Wagner said Waddell employed an oversimplified technique to critique the 2002 report, used arbitrary inflation factors, fabricated some cost streams and established “dubious decommission costs without documentation, and which do not pass any test of reasonableness.”
Instead, he said the extensive and complicated process used by the corps and many stakeholders in the Pacific Northwest was an open process that underwent extensive review by outside economists.
“The whole study was a very, very open process compared to almost anything the corps had done up to that point in time,” Wagner said in a phone interview. “I’m not saying everything in the corps report was right but it was a very good document with very good information, very readable information, the most credible piece of information out there regarding the costs of the lower Snake River dams.”
Wagner said the corps uses an analysis tool known as National Economic Development that assumes costs for goods and services remain relative to each other over time. Because of that, inflation is not used. But Waddell included inflation in his analysis.
“As previously stated, although it is recognized that costs increase over time due to inflation, these increases may be of critical importance in financing the project but are of no consequence in (National Economic Development) analysis,” he wrote.
His report also hammered Waddell for basing dredging costs over the life of the project on information taken from the corps’ Programmatic Sediment Management Plan that said 700,000 cubic yards of sediment per year need to be dredged or otherwise mitigated. Wagner noted the report does say that, but he also said the agency has no plans to actually remove that much sediment.
Finally, Wagner challenged Waddell’s estimation that it would cost an average $20 million a year, over a 100-year lifespan of the dams, to eventually decommission them when they reach the end of useful service. That cost should have been $200,000 a year, he said.
Waddell has seen Wagner’s report and written a response. He said his work didn’t critique the economic section of the corps’ 2002 report. Instead he looked at the section of the report that estimated engineering costs.
“I’m not pretending to be an economist,” he said. “Here is a cost estimate. I’m an engineer, that is what I’m trying to do.”
Waddell stands by his work but said he made a few mistakes. One was simply semantics. Waddell used the word inflation instead of escalation in his report on the advice of Lynwood Laughy, a friend who edited his work. He said if you swap the two words, there is nothing wrong with his work.
Even if the corps isn’t planning to remove 700,000 cubic yards of sediment annually, Waddell said there is a need to do so to keep the navigation channel open and to prevent water from overtopping the Lewiston Levee during a high flood event.
“Even though they said they are not going to do it, doesn’t mean it shouldn’t be done,” he said. “You can keep kicking that can down the road but it’s going to bite you in the butt sometime.”
Waddell said Wagner is right about one thing. He fumbled somewhere along the line when figuring out what it would cost to decommission the dams when their lifespan is over.
“It’s a two-decimal-point error. I think the number should have been $200,000 not $20 million.”
When his error is corrected, Waddell argues it will still cost $140 million more a year to keep the dams than the corps said in its 2002 report.
Waddell’s report is available at http://bit.ly/1I8Op7o.
Barker may be contacted at [email protected] or at (208) 848-2273. Follow him on Twitter @ezebarker.