2018-08-11 / News

Line 5 Oil Spill Could Cost Tourism Economy $4 Billion, FLOW Study Finds

By Stephanie Fortino

Assembling Tuesday, August 7, at Trinity Church for a program about the impact of an oil spill in the Straits of Mackinac are (from left) For Love of Water (FLOW) president and founder Jim Olson, MSU Professor Robert Richardson, doctoral candidate Nathan Brugnone, and FLOW Executive Director Liz Kirkwood. Assembling Tuesday, August 7, at Trinity Church for a program about the impact of an oil spill in the Straits of Mackinac are (from left) For Love of Water (FLOW) president and founder Jim Olson, MSU Professor Robert Richardson, doctoral candidate Nathan Brugnone, and FLOW Executive Director Liz Kirkwood. An oil spill from Enbridge Energy’s Line 5 pipelines at the Straits of Mackinac could have a $6.3 billion economic impact in Michigan, including a $4.3 billion hit to the tourism economy, according to a study conducted by Michigan State University Professor Robert Richardson and doctoral candidate Nathan Brugnone.

The report, “Oil Spill Economics: Estimates of the Economic Damages of an Oil Spill in the Straits of Mackinac in Michigan,” was commissioned by the Traverse Citybased environmental group For Love of Water (FLOW) and published in May.

Tuesday, August 7, about 40 people gathered at Trinity Episcopal Church to hear a presentation from the researchers and learn more about the future of Line 5. The Island and its tourism-based economy would be among the first communities affected by a Line 5 spill and the results would be devastating, according to the study.

It publicizes the economic risk and potential harm of an oil spill in the Straits of Mackinac and, it is hoped, will prove to politicians there is no feasible alternative to Line 5, said FLOW founder and president, Jim Olson.

In another technical study, FLOW noted that most of the oil and natural gas products carried by Line 5 are destined for Canada. Oil products could be rerouted through existing pipeline infrastructure to reach Canada, while natural gas used by Upper Peninsula residents could be transported by rail car and trucks, according to those findings.

The more than $6-billion price tag for an oil spill was determined after Dr. Richardson and Mr. Burgnone interviewed experts and reviewed documents from other oil spills and natural disasters. Dr. Richardson, an ecological economist, and Mr. Brugnone interviewed about 30 people, including civil engineers, hydrologists, conservationists and biologist, lawyers, and members of the tourism, and real estate industries. They analyzed such events as the 2010 Enbridge Marshall oil spill that dumped more than one million gallons of oil into the Kalamazoo River, extrapolating data to estimate the costs of a spill along the submarine portion of Line 5. A caveat, Dr. Richardson said, is that there is little data on oil spills in freshwater environments.

Since the FLOW study was published in May, the state has published a draft of its own risk analysis for a worst-case scenario from a Line 5 spill. Michigan Technological University professor Guy Meadows led some 40 scientists in the study, which will be the topic of an August 13 Harbor Springs meeting.

Dr. Richardson said he was encouraged that the cost estimates in “Oil Spill Economics” are “within swinging distance” of the costs found in the state’s risk analysis.

Impacts to Tourism Industry

The biggest economic impact would be to the tourism industry. Visitor spending grew 3% in 2016 to reach about $23.7 billion in the state, which generated about $40.7 billion in business sales. This spending supports about 221,420 jobs and the tourism economy supports about 337,490 jobs, which accounts for about 6.1% of Michigan’s employment.

The FLOW study considered economic impacts to 15 Michigan counties, the top five, or “Tier I,” counties most affected - Mackinac, Cheboygan, Emmet, Charlevoix, and Presque Isle counties - and 10 “Tier II” counties. The study does not include economic impacts to other Great Lakes states or Canada.

In Mackinac County, visitor spending is estimated at $220 million and has a $377 million impact, the report finds. Cheboygan County has $90 million in visitor spending with a $154 million impact; Emmet County has $363 million in visitor spending and a $623 million impact; Charlevoix County has $313 million in visitor spending with a $537 million impact; and Presque Isle County has $36 million in visitor spending with a $61 million impact. Total visitor spending in the most at-risk counties is estimated at $1 billion, with an impact of more than $1.7 billion.

For the Tier II counties, visitor spending is estimated at $720 million, with an impact of more than $1.2 billion.

The researchers looked to other areas affected by oil spills to get an understanding of how tourism would be affected in the Straits region. In addition to the environmental recovery effort involved, it would take years for the tourist industry in the area to cover from negative public perception of the spill.

Tier I counties could experience a 60% loss in economic impact the first year, 50% loss the second year, 40% loss the third year, 20% loss the fourth year, and 10% loss the fifth year following a spill. Tier II counties would suffer a 40% loss the first year, 35% loss the second year, 25% loss the third year, 15% loss the fourth year, and 10% loss the fifth year, according to the findings.

Natural Resources and

Other Industries

The federal government requires natural resource damage assessments to understand the effects of oil spills, Dr. Richardson explained. During the 2010 rupture of Enbridge’s Line 6B near Marshall, more than 1.2 million gallons of oil were recovered and 40 miles of river shoreline were affected. The incident caused $62 million in damage to natural resources.

The researchers estimated the spill cost about $775,000 per mile. If a spill were to occur at the Straits, the study estimated 900 miles of Great Lakes shoreline would be affected, which would cause $697.5 million worth of damage to natural resources. The estimate, Dr. Richardson said, is likely conservative, and includes many threatened and endangered species.

The commercial fishing industry would be significantly impacted and Native American tribes would be disproportionately affected because they have more than 50% of the fisheries in the Straits of Mackinac area, explained Mr. Brugnone. The average dockside value of commercial catches is $10 million to $12 million a year and the indirect effects, including the selling of secondary products such as fish pate, is estimated at $40 million to $60 million a year.

Many Chippewa Ottawa Resource Authority (CORA) commercial fishers catch fish near the Mackinac Bridge and the Straits of Mackinac utility corridor where Line 5 crosses underwater. The current value of the commercial fishing industry is about $61 million. Fisheries would be impacted for at least three years following an oil spill, Mr. Brugnone said. The negative economic impact to commercial fishing would be about $32 million the first year, $20 million the second year, and $10 million the third year.

Municipalities would incur significant costs as water filtration and sewer plants would have to repair or replace equipment it damaged. A startling concern the researchers identified is the possibility of fires in water and sewer treatment plants if the oil in water intakes were to ignite. The study estimates a spill would cause $1 million in water plant repairs and $36 million to replace sewer plants.

Researchers reviewed the costs of providing bottled water to Flint residents during its crisis from lead contamination to determine the effects here. They estimate a Line 5 spill would affect 55,600 residences and businesses and that providing them bottled water for a year would cost about $196 million.

Coastal property values would be reduced for up to 11 months, according to the analysis. Taking temporary evacuations into consideration, they estimated the negative economic impact to coastal property could be about $486 million.

The economic impacts of an oil spill would depend on the scale and magnitude of the spill, how much oil is released and where it goes, Dr. Richardson said.

Mr. Burgnone continues to study the impacts to industries such as commercial shipping. The state’s risk analysis does explore the im- pacts to commercial shipping, which would also be plagued by delays once shipping could resume after the oil is cleaned up.

Mackinac Island Concerns

The study didn’t consider costs associated with the public health crisis from an oil spill. Following the presentation, audience members raised concerns about how an oil spill would impact the Island during the busy tourist season. The water filtration plant would have to stop pumping and the sewer system would likely be affected as well, meaning everyone would have to be evacuated.

“Getting people off the Island would be a nightmare,” said Nancy May, noting the U.S. Coast Guard has said in the past that ferry service to the Island would be suspended during cleanup. Rosalie Roush said the cost of evacuating and housing Island residents would be significant, as well.

The time needed to get emergency response equipment to the Straits was another factor not explored in the study, Mrs. Roush said, noting the U.S. Coast Guard has said that it could take up to five days. Any delay in cleaning up the oil would add to the economic and environmental damages, she said.

Summer resident Susan Lenfestey suggested copies of the report be given to each of the counties included in the study. George Goodman encouraged the organization to make it available to such organizations as the Michigan Municipal League, Michigan Townships Association, and Michigan Association of Counties. Mrs. Roush suggested the study be shared with hotels, tourism bureaus, and convention and visitors bureaus.

The study explored only the effects of an oil spill during the summer. What could happen if a spill happened with total or partial ice cover is alarming, said audience members Lorna Straus, Mr. Goodman, and others.

Dr. Richardson said he and Mr. Brugnone are working on another study with Grant Gunn, an assistant professor in the geography department at Michigan State University, to try to understand how oil would react if leaked during inter. How oil would behave with ice cover, and what the response effort might entail, has not been studied in depth, Dr. Richardson said. FLOW board member Rick Kane said the U.S. Coast Guard is conducting oil and ice response efforts in Alaska to get a better understanding of how to respond to winter oil spills.

More study also is needed to understand how natural gas liquids would behave if spilled into the Great Lakes, Dr. Richardson said.

FLOW Executive Director Liz Kirkwood and Mr. Olson provided updated information on Enbridge’s applications for additional Line 5 anchor screw supports, which have been discussed in previous editions of the Mackinac Island Town Crier.

Mr. Olson said a decision on the future of Line 5 is expected this fall. He encouraged audience members to join the legal effort led by the Straits of Mackinac Alliance, which is appealing the state’s approval of 22 anchor supports earlier this year. The Grand Traverse Band of Ottawa and Chippewa Indians has filed a similar appeal. The fate of Line 5 also could impacted by the November gubernatorial race, he added.

“This year is the year of reckoning for Line 5,” Mr. Olson said.

City Councilmember Anneke Myers thanked FLOW for keeping the Island involved.

“I think Mackinac understands what the possibility is,” she said. “We appreciate you coming here and giving us updates and keeping us engaged, because we really do have far-reaching tentacles, Mackinac Island does, and has a lot of influence in the state. So [I’m] asking all of our citizens to continue supporting all of your efforts and the efforts to move this forward.”

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