A. MYRICK FREEMAN III, Ph.D. Associate Professor of Economics Bowdoin College and Visiting Associate Professor of Economics Prepared for the Senate Interior and Insular Affairs Committee May 3, 1973 My name is Myrick Freeman. I am on the faculty in economics at Bowdoin College in Maine, and hold a visiting appointment in economics at the University of Wisconsin-Madison. My training and research work have been in the fields of benefit-cost analysis, the economic analysis of public investments, resource and environmental economics, and international economic theory. A year ago I reviewed the Final Environmental Impact Statement and the Economic and Security Analysis of the Trans-Alaska Pipeline, and prepared extensive comments for submission to the Department of Interior. Since most of the points I want to make today are discussed in greater detail in those comments, I am submitting my earlier comments for inclusion in the record. NEPA AND THE PIPELINE IMPACT STATEMENT I would first like to emphasize the important and valuable role that the National Environmental Policy Act has played in the Alaskan Pipeline issue. NEPA requires that all agencies develop procedures "hich will insure that presently unquantified environmental amenities and values be given appropriate consideration in decision-making along with economic and technical considerations." To that end, the Act requires that agencies prepare detailed statements on the environmental impacts of major actions, that they use "a systematic interdisciplinary approach which will insure the integrated use of the natural and social sciences," and that all relevant alternatives to the proposed action be considered and evaluated. NEPA has been invaluable in the TAPS case because it has required the Secretary of Interior to make public the data and analyses supporting his decision to issue the pipeline permits, and has allowed scientists, environmentalists, economists, and others to scrutinize the data and the decision. As a result several serious questions have been raised about the Impact Statement, and the Secretary's decision has been sharply questioned on several grounds. I wish to emphasize three major points with respect to the Impact Statement. First, despite its limitations, the data and information contained in the Impact Statement have made a substantial contribution to public debate on this issue. The Impact Statement is the most important single source of information on the proposed pipeline and its likely environmental and economic effects. To illustrate the importance and significance of the Impact Statement, I would call your attention to my review and evaluation. My analysis was based primarily on data from the Impact Statement, yet I reached quite different conclusions, namely: that a weighing of all environmental factors together favored development of a Canadian corridor over TAPS; and that a weighing of economic and security factors also tended to favor the Canadian corridor. This second conclusion was highly tentative, however, because of a major shortcoming of the Impact Statement. to TAPS. the Impact Statement was inadequate in its consideration of alternatives Specifically the most glaring weakness is the absence of data and analysis concerning a common corridor through Canada for both oil and natural gas pipelines. This appears to be an attractive alternative. And on the basis of the data in the Impact Statement, one cannot rule out the possibility that the common corridor through Canada might be superior to TAPS TAPS on both environmental and economic grounds. costs. Third the Impact Statement fails to meet the NEPA requirements in that it does not integrate environmental and economic information and analysis. NEPA requires both a careful analysis of the economic benefits and costs and a comparison and weighing of the economic gains with the environmental The economic analysis in the Impact Statement is haphazard and in many places plain wrong; and there was no effort made to bring the economic and environmental information together so that comparisons and judgments could be made. My analysis demonstrated that the required integrated interdisciplinary framework could be developed to utilize the information contained in the Impact Statement. One of the benefits of adopting my framework was to show what kinds of additional information were most critically needed in order to arrive at sound decisions which could permit the appropriate development of economic resources and provide maximum protection of environmental values. Now that the pipeline issue appears to have come to Congress for its ultimate resolution, Congress has a unique opportunity to complete the important work begun in the Impact Statement. It can assure that no final decision is made until the most relevant alternatives, especially the common corridor through Canada, are given thorough, searching and unbiased aralysis. In the spirit of NEPA, Congress can require that it be presented with adequate information on the relevant alternatives, and that this information be presented in a framework which facilitates comparison, and identifies the crucial tradeoffs. ENVIRONMENTAL FACTORS Ideally One step in the application of an integrated analytical framework is the summarization of data on environmental damages and risks. one would want a single index or measure of environmental harm for each alternative. But in reality there are many forms of non-commensurable environmental damages. The principal environmental hazards of an artic pipeline are related to the wilderness character of the territory to be traversed, the fragile nature of the ecological systems, and the uncertainties and risks associated with constructing and operating a pipeline carrying hot oil across permafrost and through earthquake zones. Of further concern has been the threat of oil pollution associated with tanker and terminal operations and possible disasters of the Torrey Canyon variety. The Alaskan and Canadian routes are quite different in the kinds of environmental damages and risk associated with them. In attempting to rank the two routes on the basis of environmental harm, ore must weigh the greater overland distance of the Canadian route and the disruption associated with it against the hazards of marine transportation and the risks of earthquake damage accompanying TAPS. The Department of Interior's own analysis reflects these difficulties. The Impact Statement concluded that, "Nɔ single generalized route appears to be superior in all (environmental) respects to any other." However in all but one of six categories of environmental harm, the Impact Statement ranked the Canadian alternative above TAPS. The issue reduces to how important is the one category favoring TAPS relative to the five categories favoring the Canadian route? |