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Economists Question Lake Powell Pipeline Costs

Lake_Powell.jpg
Wolfgang Staudt
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Wikimedia Commons
A pipeline from Lake Powell to Kane and Washington Counties in southwestern Utah would cost over $1 billion and must be repaid by area residents. Economists say the per resident expense would be huge.

Economists from three Utah universities say repayment costs for the proposed Lake Powell Pipeline would be way out of reach for water users in Washington County.

In a letter to Gov. Gary Herbert and legislative leaders this week, 22 economists question whether Washington County can really afford to repay more than $1 billion dollars in loans to build the massive water project.

“The answer’s ‘yes’,” says University of Utah economist Gabriel Lozada, one of those who signed the letter. “The costs could be paid back. But the implications for water rates and for impact fees would be quite dramatic.”

The letter summarizes an analysis that found every Washington County resident would owe up to $781 dollars annually over 50 years to repay the state loan. And impact fees could top $14,000

U of U economist Gail Blattenberger says supporters aren’t properly counting the costs to state taxpayers either.

“There’s a lot of camouflage about what things are going to cost,” she says, “and I think if we’re making big financial decisions like this, we should make them honestly.”

Meanwhile, project proponents say the economists are making faulty assumptions. Jeremy Aguero, financial consultant for the pipeline project, says supporters have looked in-depth at water rates, impact fees and property taxes.

“None of those analyses got even close to the level of magnitude that is set forth in that report,” he says, adding that the broader question about the project’s value to Utah isn’t getting appropriate attention.

The Utah Division of Water Resources plans to deliver the pipeline license application to the Federal Energy Regulatory Commission by December 1.

Judy Fahys has reported in Utah for two decades, covering politics, government and business before taking on environmental issues. She loves covering Utah, where petroleum-pipeline spills, the nation’s radioactive legacy and other types of pollution provide endless fodder for stories. Previously, she worked for the Salt Lake Tribune in Utah, and reported on the nation’s capital for States News Service and the Scripps League newspaper chain. She is a longtime member of the Society of Environmental Journalists and Investigative Reporters and Editors. She also spent an academic year as a research fellow in the Knight Science Journalism program at the Massachusetts Institute of Technology. In her spare time, she enjoys being out in the environment, especially hiking, gardening and watercolor painting.
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