Southeast Louisiana coastal restoration, hurricane protection are new, booming ‘water management’ economic sector, Data Center says

Southeast Louisiana’s economy, long dependent on the oil and gasshipping and tourism industries, has a new major player, according to a report released Sunday morning by The Data Center: water management.

The term refers to coastal restoration and hurricane protection projects, as well as the management of water in interior areas, such as New Orleans’ efforts to manage its sinking soils and to improve the capture, storage and removal of stormwater, according to the Coastal Index, produced by the Data Center, the new name for the Greater New Orleans Community Data Center.

The water management sector’s recognition as a separate segment of the local economy may be new, according to the report, but its impact on the economy has been around for years, and has dramatically increased since Hurricane Katrina, with the investment by Congress of close to $15 billion in improvements to the New Orleans area levee system and interior drainage projects.

And the sector is about to see another burst of activity, thanks to expected spending on coastal restoration projects if the state receives the billions of dollars it expects as its share of fine money and natural resource damage mitigation payments that will be paid by BP and its drilling partners in the aftermath of the Deepwater Horizon disaster and oil spill.

The report’s authors used an economic formula called a “location quotient” to measure how concentrated the water management sector already is in Louisiana, and found that it ranked at 1.3 in 2013, meaning there’s a greater share of water-related businesses in Louisiana than the average elsewhere in the United States. That means the industry already is “exporting” its services to other locations in the country, with the revenue from that outside business returning here.

That’s below the energy and petrochemical manufacturing industry, which has a 4.2 location quotient, but well above advanced manufacturing and digital media, both 0.5, and biosciences, which was only 0.1.

And it also has a benefit in the form of comparatively high-paying jobs: In southeast Louisiana, that sector saw an increase of 7,382 jobs just between 2010 and 2013, according to the report, “outperforming overall national trends and national trends specific to the water management sector.”

The authors of the report are George Hobor, an economist and senior research fellow with the Data Center; Allison Plyer, executive director and chief demographer at the Data Center; and Ben Horwitz, a geographic information systems expert and the center’s operations and data manager.

According to the report, 75 percent of water management jobs in southeast Louisiana offer hourly wages of $15 or greater, and 22 percent earn $30 or more.

But even as the industry sector grows here, the demand for its services – and more important, its products – continues to grow in Louisiana, as “nearly half of all water management spending goes outside the region – much of this in manufactured goods, showing that the sector is lacking crucial production capacity,” the report said.

And the earnings of employees in Louisiana’s water management businesses also trail the national average for jobs in water management occupations, the report said, “dampening the local sectors ability to attract and retain badly needed workers.”

But that economic impact is only part of the story that the Data Center is trying to tell with its new Coastal Index.

The index was designed to measure the progress that will be made in the future towards creating a more sustainable southeastern Louisiana.

It will do that by tracking how the continued loss of wetlands and land is affecting coastal residents. This first edition establishes baseline indicators for mapping social changes associated with land loss that can be followed over time.

The report places Louisiana’s coastal problems in a national perspective. About 39 percent of the nation’s population lives in counties bordering the coastline, and that same narrow area is home to businesses and industry that represent 42 percent of the nation’s economic output.

But rising sea level caused by both natural effects, such as subsidence, and human-exacerbated global warming is threatening much of that area, a problem likely to become even more important to the nation’s economy throughout 21st century.

“Only a few states and regions have begun to tackle this challenge. Louisiana is in the vanguard,” the report says. That’s partly because the state’s relative sea level rise – a combination of actual rising water levels and rapid subsidence of coastal features – already is outpacing other locations along the coast.

“Louisiana has lost 1,880 square miles of coastland over the last 80 years, and scientists expect that if no action is taken to save the coasts, an additional 1,750 square miles will disappear by 2064,” the report said.

But in the aftermath of Katrina, the state and the federal government have increased their focus on coastal restoration, with the state adopting a $50 billion, 50-year plan that would spend about half that money on restoration projects and half on levees and other storm surge protection efforts.

Louisiana already has spent $2 billion on completed projects and has set aside more than $700 million in past surpluses for other projects, while attempting to win additional funding from the federal government.

But there’s also been a new focus on working with water in interior urban areas in the southeastern part of the state, including New Orleans.

“Projects like the Greater New Orleans Urban Water Plan, which focuses on storm and ground water within the levee system, complements existing efforts to manage water but also introduces new strategies, such as alterations to the physical landscape to store water rather than pump it out,” the report said. “It also experiments with natural water management systems, like flora and fauna, to store and filter water.”

The city of New Orleans’ Plan for the 21st Century calls for retrofitting parks and other built infrastructure to retain and store water, and calls for studies of ways to use the Mississippi River to manage groundwater levels in ways that would reduce subsidence within the city.

And the New Orleans Sewerage & Water Board estimates it will need $3 billion to pay for its own water plan, including significant improvements in water and drainage systems and some of the 21st Century plan projects, which will be paid for by rate hikes that will be implemented over the next 10 years.

“With this foundation in place, economic development leaders from across the region have started to visualize a future of sustainable industrial development,” the report said.

“Living with water involves sophisticated engineering and architectural services,” the report said. “Supporting these services are designers, software providers and consultants. The raw materials for the work range from crushed rock and sediment to complex plastics, such as geosynthetics. Industrial machinery, like amphibious vehicles, dredges and marine vessels are required.”

The equipment also will need to be fitted with advanced tools and those will need to be serviced by skilled technicians and machinery. And, of course, much of the activity will be construction, requiring additional expertise and products, the report said.

And the growth of this new industry in Louisiana already has led to exports of its expertise to the East Coast to assist in recovery from Hurricane Sandy, and to Colorado for assistance with flooding there.

And future exports of expertise and products to locations around the world also is likely, the report said.

This new water management sector has already joined the oil and gas, shipping and tourism industries as a major player in the state’s economy, according to the report.

The index also will compare the water management sector to other sectors that regional economic leaders have targeted for growth: energy and petrochemical manufacturing, advanced manufacturing, digital media (including software), and biosciences.

The index also will monitor other factors by which coastal erosion and land loss are affecting the economy, including those who work in the coastal zone or offshore.

Southeastern Louisiana has lower unemployment than the nation as a whole, with oil and gas extraction and water transportation the leading economic engines in areas outside of the area’s cities. In 2012, the unemployment rate was 5 percent in Houma-Thibodaux, 6 percent in Baton Rouge and 7 percent in New Orleans, compared to the national rate of 8 percent.

But since Katrina and Rita in 2005, the number of workers living outside the parish where theur work sites are located has dramatically increased. According to the report, about 42 percent of workers with jobs in Terrebonne Parish commuted from outside the parish in 2004. In 2011, the out-of-parish commuters had increased to 48 percent. In Lafourche Parish, the workers commuting from outside the parish grew from 42 percent in 2004 to 52 percent in 2011. In Plaquemines Parish, worst hit of southeastern parishes during Katrina and Rita, workers commuting from outside the parish rose from 69 percent in 2004 to 72 percent in 2011.

Wetlands loss also may be behind an increased abandonment of homes in southeastern Louisiana, according to the report.

Smaller coastal communities such as Theriot, Dulac, Montegut, Chauvin, Cut off, Lafitte and Port Sulphur have continued to lose occupied households since July 2005, according to U.S. Postal Service statistics, and the residents left behind are more likely to be poor and elderly.

“In Theriot and Dulac, more than 40 percent of the population lives in poverty,” the report said.

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