peterson_vs_dh.doc

VERIFIED STATEMENT OF STEVEN PETERSON

My name is Steven Peterson. I am a Research Economist at the University of Idaho. My business address is the Center for Business Development, University of Idaho, Moscow, Idaho 83843. With the assistance of my colleague Mike DiNoto, Professor of Economics at the University, we have been requested by the Staff of the Idaho Public Utilities Commission to research the regional economic impacts regarding the proposed abandonment of the Camas Prairie RailNet’s Grangeville line between Grangeville and Spalding. Our research report is attached as Exhibit No. 1 with Attachment A ______________, Attachment B outlines our research procedures, and Attachment C contains our vitae.
Based upon our research, we conclude that Camas Prairie’s (CPRR) abandonment of the Grangeville line will have enormous negative impacts on the regional economy. The results of a benefit-cost analysis found that for every $1.00 of costs to the region from rail abandonments there is only 24 cents of offsetting.
Using the CPRR’s estimates of rail car shipments in the forecast year (2,621) we predict the following costs:
There will be a total of $1.249 million in direct lost income to regional producers from increased transportation costs. This will have an additional impact on the regional economy from the indirect effects (i.e., multiplier effects) of $1.511 million in sales and $280,000 in labor income.

A potential loss of railroad-related toursim sales of $388,642 causing lost labor income of $170,546 (direct and indirect impacts).

There will be an increase of about 18,000 trucks a year on U.S. Highway 95 causing a regional loss of $114,980 in annualized sales and $50,456 in labor income from additional accidents. [??Steve??]

An acceleration of firm closures from railroad line abandonment. The most vulnerable business is U.S. Timber. Its closure will cost the region $6.4 million in sales and $1.57 million in labor income (direct and indirect impacts).

In total, the region will lose ($8.428 million in sales and $2.071 million in labor income.

There are several other relevant findings contained in the report. First, abandonment of the CPRR Grangeville line will erode the ability of the region to attract manufacturing and other industries. Not only may abandonment threaten U.S. Timber’s mill in Craigmont, but it will likely prevent the opening of the proposed facility to manufacture straw plywood in Grangeville. Second, the Camas Prairie region has unemployment and poverty rates that are higher than both the state and national averages. The region’s rural economy is already lagging behind Idaho and the nation.
Third, closure of the Camas Prairie Grangeville line will harm small family farms and accelerate the growth of large corporate farms. Finally, the abandonment coupled with the threat to remove Snake River dams would result in the loss of direct producer income ranging from $2.6 to $7.1 million per year depending on the degree of transportation competitiveness in the region.

VERIFICATION

State of Idaho )
) ss
County of Latah )

STEVE PETERSON, Research Economist, being duly sworn, deposes and states that he has read the foregoing Verified Statement, knows the facts asserted therein, and that the same are true as stated.

STEVE PETERSON

SUBSCRIBED AND SWORN to before me this day of July 2000.

Notary Public, State of Idaho
Resident in ________________, Idaho

My Commission expires on:

STB DOCKET AB-564
V.S. STEVE PETERSON 2