How much did Navigator’s defeat cost the Midwest?

With the Navigator CO2 pipeline gone, the Midwest has clearly lost jobs and tax revenue.

But the size of that economic loss is up for debate.

A study funded by Navigator estimated that the project would have employed an average of 3,900 construction workers a year for a period of four years, and resulted in additional property tax payments of up to $63 million a year across the five-state pipeline region of Illinois, Iowa, Minnesota, Nebraska and South Dakota.

Economic output — the total value of goods and services in the region — was expected to rise by $4.4 billion in the peak year of construction, according to the study.

But such economic impact studies are often viewed with skepticism by academic experts, some of whom suggest dividing the predicted economic outcomes by factors of 2, 3 — or even more.

“My smart-(aleck) response is to say, ‘Take whatever estimate they give you and move the decimal point 1 to the left and you’re probably close,’” said University of Chicago senior instructional professor in economics Allen Sanderson.

He chuckled but added, “It tends to be true.”

In interviews with the Tribune, academic economists and a professor of urban planning offered a number of cautions about economic impact studies, including that they are frequently — as in the case of Navigator — funded by the company that wants the project and completed using economic data supplied by that company.

Experts also pointed to cases in which studies funded by supporters of a project predicted better economic results than studies funded by those who were neutral or opposed.

“Who pays for the study seems to affect the basic message,” said Paula Worthington, a senior lecturer at the University of Chicago’s Harris School of Public Policy.

The author of the Navigator economic impact study, consultant Jon Muller of Des Moines, said that his findings weren’t influenced by the fact that he was paid by Navigator.

“The (experts) you talked to are right to be skeptical of a report paid for by industry. I would be too,” Muller said via email. “That’s a good reason to examine it very closely, not a reason to conclude the impacts are exaggerated. I’d have been happy to conduct the study at their expense as well, and it wouldn’t have been materially different.”

Among those who question the economic benefit from the Navigator pipeline is University of Iowa professor of geographical and sustainability sciences Silvia Secchi, an opponent of the project.

The net economic effect for this region, five or six years down the road, would have been zero, Secchi said.

“They don’t have a lot of workers,” she said of pipeline companies, “so all this money they’re going to make out of the 45Q (tax credits), that’s just going to go to the shareholders of the company.”

University of Illinois at Chicago associate professor of urban planning and policy Joshua Drucker said one reason the economic benefits found in the Navigator economic impact study were so large was that the study focused on just the five-state region hosting the pipeline. That allowed billions of dollars in federal tax credits to be treated as “free money,” or purely a benefit.

That’s fairly standard for these studies, Drucker said, but, in the larger picture, there is a cost.

“There might be a lot of jobs and money coming into Illinois and Iowa and South Dakota, but those have to be paid for somewhere, either by the federal government not earning revenue somewhere else, or raising taxes,” he said.

Muller responded that taxpayers in the pipeline region will pay to help fund the federal tax credits no matter what, so if the credits are paid to businesses here, that will be a benefit with no new associated costs.

In 2006, Texas A&M university distinguished professor John Crompton examined competing economic impact studies sparked by a proposal to move the Dallas Cowboys stadium from Irving, Texas, to Arlington. Crompton found that projections of the economic impact of a new stadium over 30 years differed by more than $2 billion.

A study funded by supporters indicated that the stadium would generate $2 billion to $4 billion for Arlington over 30 years, while a study funded by opponents found a stadium could cause the city to lose up to $325 million in the same time period.

Crompton, who declined to comment on the Navigator study, said that, speaking in general, one economic impact study is not enough.

“You need — in my view — an independent alternative study, done by a qualified person who has no ax to grind or is in fact supported by the opponents,” he said. “It’s sort of like a bill in Congress: Democrats and Republicans look at the same issue and come up with two totally different perspectives.”

Unfortunately, he said, opponents often can’t afford to fund their own studies.

“The deep pocket has the advantage,” Crompton said.