Friday, February 27, 2004
Copyright © Las Vegas Review-Journal

'THERE IS A RIPPLE EFFECT': Growth controls studied

Report looks at consequences of setting limits on development

A sea of rooftops stretches northwest from U.S. Highway 95 near Horizon Drive in Henderson, one of the fastest growing cities in America. A study presented to the Southern Nevada Water Authority Thursday spells out the economic damage that could be wrought by a sudden interruption in growth in Southern Nevada. Photo by Gary Thompson. Water gushes from a pipe into Black Canyon during a routine structural test Thursday afternoon at Hoover Dam. A report released Thursday found efforts to solve Southern Nevada's water problems by restricting growth could trigger an economic catastrophe. Photo by John Gurzinski.

Efforts to solve Southern Nevada's water problems by restricting growth could trigger an economic catastrophe, according to a study presented Thursday to the Southern Nevada Water Authority.

The study commissioned by the authority does not address water issues specifically. Instead, it analyzes the potential economic effects of undetermined growth interruptions of varying length and severity.

Pat Mulroy, general manager of the Southern Nevada Water Authority, said the report was meant to determine whether controlling growth would work as a means for drought management.

"This shows there's a continuum of consequences to that," she said.

Mulroy said the report in part also was meant to help authority officials answer the queries of other states that rely on the Colorado River. Those states have asked why Southern Nevada simply won't stop growing while the drought endures.

The 642-page study was prepared for the authority by Hobbs, Ong and Associates for about $160,000. It serves to update and expand a 1992 study, commissioned by the Las Vegas Valley Water District, that reached similar conclusions about the impact of growth restrictions.

A key difference is that the older White study, so named because it was developed by the economic consulting firm William T. White Associates, focused on the impacts of a water shortage that would disrupt growth.

The White study concluded: "Additional water supplies for Las Vegas are essential to a high quality future, not only for Las Vegas but also for the rest of the state of Nevada, including especially the areas from which the now unused water is proposed to be taken."

The study unveiled Thursday makes no such specific statements about water procurement, but it does paint a bleak picture of what could happen should growth suddenly slow down or stop.

The impacts would be felt first and worst by key growth-related industries, such as construction and the various industries that supply them. But no industry would be safe, said Jeremy Aguero, principal analyst for Applied Analysis, a member of the study's project team.

"There is a ripple effect," Aguero said. "The industries aren't separate. They do cross over."

According to the study, the construction industry employs 9 percent of the state's total workforce. That number increases to 17 percent when related industries such as manufacturing are included.

For every 10 new construction-related jobs, 10 jobs are created in other sectors, the study states.

But Daniel Patterson, a desert ecologist with the Center for Biological Diversity in Tucson, Ariz., questioned the motivations behind the study.

Patterson said commissioning reports that ultimately warn against growth restrictions is a common tactic among water boards. "It's really kind of old-school thinking," he said.

Patterson had not yet read the study, but he said it might be used by advocates of unchecked growth to bolster their political agenda as an alternative to "dealing seriously with conservation and sustainable growth."

As economically damaging as a slow-down in growth might be, Patterson said, Las Vegas will be worse off if it continues on its present path, which he said threatens the valley's air quality, water supply and other factors associated with quality of life.

"That's going to be catastrophic eventually," he said. "Something has to be done."

The study released Thursday identifies impacts including the loss of jobs, declines in production, income and tax revenue, and increases in poverty, crime and the demand for government services.

"If you're going to cut away a significant part of your economy, it's difficult to presume that would be good," said Guy Hobbs, managing director of Hobbs, Ong and Associates.

The study envisions one scenario in which a sudden, 65 percent drop in residential construction is followed by 10 years of recovery to a normal growth rate. The predicted result is the loss of more than 1.3 million person-years of employment, which the study defines as the job of one person for one year.

That same scenario is projected to cost $148 billion in economic output and more than $15 billion in tax revenue over a 14-year period .

Water Authority Chairwoman Amanda Cyphers, who also is on the Henderson City Council, said the study cleared up the confusion members of the public might have about the valley's growth and its relationship to the drought.

"They're not related," she said. "They've always been separate, and we've never been a board to control growth. This report shows there's a whole domino effect that could happen if we decide to tamper with our growth."

Cyphers said increasing housing costs would limit growth faster than any limitations on the water supply, which she said the authority can ensure for the next few decades with constant planning.

The authority on Thursday approved an accelerated plan to develop water resources from the Virgin and Muddy Rivers and from groundwater in Clark, Lincoln and White Pine counties.

"There's not a shortage of water," Cyphers said. "But we're still in a drought and we still need to use our water wisely. In the future, the biggest factor on our water supply won't be about whether we have water, but what will it cost."

Advocates for the construction industry plan to scrutinize the document.

"We'll dig into the report and see what it says," said Steve Hill, chairman of the Coalition for Fairness in Construction, a statewide group of homeowners, affordable housing advocates, builders and subcontractors formed in 2002. "It will have an awfully large impact on the discussion of water, of growth and of how we preserve the quality of life here in Southern Nevada."

Another group with plans to study the document is the Southern Nevada Home Builders Association, which has assembled a small team of people to conduct a full-day work session on the document today.

"We are going to give it very, very thoughtful review. It will be read with great care," said Monica Caruso, association spokeswoman.