Center for Property Rights

‘S⁠t⁠⁠i⁠cker Shock’: Negron Plan Would Slap Flor⁠i⁠da w⁠i⁠⁠t⁠h a $695 M⁠i⁠ll⁠i⁠on Annual Loss

By: The James Madison Institute / 2017

Florida would take a devastating economic hit if Senate President Joe Negron's SB 10 becomes law, reveals an eye-opening study released Thursday by the James Madison Institute.

By JMI's calculations, Florida is looking at an annual loss of more than a half billion dollars.

“This study looks beyond the 2.4 billion taxpayer dollars that would be spent and examines the additional cost to Florida families in terms of lost jobs, lower household income and an eroded business climate,” said J. Robert McClure, president and CEO of the Tallahassee-based think tank.

J. Antonio Villamil, founder and principal of the Washington Economics Group and senior fellow at JMI, said in the report that Palm Beach and Hendry counties will take the brunt of the blow when 60,000 acres of Everglades Agricultural Area is taken out of production and off the tax rolls.

InSticker Shock: Examining the Economic Impacts of Land Acquisition in the EAA,Villamil claims the overall negative economic impact of the proposed land displacement on Florida — not counting the cost of purchasing the land and constructing the reservoir — totals $695 million.

This is anannuallyrecurring number — $695 million every year.

It means a reduction of $166 million in household income.

It means a loss of $282 million in gross domestic product (GDP).

It means $59 million of forgone fiscal revenues (taxes and other government fees and charges). Of this total, almost $17 million flowing to Florida’s state and local governments would be forgone annually.

Add to all that an estimated loss of 4,148 jobs. Job loss would mostly affect Belle Glade, South Bay, Clewiston and Pahokee. And yes, we're talking about someof the areas SB 10 creator Sen. Joe Negron, R-Stuart, directly represents.

“All of these towns will experience significant loss of employment opportunities and shuttered businesses within and around the proposed purchase, said Villamil. Further, our research found that the proposed land to be flooded produces a variety of agricultural-related products, with suppliers to these businesses extending well beyond the local area and towns. Thus, the negative impacts will be felt statewide, in addition to the local areas and towns.”

Sen. Rob Bradley, R-Fleming Island — who introduced SB 10 and listened to one Glades resident after another worry out loud that a reservoir stealing their fields would take their jobs with it — promised the bill wouldn't be passed without an economic component.

But check out these figures again. If Villamil is right, the Senate is looking at one monster of an economic component.

And McClure has grave doubts how a Senate economic component would work. Government doesn't create jobs, the private sector creates jobs, he said.

Flooding this land would result in the displacement of the residents of the area, and also force the closure of businesses in a variety of agricultural-related industries — from manufacturing, to wholesalers, suppliers, retailers and others, Villamil writes in the report. Consequently, the state acquisition and flooding of these specific parcels of land would negatively affect private industry, the state and local economies, as well as public services and fiscal revenues.

In conducting theiranalysis, researchers used the IMPLAN (input/output) methodology to estimate the economic impacts of removing productive land to create a reservoir as currently envisioned, according to Villamil. On this page you can see the circled, preferred sites Negron identified last August for the reservoir.

Says the report, It is important to note that the quantitative impacts presented are conservative estimates, as they do not include all the secondary and tertiary effects that would likely occur over time. In addition, not all potential lost revenues and employment within the area were modeled, only major agricultural producers were modeled.

In other words, the losses projected here are conservative.

Critics of the report ask, what about losses generated from blue-green algae in rivers and estuaries after Lake Okeechobee discharges?

“The study does not evaluate the economic impact of continuing to allow discharges from Lake Okeechobee to destroy Florida’s fishing and tourism industries, not to mention the long-term damage to natural systems and the cost to restore these systems,” Negron said in a statement.

True, itwas not considered, said JMI's McClure, because what Sen. Negron wants to do wouldn't solve the problem.

And to be honest, losses due to algae are less predictable month over month, let alone year over year than taking 60,000 acres. Algae damage is not the same from one year to the next. Neither are effects on tourism. Nor does it affect the supply chain in quite the same way. Florida, for example, is a global trade leader and the state's agricultural sector is a critical component of that.

In 2014 Florida ranked 8th among all states in agricultural exports, with more than $4 billion. Exports include commodities grown and processed in the Everglades Agricultural Area (EAA), said the report.

Zeroing out 60,000 acres — that's 93.75 square miles of some of the most productive farmland in America — is not unimportant.

Calculating the value ofagriculture in the Everglades Agricultural Areais not coddling an industry environmentalists hate and say is in the way.

Sixty thousand productive acresarenot a worthy sacrifice for any other part of Florida.

To destroy such a large part of the Florida economy — actually, the national economy — and the lives of tens of thousands of people who make their lives in and around the EAA,knowing you're not going to solve theproblem is, frankly, unconscionable.

My next stop will beAmy Baker. What does our state economist have to say? How does her figures compare with JMI's? Has anybody tasked her with SB 10's economic impact?

Negron was flying blind until Thursday. JMI deserves a vote of thanks.