Study Shows Economic Impacts from Low Water Levels on the Great Lakes

The Mowat Centre an independent public policy think tank based at the School of Public Policy & Governance at the University of Toronto released a report called Low Water Blues: An Economic Impact Assessment of Future Low Water Levels in the Great Lakes and St. Lawrence River. It details the possible economic impacts from low water levels and the uncertainty surrounding future predictions.

“Following nearly three decades of higher than historic average water levels throughout the Great Lakes and St. Lawrence (GLSL) basin water levels fell dramatically across the region in 1997-98. During the period between 1997-98 and 2012-13 for example water levels in Lakes Superior and Michigan-Huron were substantially below historic averages. In January 2013 Lake Michigan-Huron reached its lowest levels since the U.S. and Canada began coordinated measuring and tracking of water levels in 1918” the report said.

Since 2013 water levels have rebounded to some degree aided by the ice coverage and snowfall on much of the upper Great Lakes. However the report said it is unclear whether or not this rebound will completely end the low water trend. The National Oceanic and Atmospheric Administration (NOAA) has suggested that cooler temperature and ice cover was an outlier event rather than a trend.

The health of the basin is necessary for many and the report said the economic output of the region is $4.9 trillion accounting for 28 percent of combined Canadian and U.S. economic activity.

While the scientific community is somewhat in disagreement over the causes of prolonged water level declines and whether future water levels will rise or fall the report does note a prediction by the Great Lakes Integrated Science and Assessment Center a consortium between Michigan State University and the University of Michigan which said most climate models project that evaporation from the Great Lakes will outpace precipitation.

Under a worst case scenario analysis Mowat Centre said “The economic impacts attributable to low water levels will be significant.” The report analyzed many industries including commercial shipping and harbors which would lose an estimated $1.18B economic output through 2030 and $1.9B total through 2050.

Different regions would experience the impacts at varying degrees. The report said Lake Erie harbors could see $292M in added dredging and maintenance costs through 2030; Lake Michigan harbors could see $142M in similar added costs through 2030. Lake Huron marinas could experience $230M through 2030 and $690M through 2050 and Lake Michigan marinas could experience $180M through 2030 and $460M through 2050 in added dredging and maintenance costs.

Iron ore shippers and producers who have a strong presence around Lake Superior could face losses to shipping capacity estimated at $220M through 2030 and $465M through 2050. Coal shippers and producers in the region could face losses to shipping capacity estimated at $190M through 2030 and $373M through 2050.

Part of the danger for the Great Lakes and what challenges research and planning efforts is the uncertainty surrounding water levels and predicting their future. The economic analysis depends on climate change impacts and water levels models. In 2007 the Intergovernmental Panel on Climate Change (IPCC) notes that many assessments project lower net basin supplies and water levels for the Great Lakes–St. Lawrence Bain reflecting the likely impact of climate change as it was understood at the time. More recently however sciencfic models have introduced more uncertainty in the calculations. The International Upper Great Lakes Study Board of Canada said new analyses shows that water levels over the next 30 years may not be as low as some previous models had predicted. In 30 years more extreme fluctuations on lake water levels may become more common though the report noted all the predictions still have a high level of uncertainty.