Study to show effect of limiting growth

Report to 'provide tools' to water officials

February 25, 2004 - For months, the call to limit new development has gotten louder as the severity of drought-inspired water use restrictions has increased.

A study of the economic effect of cutting off water for development, commissioned by the Southern Nevada Water Authority in July, could give both sides of such a move hard data to make their points.

Guy Hobbs and Jeremy Aguero, economic and fiscal analysts, will present their study to the authority board Thursday. Hobbs noted that the study will not decide the policy questions that have been vigorously debated. It will, however, provide information about some of the potential effects of artificially controlling growth, he said.

"The fact of the matter is, whether an interruption is caused by our own free will or some other unforeseen event, there will be an impact," Hobbs said. "It's incredibly important whenever you consider anything from a policy viewpoint that you understand what the downside is ... so cause and effect, cost and benefit can be discussed together.

"It doesn't speak to whether one thing is good or bad; it provides tools to help you understand what will happen."

The authors of the study will keep the results of their economic modeling under wraps until Thursday, when the board will receive it. However, the results could mirror those of a similar study, also commissioned by the water authority in 1992, that found that using water as a tool to limit growth caused unemployment to double within a short time.

Hobbs said the 1992 study by University of Nevada, Las Vegas economist William White studied the "economic impact of water imposed interruptions on growth." For the follow-up study, Hobbs and Aguero did not focus on water as the only cause for the interruption in growth.

"What we tried to do, and we gave it a lot of thought in beginning, is to make it less specific as to the cause," Hobbs said. Causes that might interrupt growth could include a government order, an act of war, economic calamity, a major labor disruption - the list, he said, is almost endless.

Aguero agreed: "There are underlying similarities to any major disruption of the economy."

The authors included two broad variables. The study includes three levels of interruption - limited, moderate or severe. It also includes three durations of interruption - short, medium or long-term.

Combining the two elements guides the basic economic model for the study. The study also includes anecdotal reports of interruptions in the growth of other booming cities, and the report had independent reviews by six professional economists, three from this region, three from outside the region.

Hobbs, who with Aguero worked on the Governors Task Force on Tax Policy last year, said the study would not be everything that everybody wanted. Perhaps most significantly, it talks about interruptions of growth, but not growth management.

"It is not a study of growth-related policies," he said. "Some people have presumed it to be an analysis of growth of growth-limitation policies. That it is not."

Vince Alberta, water authority spokesman, said the goal of the project "was to update the original study and to develop a range of forecast scenarios regarding the level of economic effects caused by an interruption of natural growth patterns."

The water authority originally commissioned the study in July with seed money of $50,000. The board funded a full project with an additional $110,000 two months later.

As drought conditions worsened and the level of Lake Mead, the source of 90 percent of the region's drinking water, plummeted, issues of water and growth have taken center stage for Southern Nevada's elected policy makers. Some critics have argued that the best way to solve the problem of too little water for a growing population is to stop growth, especially residential construction.

"I think certainly quality of life has been an emerging issue over the last year or so," Alberta said. "This report will provide various policy makers, community leaders and the community as a whole data for a discussion on growth."

While many of the elected policy makers have rejected that solution, others have called for a deeper look at the impact of growth on the community. Those voices have included Clark County Commissioners Rory Reid and Mark James, two who backed a recently initiated county discussion on growth. Both commissioners also serve on the water authority regional board.

Reid said Tuesday that the water authority study will provide data for the county discussion, which should provide policy recommendations to the county commission by the end of the year.

"It's about information," Reid said. "With the commitment we're undertaking, the first thing we need is information."

He said the study is not designed to give political cover for any policy.

"I don't know what they're going to conclude," he said. "If we wanted political cover, we wouldn't be doing what we're doing."

Reid said the research commissioned by the water authority will be important for the county's growth task force because it will help all sides understand the importance of what they are working on.

Hobbs said various constituencies with an interest in the debate over growth will be interested in the results of the study. His colleague Aguero agreed, and stressed that the results should not be interpreted as an endorsement of a specific policy.

"Guy and I are in an analysis capacity, not an advocacy capacity," Aguero said. "I think the report probably has fodder for all sides."

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Article Copyright ©: L. Rake, Las Vegas Sun