Economic Growth and the Role of the Great Lakes Highlight Discussion at Federal Reserve Bank of Chicago, Detroit Branch Meeting
“The best way to predict the future is to create it.”
Abraham Lincoln
DETROIT — The Great Lakes form the largest surface water system on earth, with 20 percent of the world’s fresh water located right in our backyard. With Michigan at the heart of that system, surrounded by four of the five Great Lakes, the economic impact of water for future economic development was the topic of conversation at an informal meeting held last month at the Federal Reserve Bank of Chicago, Detroit Branch.
Emphasizing that water is a resource not a commodity, discussion centered on utilizing this resource as a catalyst for economic development; by adding value through safe and environmentally sensitive industries related to water technologies. This includes incorporating plans for the design, funding and implementation of a robust, vibrant, productive and sustainable aquaculture industry in Michigan.
“We here at the Federal Reserve Bank of Chicago’s Detroit Branch truly understand the importance of the Great Lakes to this region. Investment in research that would help to preserve the integrity of the Great Lakes is something that could have a long lasting impact on the economic viability of Michigan as well as the region as a whole,” said Robert G. Wiley, SVP and branch manager at the Federal Reserve Bank of Chicago, Detroit Branch. Joining in the exchange of ideas was Paul Traub, research economist of the Federal Reserve Bank, Detroit Branch and Dennis Cawthorne, chairman of the board of the Mackinac Island State Park Commission.
“From my Mackinac Island perspective where I see two of the five Great Lakes intersect, I know firsthand the huge economic impact of this resource. We need to move in new ways to benefit from our unique location in order to both preserve this resource for the future and take advantage of its economic benefits,” Cawthorne emphasized.
Dennis Cawthorne, chairman of the board of the Mackinac Island State Park Commission; Paul Traub, economist at the Detroit Branch of the Federal Reserve Bank of Chicago; and Robert G. Wiley, SVP and branch manager of the Detroit Branch of the Federal Reserve Bank of Chicago.
Making the Case: Economic Growth and Fresh Water
Anyone who lives in Michigan knows that water makes this a special place. “The Great Lakes and their connecting channels, form the largest surface fresh water system on earth. Michigan is at the heart of that system, surrounded by four of the five Great Lakes. Water is what makes Michigan a special place, with more than 3,288 miles of Great Lakes shoreline, 11,000 inland lakes and 36,000 miles of rivers. The Great Lakes represent about one-fifth of the world’s fresh surface water supply, and nine-tenths of the U.S. supply. Environmental stewardship, sustainable economic development and responsible use of the Great Lakes are in the best interest of Michigan, the Great Lakes region, the country and the world,” said Dr. James S. Diana, Director, Michigan Sea Grant, and Professor of Fisheries and Aquaculture at the University of Michigan.“Investment in research that would help to preserve the integrity of the Great Lakes is something that could have a long lasting impact on the economic viability of Michigan as well as the region as a whole.”
Robert G. Wiley, SVP and Branch Manager
Federal Reserve Bank of Chicago, Detroit Branch
“The Great Lakes is one of the greatest resources on the planet, and effective management of available high quality fresh water for human consumption needs is essential. As an example, new USDA Dietary Guidelines point out that Americans eat only 44 percent of the seafood required for optimal health,” explained Dr. Chris Weeks, Aquaculture Extension Specialist, North Central Region, Department of Fisheries and Wildlife, at Michigan State University. “Since wild harvested seafood is considered to be at or near maximum levels, sustainable aquaculture development in Michigan is an opportunity to utilize the precious resources we have, albeit carefully and wisely, to help promote human health and at the same time increase employment opportunities in our state.”Dr. Frank A. Fear, Senior Associate Dean, College of Agriculture and Natural Resources, Michigan State University added, “Without question, a primary issue in agriculture is water. Water for food will be a defining issue in the quest to feed the world.”
On October 31, 2011, the world’s population reached 7 billion, and human population continues to increase at a rate that makes food production a critical need for future generations. “According to the United Nations, food production must double by 2050 to feed a growing world population. At the same time, it is estimated that humans are already using 40-50 percent of globally available freshwater, with over 70 percent of that water utilized for agriculture. Centered in the Great Lakes Basin, Michigan is well positioned to significantly increase food production,” noted Kent B. Herrick, president, Aquaculture Research Corp. “This will be technically challenging, to increase scale in a sustainable manner, but Michigan, as one of the most diverse crop producers in the United States, already has strong capabilities to meet this challenge. Aquaculture development will be an important contribution to efficient protein production and integrated with a host of other agriculture advancements, we will expand value creation from our water sources.”
Restoration Leads to Economic Benefits
A recent example that highlights the benefits of ensuring water resources and connecting it to economic growth efforts can be found in the Great Lakes restoration project in Muskegon. A story posted in May on www.healthylakes.org by Jeff Alexander covered a Grand Valley State University research effort; a $10 million shoreline restoration project on Muskegon Lake. It is designed to generate more than $66 million in economic benefits. That’s a 6-to-1 return on investment over a 10-year period, according to the GVSU study.“The results are clear and we are excited to know that this restoration project will have a significant beneficial economic impact on the community,” said economics professor Paul Isely chairman of the economics department.
The $10 million project is being overseen by the Great Lakes Commission and West Michigan Shoreline Regional Development Commission. According to the new report the project will generate:
- A $12 million increase in property values
- Up to $600,000 in new tax revenue annually
- Over $1 million in new recreational spending annually in Muskegon
- Nearly 65,000 additional visitors annually
- $66 million in economic benefits over ten years
- More than a 6-to-1 return on investment
According to the study, the work will make Muskegon Lake more hospitable to birds, fish and people. It will also bolster the economy of a community that has been hit hard by the national recession.
On a broader scale, the Muskegon Lake project highlights the tremendous economic benefits that can be realized by removing toxic mud from Great Lakes harbors, restoring wetlands and fighting invasive species. It also underscores the need for Congress to fully fund the Great Lakes Restoration Initiative.
Congress funded the Great Lakes Restoration Initiative at $475 million in the 2010 budget and $300 million in the recently passed 2011 budget (a significant victory considering the fact that some U.S. House budgets had the initiative at $225 million).
The Muskegon Lake project builds off of an earlier study by the Brookings Institution found that every $1 spent on Great Lakes restoration creates $2 in economic benefits.
