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White Paper: Balancing the Positive Economic Benefit against Negative Environmental Impact in order to serve the public good at Hanscom Field

   

Summary 

Massport misrepresents and greatly overstates the economic benefit of Hanscom Field Airport to the state and local economies because Massport does not use the appropriate method of economic analysis. When the FAA prescribed method for assessing the economic impact of the airport is applied to Massport's data, the actual benefit of the airport is reduced by 70%. This significantly diminishes the argument that the economic benefits of airport growth outweigh the environmental costs.  Furthermore, Massport does not include any of the negative economic impacts of Hanscom Field.  When these are included, the net benefit of the airport is nearly zero.

 

Background 

Massport's enabling act states that they will take actions for the public good.    This can be interpreted to mean that development by Massport must balance negative environmental and economic consequences of their actions against any positive public benefits.   In the case of airports, extraordinary environmental impacts are often tolerated because they are considered an unavoidable consequence of airport operation. Since Hanscom Field airport primarily serves private luxury aviation, providing convenience and recreation benefits for a small number of very wealthy individuals, the main public benefit of the airport is generally considered to be its contribution to the state economy. Therefore, it is essential to understand the magnitude of that benefit.

To justify its policies and actions, Massport estimates the economic value of the airport in the annual "State of Hanscom" report and in the Environmental Status and Planning Report of 2002:

"Massport estimated that Hanscom Field generated $110.6 million dollars from direct, indirect, and induced sources in fiscal year 2000"

This is the claimed benefit, which must be balanced against the environmental impacts and other negative economic losses in order to serve the public good. However, this number is wrong. It is not based on a sound analysis, and in fact the methods used are contrary to the official FAA prescribed methods for the assessment of economic impact. When the FAA prescribed methods are used, a much lower economic benefit results.

 

Review of Massport economic benefit analysis 

In order to review and verify the methods used by Massport to arrive at the dollar value for the economic benefit of the airport, we used the following approach:

 

Using the Massachusetts Public Records Law to obtain from Massport the backup documentation and data for their calculation, along with documentation for the method used.

To research and identify relevant federal standards for measurement of economic impact of airports

To contract with a independent economic analysis consultant to have a third party review of the Massport analysis, and to identify any inconsistency with prescribed federal standards for assessing the economic impact of airports.

 

Public Records Law request 

This request yielded very little information other than the information contained in the "State of Hanscom" report. Massport replied that the person who had done the analysis was no longer there, and there were almost no records of any kind regarding the procedure used. They did provide some operating income data, and they withheld some proprietary economic data regarding certain tenants at the airfield. They said "standard economic principles and methods" were used to prepare their results. Massport was not able to produce the data or methods used to obtain the claimed economic benefit.

 

 

Federal Standards 

We did identify a key FAA standard titled "Estimating the Regional Economic Significance of Airports." which is the only known standard for assessing the economic impact of airports. This comprehensive standard is the United States reference for assessing the economic impact of an airport, and is the appropriate standard to use in this case. During the remaining research, it became apparent that Massport had not used this standard during their economic analysis.

 

 

Independent Economic Analysis 

We contracted with the Commonwealth Research Group to undertake a review of the Massport's economic analysis of Hanscom Field, and to develop an independent and objective determination of what the economic benefit of the airfield is. The Commonwealth Research Group has done economic analysis for many Massachusetts municipalities and for the Massachusetts Water Resources Authority. The executive summary of this report is attached as Appendix A.

 

The key finding of this review was that Massport was not using the FAA prescribed method for assessing economic impact of airports, and as a result attributed substantial economic benefits which the FAA method specifically states should not be included. An analysis using the FAA prescribed method results in an economic benefit approximately 70% lower than the Massport claim. This is a very significant error.

 

 

Negative Economic Impacts 

Neither Massport nor we studied the negative economic impacts of the airport on the surrounding communities. However, these are not insignificant and are subject to significant increase under the growth scenarios proposed by Massport. These negative impacts include reduced tourism due to environmental impacts, decreased property values, decreased tax revenue to the towns, increased need for public services to handle the increased traffic, etc. While it is difficult to quantify these impacts without an in-depth analysis, such impacts can be shown to be in the millions of dollars per year, significantly and directly offsetting any positive economic contribution of the airport.

 

The claimed benefit of increased tax revenue from aviation avoids the fact that private luxury aviation is exempt from sales tax in Massachusetts, due to successful lobbying by aviation interests.  This subject is discussed in more detail in a related white paper.

 

MIT and Bank Boston recently completed a study called "The Impact of Innovation" in which attempted to understand why Massachusetts has a disproportionate fraction of innovative new companies driving the local economy.  This study found that the highest density of innovative companies  in New England are located in the Hanscom vicinity; furthermore, the existence of Hanscom Field was not even mentioned as a consideration in these location decisions.  The number one factor in determining the location of these innovative companies was found to be the character and quality of life in the communities, the very commodity threatened by the uncontrolled growth of Hanscom Field.

 

Conclusion 

The Commonwealth must balance the economic and public benefit of an activity against its environmental impact. In the case of Hanscom Field, the public comment demonstrates that Massport has understated the negative environmental impact of the airport in their public disclosures.  Furthermore, Massport has inflated the public economic benefit of the airport by a factor of 3. This means that Massport policy seriously distorts the balance between environmental impact and the public good.

Unfortunately Massport, as a powerful development agency except from local control, has an incentive to create policy with such distortions.  This places the local communities in the difficult situation where they have developer which is specifically exempt from local regulation on the grounds that it is acting in the interests of the community, but refuses to consider the negative economic effects of its actions while exaggerating the economic benefits.  The burden must be on the state to ensure that Massport does not violate its charter, to ensure that the Massport does operate for the good of the current and future residents of Massachusetts, and to demand that environmental disclosure be honest and objective.

We submit that the economic benefit of the airport provided by Massport is wrong.  The State through its environmental policy office should take three actions based on this: 

1) The State should require that Massport remove the current economic benefit statement and instead provide a statement of the economic benefit of the airport based on FAA prescribed methodology, making the underlying method and calculations public.

2) The State and Massport should use a significantly reduced value for the economic benefit of the airport, on the order of $30M, when it deliberates on the balance between economic benefit and protection of the residential, natural, and historic sites surrounding Hanscom Field.

3) If decisions are to be taken based solely on economics, then an attempt must be made by the state to assign an economic value to the irreplaceable historical and natural assets located within a few runway-lengths of Hanscom Field.

 

 

 

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