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Estimating Economic Impacts of Border Wait Times

Estimating Economic Impacts of Border Wait Times. February 24, 2006. in the San Diego-Baja California Region. Study Objectives. Understand the economic significance of border delays Measure economic impacts of wait times Cross-border personal travel Cross-border freight movements

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Estimating Economic Impacts of Border Wait Times

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  1. Estimating Economic Impacts ofBorder Wait Times February 24, 2006 in theSan Diego-Baja California Region

  2. Study Objectives • Understand the economic significance of border delays • Measure economic impacts of wait times • Cross-border personal travel • Cross-border freight movements • Develop new model for testing public policy solutions

  3. Study Framework • For cross-border personal travel • 3,603 surveys at San Ysidro, Otay Mesa, and Tecate • For cross-border freight movements • Interviews of trucking companies, Customs brokers, major cross-border manufacturers and U.S. Customs and Border Protection • Published international trade data • Published border crossing traffic data • Estimated net economic impacts • Risk analysis approach • Panel of experts and stakeholders

  4. Panel of Experts and Stakeholders • Consulate of Mexico in San Diego • U.S. Customs and Border Protection • U.S. Federal Highway Administration • Otay Mesa and San Diego Regional Chambers of Commerce, South County Economic Development Council • San Diego State University, University of San Diego Transborder Institute, San Diego Dialogue, Mexico’s College of the Northern Border (COLEF), Autonomous University of Baja California (UABC)

  5. Crossborder Travel Characteristics • More than 60 million trips cross northbound at the San Diego - Baja California border annually • Over half of those trips are for shopping or recreation • Another 10 million trips are made for work or business • More than 90% of the crossborder trips are local

  6. Binational Trade & Freight Facts Mexicois theUnited States’ second largest trading partner. #2 #1 9% of U.S.-Mexicotrade value crosses at Otay Mesa and Tecate.

  7. The Otay MesaPort of Entry (POE) is the third ranking POE in theU.S.-Mexico border. #3 Otay Mesa POE #2 MexicoisCalifornia’s number one export market. #1 Binational Trade & Freight Facts

  8. 99%of trade between California and Mexico is carried by trucks. Exports: $9.4 Billion Imports: $13.8 Billion Binational Trade & Freight Facts $23.2 Billion in Imports and Exports (2004) Otay Mesa Tecate

  9. Otay Mesa & Tecate POEs Northbound Truck Crossings $25,000 800 $20,000 600 $15,000 Number of Trucks (thousands) Two-Way Trade (in $millions) 400 $10,000 200 $ 5,000 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Otay Mesa Tecate Two-Way Trade

  10. Key Interview Findings • Trade, truck volumes & congestion have grown significantly over the years • Physical infrastructure constraints at Otay Mesa- Mesa de Otay POE • For some industries, modern rail is key to lower transportation costs

  11. Key Interview Findings • Extremely sensitive supply chain • No inventories: Just In Time • Parts go back and forth across the border several times • Delays at Otay Mesa POE are as important as delays at Port of LA/Long Beach • Delays mean higher logistics costs and lost economic opportunities • Time is money • F.A.S.T./ Empresa Certificada • Tijuana-Tecate Toll Road

  12. San Diego County More than 8 million trips lost 3 million potential working hours and $42 million in wages lost Output Loss: Between $2 billion and $2.5 billion (total economic impact) Job Loss: Between 28,000 and 35,000 jobs Baja California More than 2 million trips lost About 500,000 potential working hours and $10 million in wages lost Output Loss: Between $100 million and $230 million (total economic impact) Job Loss: Between 800 and 1,900 jobs Cross-Border Personal Travel At today’s level of waits (45 minutes average):

  13. Cross-Border Personal Travel Combined Regional Economic Impacts (San Diego County & Baja California) Impact Category Total Annual Impact Output (millions of U.S. dollars) Labor Income (millions of U.S. dollars) Employment (FTE jobs) -$2,428 -$1,018 -32,821

  14. Economic Impacts due to Cross-Border Freight Delay Impact Category Total Annual Impact (U.S. $ in millions) Baja California United States San Diego County California Mexico Output Labor Income Employment(FTE jobs) -$ 455 -$ 131 -2,461 -$ 716 -$ 204 -3,654 -$ 1,256 -$ 351 -7,646 -$ 2,069 -$ 236 -10,889 -$ 1,317 -$ 150 -6,929

  15. Total Output Impacts by Sector in the San Diego Region (2005) $455 Million • Manufactured Goods • 11% • Biomedical devices • Furniture • Plastics • Textiles • Agricultural & Food Products • 18% • Tomatoes • Vegetables • Beer • Machinery & Equipment • 43% • TV sets • Circuit boards • Trailers • Motor vehicles • Mining & Mineral Products • 28% • LPG • Chemicals for electronics

  16. Total Output Impacts by Sectorin Baja California (2005) $1,317 Million Manufactured Goods 19% Agricultural & Food Products 22% Mining & Mineral Products 9% Machinery & Equipment 50%

  17. Import Growth Opportunities = 15% $2,069 Export Growth Opportunities = 13% $1,256 Economic Opportunities for Trade Growth via the Otay Mesa and Tecate POEs $16,000 $12,000 Output Loss (in millions) $8,000 $13,793 $9,382 $4,000 $0 Exports to Mexico Imports from Mexico

  18. Total Output Impact Due to Delays at the BorderPersonal Travel and Freight Movements California -$3.20 United States -$3.74 San Diego County -$2.71 Baja California -$1.49 Mexico -$2.24 (In Billions of Dollars)

  19. Total Employment Impact Due to Delays at the BorderPersonal Travel and Freight Movements California -35,077 United States -39,069 San Diego County -33,915 Baja California -8,296 Mexico -12,256

  20. -$4,200 -$5,974 -$9,979 -$13,873 Projected Output Impact of Border DelayPersonal Travel and Freight Movements San Diego County & Baja California United States & Mexico $0 -$4,000 Output Loss (in millions) -$8,000 -$12,000 -$16,000 2005 2014

  21. -42,211 -51,325 -104,146 -123,682 Projected Employment Impact of Border DelayPersonal Travel and Freight Movements San Diego County & Baja California United States & Mexico 0 -40,000 Employment Loss -80,000 -120,000 2005 2014

  22. Conclusions • Current border delays are responsible for significant economic losses on both sides of the border. • Personal travel: Economic impact of congestion is much stronger in the U.S. than in Mexico. It affects mainly the San Diego-Baja California region. • Freight movements: Economic impact of congestion is greater on the Mexican side. It spreads significantly to the national level.

  23. Conclusions (continued) • Trade is a key contributor to local, state, and national economic growth. • Border delays impact the competitiveness of the binational region. • Traffic delays and economic losses are expected to double over the next 10 years. • Delays and losses can be reduced with improved infrastructure and management. • Survey results show cross-border travelers are willing to pay a toll if delays can be reduced.

  24. Willingness to Pay $3 at Proposed East Otay Mesa POE Sometimes Use East Otay Mesa POE 14.2% Would Use East Otay Mesa POE 59.4% Would Not Use East Otay Mesa POE 26.5%

  25. Estimating Economic Impacts ofBorder Wait Times February 24, 2006 in theSan Diego-Baja California Region

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