RECENT SNOWSTORM COST OVER $5 BILLION …
Snowfighting Agencies Still Not Prepared
to Meet Customer Demands
Washington, DC/Alexandria,VA – This week’s snowstorms on the East Coast which closed businesses, retail stores and schools imposed a cost of more than $5 billion in lost wages, retail sales and government tax revenues. Delays and failure to get snowplows out and salt on the roads costs at least $2.5 billion dollars per day. This week there were at least two total days involved in the storm and clean-up before people could get back to relatively normal schedules so the pricetag for this storm was at least $5.0 billion.
For these two days, the lost wages alone are more than three times the annual costs of snowfighting, according to the Salt Institute which represents North American salt producers. The Institute commissioned an economic analysis by Standard & Poor’s DRI of the costs of disruption in 12 Midwest and Eastern states and estimates of winter maintenance costs obtained by the Salt Institute.
The 1998 Standard & Poor’s DRI study of Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Pennsylvania, Virginia, and Wisconsin found that $526.4 million a day in federal, state and local tax revenues would be lost if impassable roadways paralyzed the region. This is more than the $518.7 million spent by the twelve states for the entire winter season on snow and ice control to keep the roadways mobile and safe. This figure was provided by state public works officials to the Salt Institute. Lost taxes are not the biggest economic hit to these states. In addition, a crippling snowstorm costs $1.4 billion per day in unearned wages and $600 million per day in lost retail sales. To show how these losses could quickly multiply with each snowstorm, in the Chicago area, a normal winter averages 20-30 snowstorms requiring winter maintenance, and in New York State there are 40 average snowstorms statewide.
David Wyss, Chief Economist for Standard & Poor’s DRI comments, "Snow and ice storms have significant economic and social consequences that could be tempered by winter programs designed to keep a region’s roads operable."
Even these dramatic figures are conservative, the analysts cautioned. "Not covered by the Standard & Poor’s DRI study were factors such as vehicle crashes - fatalities, injuries and property damage, and increased health and insurance costs, which are sometimes very hard to define and were beyond the scope of this study," explains Paul D. Roberts, Standard & Poor’s DRI Senior Associate. Past studies have found that good winter maintenance can reduce injury crashes by as much as 88 percent during and after each storm and total vehicular crashes by 20 percent throughout the winter season.
The new analysis confirms other earlier studies of economic disruption. In 1996, Standard & Poor’s DRI calculated that the Blizzard of ’96 cost the Eastern states as much as $10 billion in lost production and $7 billion in lost sales for 4 days of being shut down. "These are the losses caused by the fact you can’t get to the store and you can’t get to work," Wyss points out. Mark P. Vitner, Chief Economist for First Union Corp., also estimated the blizzard’s cost in goods and services produced by factories, offices, shops, and other enterprises at about $4.8 billion per day in the Northeast corridor of the U.S. from Virginia to Massachusetts.
"We can’t prevent snow and ice, but we can prevent much of the economic calamity they can cause," says Salt Institute President Richard L. Hanneman. "Winter storms like the one we just went through, may be unpredictable and unique, but investments in professional snowfighting can keep snow- and ice-storms from paralyzing local economies, keeping children home from school and preventing emergency vehicles from making their lifesaving trips. Good winter maintenance keeps the roads open and saves lives. Therefore, we need to make a larger investment in winter maintenance equipment, materials and manpower. It is possibly the single most cost-effective investment of our highway tax dollars, returning at least $60 in benefits for every dollar spent. Documenting the magnitude of these savings is the importance of this Standard & Poor’s DRI study."