Economic Impacts of Reducing Wait Times at U.S. Border Crossings
Transcription
Economic Impacts of Reducing Wait Times at U.S. Border Crossings
Economic Impacts of Reducing Wait Times at U.S. Border Crossings Bryan Roberts Adam Rose Nathaniel Heatwole Dan Wei Misak Avetisyan Fynn Prager Charles Baschnagel Timothy Beggs Oswin Chan Isaac Maya 1 Study Objectives • Phase I : Estimate economic impacts of changes in wait times at U.S. border crossings due to changes in U.S. Customs & Border Protection staffing - 17 land passenger, 12 land freight, 4 airports - Impacts measured by time value opportunity costs (non-market), Gross Domestic Product (GDP), employment & at both regional & national levels • Phase II : Focus on international airports • Combined results are presented here 2 Border Crossings • People and vehicles come to a border crossing, enter a wait queue, and then undergo primary inspection of their passports or freight documents • Those passing this inspection then enter the U.S. • Those who do not are sent to secondary inspection • We focus on the wait time before primary inspection 3 Land Border Crossings: Passenger Vehicles 4 Land Border Crossings: Trucks 5 International Airports 6 Impediments to International Trade • Gains from free trade are well-established (comparative advantage => global efficiency) • Practically all research to date: explicit trade restrictions (e.g., tariffs & quotas) • Hardly any literature on “administrative costs” (e.g., processing, health & security inspection) 7 Basic Analytics: Passengers Total opportunity cost of trip (monetized) P0 V: value of time ∆T: change in wait time A Change in consumer surplus: Existing traffic: P0P1BA New traffic: ABC V*∆T C P1 B D Q0 Q1 Number of crossborder trips 8 What We Quantify • We quantify how T changes with addition of one inspection officer to a border crossing • We quantify P0P1BA • We quantify Q1-Q0 (for both passengers in vehicles at land border crossings, and international air passengers) • We do not quantify ABC – But these would be very small triangles • We quantify GDP and employment impacts related to Q1-Q0 9 Basic Analytics: Freight Total cost of freight shipment V: trucking costs related to time ∆T: change in wait time P0 A P1 B Change in transport cost: Per shipment: P0P1 Total time cost savings: P0P1BA V*∆T Q0 Number of cross-border truck shipments 10 What We Quantify • We quantify how T changes with addition of one inspection officer to a border crossing • We quantify change in per-shipment transport cost P0P1 • We quantify transport cost savings P0P1BA • We assume a freight shipment elasticity with respect to T equal to zero • We quantify the GDP and employment impacts related to the change in transport cost change P0P1 11 Who Has Standing? • Interesting issue for this study – Welfare of both U.S. residents and non-U.S. residents are affected by change in wait time – Economies of U.S., Canada, and Mexico are all affected by change in cross-border travel volume – Should welfare of both groups and economic impacts for all countries be counted from the viewpoint of U.S. decision makers? • Study summary focuses on results for U.S. residents • But study presents results for both groups 12 Should Indirect Impacts Be Counted • Economic Consequence Analysis (ECA) - includes all market transactions impacting GDP - can include non-market impacts too • Welfare Analysis—usually exclude indirects - claims indirect effects embodied in price changes - claims indirect effects are zero under full employment (displace other activities) - but if the economy operates at less than full employment, there is a case for including them 13 Data & Methods • Data - CBP primary data on wait times - travel expenditure data • Methods - operations research & econometric analysis of staffing affect on wait times & travel volume - logistical analysis of inspection process - I-O analysis of changes in passenger travel - CGE analysis of changes in freight costs 14 Economic Impact Components & Methods Vehicle Wait Time Elasticity / Calculation Models Other Data CBP Data Truck Wait Time Calculation Models Air Passenger Wait Time Calculation Models Land Passenger Wait Time Value Opportunity Cost Passenger Cost Models Truck Transport Cost Models InputOutput Model GTAP CGE Model Impacts of Land Passengers on GDP and Jobs Impacts of Truck Transport Costs on GDP and Jobs Truck Wait Time Value Opportunity Cost Airline Passenger Wait Time Value Opportunity Cost Passenger Cost Models GTAP CGE Model Impacts of Air Passengers on GDP and Jobs 15 Econ Impact Components & Methods • Passenger Impacts change in wait time (operations research and economic analysis) value of wait time (opportunity cost measure) increased tourist/business travel (wait-time elasticity) direct expenditures (adapted BEA & SANDAG data) indirect regional/national macro impacts Land passengers (I-O analysis) Air passengers (CGE model) • Freight Impacts change in wait time (econometrics; queuing theory) reduction in freight costs (logistical model) direct change in competitiveness (CGE model) indirect macroeconomic impacts (CGE model) 16 How Does Adding or Subtracting One Officer Impact Wait Time at a Crossing? • In our first study, we used two methods to evaluate impact of adding one officer to primary inspection during the 8 most congested hours of the day: 1) Results of July 2012 controlled experiment at San Ysidro that increased the number of officers doing primary inspection 2) A theoretical methodology that can be applied to all border crossings Results of experiment consistent with the theoretical methodology • We used the theoretical methodology to evaluate the impact on wait time of one less officer for the 8 least congested and 8 most congested hours 17 Approximate Versus Exact Analysis • The theoretical methodology was an approximation to the true relationship between officers and wait time – It was known to underestimate the impact of adding an officer • In our second study, we developed an exact analysis and applied it to three border crossings – Results confirm the underestimate hypothesis • All of the results we show here are from the first study and are significant underestimates 18 How Does a Change in Wait Time Affect the Number of Passenger Trips? • For passenger vehicles at land border crossings, we used two sources of information: Results from the July 2012 experiment at San Ysidro: the fall in wait time caused a significant increase in trips Previous research on the relationship between traffic flow/trips and travel time Both of these suggest a trip-wait time elasticity value of roughly -0.5: if wait time falls by 10%, the number of trips increases by 5% We adjust this elasticity for other crossings to take into account that a lower wait time has less of a trip deterrence impact Evidence also suggests that the long-run elasticity value is twice as much as in the short run 19 (Cont.) • For international air travelers, we used an opportunity cost approach: – The value of time spent in passport inspection queues is monetized and added to the value of an air travel ticket – The elasticity of demand for international air travel with respect to price is applied to change in monetized wait time to get change in number of trips 20 TABLE 1-1. AVERAGE WAIT TIMES AND TRIP-WAIT TIME ELASTICITIES FOR PASSENGER VEHICLES AT LAND COEs Port Calexico El Paso Laredo Nogales San Ysidro Buffalo-Niagara Falls Blaine Detroit Average wait time per vehicle in minutes in FY 2012 SENTRI/ Lane Type Regular READY NEXUS Crossing Calexico/East 41 16 1 Calexico/West 48 4 Ysleta 26 8 2 Paso Del Norte 28 11 Bridge of the Americas 33 14 Lincoln-Juarez 23 22 1 Convent St. 21 Mariposa 20 Deconcini 23 3 0 San Ysidro 74 47 7 Rainbow Bridge 7 0 Lewiston Bridge 14 Peace Bridge 7 0 1 Peace Arch 18 1 3 Pacific Highway 17 2 Windsor Tunnel 5 4 Ambassador Bridge 4 2 4 As percentage of San Ysidro value Trip-Wait Time Elasticities Short Run Long Run Regular Regular 55% 66% 35% 38% 44% 31% 28% 27% 31% 100% 9% 19% 9% 24% 23% 6% 5% -0.28 -0.33 -0.17 -0.19 -0.22 -0.16 -0.14 -0.13 -0.16 -0.50 -0.05 -0.10 -0.05 -0.12 -0.12 -0.03 -0.03 Regular -0.55 -0.66 -0.35 -0.38 -0.44 -0.31 -0.28 -0.27 -0.31 -1.00 -0.09 -0.19 -0.09 -0.24 -0.23 -0.06 -0.0521 WAIT TIME-OFFICER ELASTICITIES FOR PASSENGER VEHICLES AT LAND BORDER CROSSINGS Time Period Lane Type Officers Added Port Calexico El Paso Laredo Nogales San Ysidro Buffalo-Niagara Falls Blaine Detroit FY 2012 Regular +1 -1 -1 Most Least Most Targeted 8 hours congested congested congested Crossing Calexico/East -35% 74% 64% Calexico/West -16% 35% 21% Ysleta -37% 252% 62% Paso Del Norte -37% 252% 60% Bridge of the Americas Lincoln-Juarez Convent St. Mariposa Deconcini San Ysidro Rainbow Bridge Lewiston Bridge Peace Bridge Peace Arch Pacific Highway Windsor Tunnel Ambassador Bridge -31% -28% -48% -55% -46% -8% -33% -38% -39% -49% -62% -73% -63% 176% 76% 70% N/A 170% 25% 4% 13% 30% 6% 54% 44% 25% 24% 37% 82% 91% 89% 10% 45% 54% 55% 76% 109% 96% 82% 22 Value of Time Saved for Existing Traffic Time Period Lane Type Officers Added Change on FY 2012 Level Regular +1 Officer Targeted Eight Hours Port Calexico El Paso Laredo Nogales San Ysidro Buffalo-Niagara Falls Blaine Detroit Value of wait time change, million $US Crossing Calexico/East Calexico/West Ysleta Paso Del Norte Bridge of the Americas Lincoln-Juarez Convent St. Mariposa Deconcini San Ysidro Rainbow Bridge Lewiston Bridge Peace Bridge Peace Arch Pacific Highway Windsor Tunnel Most congested US nationals and LPRs Mexican or Canadian nationals TOTAL $1.6 $1.3 $0.9 $1.0 $0.3 $0.2 $0.2 $0.2 $1.9 $1.4 $1.1 $1.2 $1.4 $1.0 $0.7 $0.8 $0.7 $2.4 $0.4 $0.8 $0.5 $1.4 $1.2 $0.5 $0.3 $0.2 $0.1 $0.2 $0.2 $0.2 $0.8 $1.5 $0.9 $2.3 $1.9 $0.3 $1.8 $1.2 $0.8 $1.0 $0.9 $2.5 $1.3 $2.2 $1.4 $3.7 $3.1 $0.8 23 Results Under Exact Methodology Figure ES-1 Monetary Value of Change in Hours Waited With Extra Officers: 3 Land Passenger Vehicle Crossings $30 $25 San Ysidro $15 Bridge of the Americas Peace Arch $10 $5 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 $0 1 Million $US $20 Extra Officer Added 24 Wait Time at Airports • Results depend on whether or not baggage delivery is taken into account • We develop lower and upper bounds for waiting at airports: – Lower bound ignores any wait times less than 30 minutes – Upper bound includes all positive wait times 25 Overview of Truck Freight Transportation Cost Changes • One additional U.S. Customs and Border Protection (CBP) officer added: – to each of 12 land ports of entry (N. and S. borders) – during the 8 most congested hours of each day – for 153 total days a year • By how much does wait time fall for trucks? – traditional queuing theory methods ill-suited for ‘saturated’ queues (rush hour-like traffic flows) • Assume queue is in equilibrium, examine impact of opening additional booth/lane algebraically – results align with San Ysidro ‘controlled experiment’ 26 Changes in Wait Time for Trucks Port of Entry Calexico, CA El Paso, TX Laredo, TX Nogales, AZ Otay Mesa, CA Blaine, WA Buffalo-Niagara Falls, NY Detroit, MI Crossing Annual Wait Time Change in Wait Time, Truck in Default +1 CBP Officer Case* Volume Case* (FY 2012) (minutes) percent minutes Calexico/East Ysleta Bridge of the Americas Columbia Solidarity World Trade Bridge Mariposa Otay Mesa 320,482 360,470 290,220 215,701 1,356,418 298,730 644,925 28.8 13.1 17.5 8.6 29.0 37.5 34.2 -20.0 -9.5 -10.2 -8.2 -20.0 -20.5 -13.0 -69% -73% -58% -95% -69% -55% -38% Pacific Highway Lewiston Bridge Peace Bridge Windsor Tunnel Ambassador Bridge 343,396 309,365 625,651 39,186 1,425,757 16.4 8.1 11.2 4.6 7.0 -13.6 -5.8 -5.3 -4.6 -4.3 -83% -72% -47% -100% -61% *During the 8 most-congested hours of each day, 153 total days per year. 27 Economic Value of Reduced Wait Times for Trucks • What is the monetary value of reduced wait times for trucks? • Out-of pocket expenses (transportation costs) – driver wages – diesel fuel – other truck operating costs (e.g., maintenance, repairs, depreciation, licensing) • Opportunity cost of time – foregone trucking activity 28 Flow Diagram for Truck Traffic at Border (image from: Ojah et al., 2002) 29 Truck Transportation Costs Cost Category Driver wages Diesel fuel All vehicle operating costs other than fuel Relates to Wait Time? Yes Yes Yes Unit Cost Country (average) (2012 US$) U.S. $20.86/hr Canada $23.05/hr Mexico U.S. Canada Mexico $4.48/hr* $4.03/gal $4.94/gal $3.42/gal U.S. $34.72/hr Canada $77.60/hr Mexico $11.37/hr* Canada $100/truck Custom’s No broker fees Mexico $25/truck Drayage cost No Mexico $154/truck *Estimated based on relative GDPs per capita. Source(s) ATRI (2011); BLS (2012) Statistics Canada (2012); Transport Canada (2005) World Bank (2013) MyTravelCost.com MDOT (2003); Boyer (1997); ATRI (2011); Schrank et al. (2011) Transport Canada (2005) World Bank (2013) Tom Gould - President, Tom Gould Customs Haralambides & Londono-Kent (2004) 30 Changes in Transport Costs for Truck Freight Port of Entry Calexico, CA El Paso, TX Laredo, TX Nogales, AZ Otay Mesa, CA Blaine, WA Buffalo-Niagara Falls, NY Detroit, MI Crossing Annual Truck Volume (FY 2012) Calexico/East Ysleta Bridge of the Americas Columbia Solidarity World Trade Bridge Mariposa Otay Mesa 320,482 360,470 290,220 215,701 1,356,418 298,730 644,925 Pacific Highway Lewiston Bridge Peace Bridge Windsor Tunnel Ambassador Bridge Total = 343,396 309,365 625,651 39,186 1,425,757 6,230,301 Change in Truck Transport Costs for +1 CBP Officer* Total Percent (all trucks) -$0.81 M -0.131% -$0.37 M -0.053% -$0.39 M -0.070% -$0.34 M -0.083% -$2.74 M -0.105% -$0.83 M -0.145% -$0.94 M -0.076% -$1.81 M -$0.37 M -$1.06 M -$0.09 M -$1.92 M -$11.67 M *Working the 8 most-congested hours of each day, 153 total days per year. -0.252% -0.057% -0.181% -0.109% -0.065% n.a. 31 Results: U.S. GDP and Employment Impacts (+1 CBP Officer)* Port of Entry Calexico, CA Change in truck transport cost (percent) Crossing Change in U.S. Employment (jobs) Change in U.S. GDP (2011 $US million) Change in Canada GDP (2011 $US million) Change in Mexico GDP (2011 $US million) Southern Border Northern Border Calexico/East -0.13% 2.5 0.246 -0.059 0.966 Ysleta -0.05% 1.0 0.104 -0.023 0.391 Bridge of the Americas -0.07% 1.3 0.125 -0.032 0.515 Columbia Solidarity -0.08% 1.5 0.152 -0.037 0.611 World Trade Bridge -0.11% 1.9 0.193 -0.047 0.774 Nogales, AZ Mariposa -0.15% 2.8 0.276 -0.066 1.068 Otay Mesa, CA Otay Mesa -0.08% 1.5 0.152 -0.035 0.557 Blaine, WA Pacific Highway -0.25% 8.1 0.790 3.990 -0.030 Buffalo-Niagara Falls, NY Lewiston Bridge -0.06% 1.9 0.182 0.902 -0.007 Peace Bridge -0.08% 2.6 0.248 1.283 -0.009 Windsor Tunnel -0.11% 3.5 0.343 1.731 -0.013 Ambassador Bridge -0.07% 2.0 0.195 1.028 -0.008 - 30.6 3.005 8.634 4.815 El Paso, TX Laredo, TX Detroit, MI Totals *Working the 8 most-congested hours of each day, 153 total days per year. 32 CGE Analysis of Economic Impacts of Reduced Freight Costs • Definition of Computable General Equilibrium Analysis: multi-market model of the behavioral response of individual producers & consumers to changes in prices, policies & external shocks, within the limits of capital, labor & natural resources • Maintains capabilities of I-O analysis (disaggregated sectoral representation, consideration of all inputs & economic interdependence) & overcomes limitations • Widely used in international trade analysis • Meets most of our modeling needs 33 The GTAP Model • Developed by ITC and WTO • Multi-region, multi-sector CGE model - Consists of 129 regions and 57 sectors - For this study aggregate to 4 regions & 57 sectors • Standard GTAP model does not allow for substitution between different modes of transport - Incorporated modal substitution for air, water & land 34 Example Results: Blaine POE -- U.S. GDP Impacts of +1 CBP Officer Regions Exports (percent) Imports (percent) Trade balance ($US million) GDP ($US million) United States 0.0011 0.0016 -4.493 0.790 Canada 0.0026 0.0114 -10.794 3.990 Mexico 0.0002 -0.0004 0.547 -0.030 Rest of World 0.0000 -0.0002 17.400 -4.741 • +1 CBP Officer reduces Transport Costs by 0.25% • GDP increases in the U.S. and Canada, while it declines in Mexico and Rest of the World. • U.S. GDP increases because imported intermediate goods are cheaper => lowers price of U.S. exports 35 Economic Impact Results (+1 Case) GDP Impacts of Adding One CBP Officer at Each of 17 Land Passenger POEs (million 2011$) Port Calexico El Paso Laredo Nogales San Ysidro Buffalo-Niagara Falls Blaine Detroit Total Crossing Calexico/East Calexico/West Ysleta Paso Del Norte Bridge of the Americas Lincoln-Juarez Convent St. Mariposa Deconcini San Ysidro* Rainbow Bridge Lewiston Bridge Peace Bridge Peace Arch Pacific Highway Windsor Tunnel* Ambassador Bridge* Port Region $4.5 3.1 4.6 4.9 7.6 4.3 2.8 2.3 2.2 -1.1 2.1 3.8 2.2 4.4 3.8 -0.9 -0.8 $49.7 *Based on FY12 CBP data that 76% of travelers are US residents Rest of the U.S. $2.8 1.4 3.2 3.4 5.2 2.4 1.6 2.0 1.9 -4.3 0.6 1.1 0.6 -3.7 -3.1 -1.5 -1.4 $12.1 U.S. Total $7.3 4.5 7.7 8.3 12.8 6.7 4.3 4.3 4.1 -5.4 2.7 4.9 2.9 0.7 0.6 -2.3 -2.3 $61.8 36 Economic Impact Results (+1 Case) Summary of Economic Impacts from Adding One CBP Officer at Each of 17 U.S. Passenger Land POEs Output Impacts (M $) Region All 8 POE Regions Rest of the U.S. U.S. Total Impacts of Increased Spending by Canadians/Mexicans Impacts of Reduced Spending by Americans Net Impacts Impacts of Increased Spending by Canadians/Mexicans Impacts of Reduced Spending by Americans Net Impacts Impacts of Increased Spending by Canadians/Mexicans Impacts of Reduced Spending by Americans Net Impacts GDP Employment Impacts Impacts (M $) (jobs) 145.5 79.4 1,488 -51.3 94.1 -29.7 49.7 -499 990 136.4 72.6 881 -108.9 27.5 -60.5 12.1 -818 64 281.9 152.0 2,370 -160.2 121.6 -90.2 61.8 -1,316 1,053 37 SUMMARY OF ALL ECONOMIC IMPACTS Time value opportunity costs for U.S. residents Time value opportunity for Canadian and Mexican Ground Passenger Travel residents Net impact on port region and U.S. GDP and employment Time value opportunity for U.S. truckers Time value opportunity for Canadian and Mexican truckers Truck Freight Transportation Net impact on U.S. GDP and employment Net impacts on the Canadian and Mexican economies Time value opportunity for U.S. residents Air Passenger Travel Time value opportunity for foreign travelers Net impact on U.S. GDP and employment TOTAL NON-U.S. TOTAL U.S. n.a. – not applicable; n.c. – not calculatedTOTAL WORLD GDP (million 2011$) Time Value Opportunity Cost (million 2011$) Employment (jobs) n.a. $17.0 n.a. n.a. $10.2 n.a. $61.8 n.a. 1,053 n.a. n.c. n.a. n.a. $29.1 n.a. $3.0 n.a. 31 $13.4 n.a. n.c. n.a. $2.5-9.0 n.a. n.a. $6.1-12.2 n.a. $4.2-11.8 n.a. 37-81 n.a. $69.0-76.6 n.a. $45.4-51.5 $19.5-26.0 $64.9-77.5 n.a. 1,084-1,165 n.a. 38 Summary Results of Unit Staffing Changes at 17 passenger land crossings, 12 freight crossings, and 14 passport inspection sites at 4 major passenger airports -- total of 43 POEs • Impacts on the U.S. economy: - $69-77 million increase in Gross Domestic Product - $20-26 million in time value opportunity cost savings - 1,084-1,165 annual jobs added • Impacts on the global economy : - $45-52 million in time value opportunity cost savings • Average impact per CBP staff member added: - $1.6-1.8 million increase in U.S. GDP - Time value opportunity cost savings: - $0.5-0.6 million for U.S. residents - $1.5-1.8 million for U.S. and non-U.S. residents - 25-27 jobs in U.S. - These results are underestimates 39 Study Impacts • Cited in successful CBP congressional appropriation request • Briefed to other stakeholders (e.g. Canadian Embassy) • Led to a phase II that focused on airports and refined methodology – This has just been publicly released 40 Conclusions • Conducted successful national & regional econ impact studies of CBP officer deployment • Developed analytical capabilities to support economics-based decision-making on the topic – Extensive insight into CBP data – Close-working relationship with CBP – Advanced SOA of OR/Econometric/Simulation Models • Models can be a basis for future analysis of: – Optimal staffing deployment – Investments in personnel, infrastructure & technology – Impact on risks & law enforcement outcomes 41 Backup Slides Additional Information GTAP Transport Cost Reduction Scenario • In the GTAP model, transportation costs per unit are endogenously determined. • A transport cost reduction scenario can be implemented by exogenizing and perturbing the corresponding transportation price variables: - Price of composite transport services by commodity, source and destination - Price of global transport services by mode • Transport cost variable is exogenized by swapping it with the variable representing the change in technology. 43 Summary of Impacts of Freight Transportation Cost Changes • Reduction in transport costs of U.S. imports from Canada or Mexico makes them more competitive. • However, most of the imported commodities are intermediate goods used in the U.S. production sectors, which makes U.S. exports more competitive globally. • The net effect on the U.S. economy is the combination of these positive and negative impacts. 44 Future Research • • • • • • • • • • Economic impact analysis of changes in border infrastructure Risk analysis studies related to the effect of lower wait times on security Quantification of the marginal benefits and costs of adding or subtracting more than one primary inspection officer at a crossing. Optimization analysis of staff deployment across crossings. Evaluation of staffing requirements to achieve a standard of wait time never to exceed 30 minutes at any crossing Controlled experiments at border crossings to provide more extensive results on wait time-booth and trip demand elasticities More formal analysis of the July 2012 experiment at San Ysidro Completion of methodology for analyzing processing of air travelers in terms of all flights in a cluster, intermingling of passengers, etc. Study of relationship between congestion, staffing & enforcement outcomes Development of a simulation model that CBP can use to analyze scenarios involving changes in staffing levels, traffic levels, etc. 45