By John M. Robertson
This Economic Outlook is focused on the impending military buildup on Guam and the Northern Marianas Islands Military Relocation (2012 Roadmap Adjustments) as stated in the Final Supplemental Environmental Impact Statement released by the Joint Guam Program Office in Washington, D.C., in mid-July. The nearly 1,600-page document is available online at www.guambuildupeis.us/.
A major part of the local economic impact on Guam is related to the population, both military and non-military and those involved in construction, either directly or indirectly related to the buildup or military operations.
The table below shows the growth of population related to the proposed action over the period of 2015 to 2028. It indicates that a maximum total impact in population increase of 9,721 would occur in 2023 and that a steady-state population increase of 7,412 would be reached in 2028. The table covers even numbered years from 2016 through 2026.
The chart that follows compares total population on Guam with and without the proposed action. Between the years 2021 and 2023 population with the proposed action is 5.6% higher than it would have been without the proposed action. At a steady-state, which would begin in 2028, the difference would be 4.1%.
While the population change associated with the proposed Marine Corps relocation would be considered significant during both the construction and operation phases — given that population change would exceed 2% — the significant change would not be considered entirely negative. Impacts related to population change would be mixed, with some adverse and some beneficial outcomes. Population increases would bring about increased demand on Guam’s public services agencies, but also increased economic activity and government of Guam tax revenues.
No potential mitigation is proposed, as the population increase would not likely result in a considerable increase in demand on Guam’s public services and permitting agencies, and the estimated increases in government of Guam tax revenues would likely compensate for any increased demand on public services that would occur.
The economic impacts would be beneficial, leading to increased employment and standards of living, and impacts to Guam’s housing stock and availability would not bring about reactionary development, which could have otherwise led to dislocations in the housing market.
Civilian labor force demand
The table above shows the proposed action would support a maximum of 7,031 full-time equivalent jobs. This maximum number of jobs would occur in 2021. After 2021, the number of civilian sector jobs associated with the proposed action would begin to decline until the steady-state level of 1,438 jobs would be reached in 2028.
Government of Guam tax revenues
Government of Guam tax revenues are expected to increase by a maximum of $86.4 million in 2021 and reach a steady-state level of $40 million in 2028. Personal income tax and Section 30 revenue are estimated to be the primary drivers of government of Guam tax revenue impacts associated with the proposed action (72% of total tax revenue impacts in 2021 and more than 90% of revenue impacts during the steady-state). The table below provides summary government of Guam tax revenue impact data.
Civilian housing demand
The table at the top of page 10 indicates that the peak annual civilian demand for new housing units would occur in 2021, when there would be a need for 770 new units. The annual demand for new housing units would fall to 285 units by 2028. At the 2021 maximum, housing demand with the proposed action is 1.2% higher than it otherwise would have been without the project. At 2028, the difference declines to 0.4%. There would not be a significant impact related to civilian housing demand because there would not be a substantial change to baseline conditions.
Gross Island Product
The table in the middle of page 10 shows the combined total impact on Gross Island Product would be $635 million in 2021, declining to a stable figure of $75 million beginning in 2028 as the steady-state operational phase begins. The primary driver of GIP impacts in 2021 would be DOD construction activity, while during the steady-state period GIP impacts would be primarily driven by Marine Corps operational expenditures.
The chart that follows compares Guam’s GIP with and without the proposed action. At maximum in 2021, GIP with the proposed action is 10.2% higher than otherwise would have occurred without implementation of the proposed action. At 2028, the difference declines to 1%. There would be a beneficial impact related to GIP at maximum and a smaller beneficial impact during the steady-state period
The tourism industry on Guam could be impacted in a number of ways. In general, impacts to tourism would be considered mixed (partially beneficial and partially adverse) and, overall, less than significant.
During the construction phase, an increase in construction-related business travel would be expected as a result of the proposed action. Compared to the overall number of annual visitor arrivals to Guam — estimated by the Guam Visitors Bureau to be 1.3 million in fiscal 2012 — the number of construction-related business visitor arrivals would be expected to be small, and thus impacts would be considered less than significant. Also, the possibility of wage increases or loss of labor to higher-paying jobs during the construction phase is a possible outcome, as wages in the construction sector are higher than those in the tourism sector. Impacts to Guam’s tourism industry from loss of workforce and/or wage increases are not expected to be drastic, and impacts would be considered less than significant.
During the operations phase, it is likely that the increase in military personnel would generate more visits from friends and family, as well as more business travel. With an average weighted 2012 hotel occupancy of 75%, according to the Guam Visitors Bureau, the relocation provides an opportunity for new sources of business and diversification of the travel market.
Additionally, off-duty military personnel and their families are likely to patronize retail locations and restaurants island-wide, including the central entertainment district of Tumon Bay, and participate in ocean-based tourism. Population increases are also likely to provide expanded markets for tourism support businesses.
Positive effects on ocean-based tourism are counteracted by both the prospect of more conflicts between various activities due to the limited number of calm-water sites and potential conflicts that could arise from increased demand for tie-off buoys. In Hawaii, another island environment where population growth has generated these conflicts, the state government has spent a considerable amount of time attempting to mediate conflicts and work out informal or formal rules for assuring equitable access to sites equally attractive to commercial scuba dive groups, motorized boat tours, rental jet-ski users, paragliders, snorkelers, board surfers, body surfers and swimmers, according to the Hawaii State Department of Business, Economic Development and Tourism. Such regulatory efforts would eventually be needed on Guam over time as the population of visitors and military and civilian populations grow. However, even though the scale of the military relocation has been greatly reduced, such actions could be required sooner than they otherwise would be. Overall, due to the mixed nature of impacts and the reduction in population impacts compared to the 2010 Final EIS, impacts to tourism during the operational phase would be considered less than significant.
The Guam community has the opportunity to maximize the benefits of the military buildup and minimize any negative impacts. As we approach the peak in construction activity, the public and private sector have the opportunity to work together to make this happen. In times past, the military had a much larger presence than is contemplated by this action and without undue stress on the local population and environment. Some of the steps needing to be taken have already been initiated.
The FSEIS points out the need for more medical facilities in terms of civilian hospital beds together with general and specialist physicians, nurses and technicians. The Guam Regional Medical Facility in Dededo had its soft opening July 1, and additional departments have been opened in the following weeks so that this need is being met.
Education is of paramount importance so that Guam citizens and residents can take advantage of jobs to be offered in a variety of fields including medicine, hospitality, engineering as well as construction. The public school system, under new management, is making strides in improving the number of graduates and the quality of those young people’s skills when entering college, the university or the workforce. The University of Guam and Guam Community College provide quality education for professionals as well as those moving toward careers in supporting roles.
The majority of positions needing to be filled are in construction, and the Guam Contractors’ Association Trades Academy was established in 2006 for providing certified training in a variety of construction trades. So far, more than 3,000 individuals have received skilled and semi-skilled training at the Trades Academy and are now part of the workforce. The number of trainees and apprentices attending the academy ranges between 150 and 200 and above at any given point in time. The number of off-island skilled construction workers will be reduced by the number of local workers available for jobs in the industry. These tradesmen are here to stay and will be available beyond the military buildup to strengthen and sustain the local economy. Some will form their own businesses after receiving on-the-job training with major contractors. The training offered by the GCA Trades Academy is coordinated with the Guam Community College, where construction and other skilled training is also provided. By using the local workforce to a greater extent, the demand on additional housing will also be reduced.
Developers over the past few years have placed new housing communities, built to higher standard, in the marketplace. This will continue as demand for housing increases and will tend to improve the quality of life for all Guam’s citizens and residents. n
— John M. Robertson is the president and principal engineer for AmOrient Engineering as well as chairman of the Guam Contractors’ Association’s Military, Labor and Government relations Committee and a principal founding member and chairman of the board of trustees of the GCA Trades Academy. He may be reached at email@example.com.