Community Impact

May 16, 2018 | Fred Carstensen, Connecticut Center for Economic Analysis and Department of Finance

Op-ed: Would a Long Island Sound Tunnel Help Revive Connecticut’s Failing Economy?

Finance professor Fed Carstensen suggests that a tunnel under the Sound could benefit both Long Island residents and the Connecticut economy, and pay for itself over time.

The skyline of lower Manhattan in New York City seen on May 9, 2018 from Weehawken, New Jersey. (Photo by Kena Betancur/VIEWpress/Corbis via Getty Images)

The skyline of lower Manhattan in New York City seen from Weehawken, New Jersey. (Photo by Kena Betancur/VIEWpress/Corbis via Getty Images)

Connecticut’s economy has been shrinking since 2008; it desperately needs to find a way back to growth. Long Island’s economy is choking because of the necessity of everything going in or out through New York City. An interstate collaboration to “bridge” the Sound might address both challenges.

Past studies – a half century of them! – highlighted daunting construction costs, insufficient traffic, inadequate toll revenue, and environmental issues to justify a crossing project. But given the large scale of the current Long Island economy, the chokehold of logistics requiring everything to navigate the New York City metro, and the challenge Connecticut is facing to restore economic growth (Connecticut’s economy, shrinking since 2008, is now smaller than it was in 2004), the question now is whether linking Long Island and Connecticut would be mutually beneficial.

That half-century of studies, including Gov. Cuomo’s latest one, looked only at the huge, intimidating costs, but failed to consider whether the broad economic benefits – opening up new opportunities for business creation and thus job creation, improved logistics for the Long Island economy, expanded markets, benefits to Connecticut businesses and communities, generation of new tax revenues, etc. – would make a Long Island crossing nevertheless beneficial for both regions. Would such a massive public infrastructure project pay for itself over time as a result of the broad regional benefits it would generate?

The best way to answer this question is to develop a comprehensive dynamic economic impact analysis, one looking out over a 25-year time horizon to project business growth, job creation, demographic impacts, incremental tax revenues, an analysis that the Connecticut Center for Economic Analysis (CCEA) at UConn, in partnership with REMI Inc., of Amherst, Massachusetts, is undertaking. To begin to develop appropriate data, CCEA has already initiated an online survey of businesses. The survey asks, for example, how individual businesses would utilize cross-Sound access to expand their sales of goods and services or to project the benefit from lower transport costs for goods and services that previously had to be routed through the New York Metro area. CEA will also engage area Chambers of Commerce and economic planning groups to refine and enlarge understanding of the likely impacts.

Connecticut’s economy is in clear need of a powerful stimulus to break it out of the doldrums in which it now sits. Eastern Long Island is an unbalanced, heavily seasonal economy that pays a premium to import goods and services from or through Metropolitan New York. A Long Island Sound crossing would presumptively open up new opportunities for developing a more balanced regional economy for those communities, while significantly expanding opportunities for Connecticut businesses to provide an array of services – including shipments through Connecticut’s deep water ports – and goods that Long Island communities need. Linking the regions will thus generate broad benefits on both sides of the Sound. The fundamental question is whether net new benefits will be sufficient to justify the investment.

The emergent technology of electric autonomous vehicles (AV) points to an approach that would make the crossing both much less expensive and more environmentally friendly. A long tunnel has high ventilation costs and major vehicle safety concerns. With electrified autonomous vehicles, neither consideration will be significant. Autonomous vehicles will be widely used, in the opinion of many, within two decades. That is also a reasonable timeframe for the outreach, planning, legislative approvals, environmental impact statement, design, and construction of a tunnel project.

Non-AV electric vehicles could utilize lane guidance systems. Non-electrified vehicles could be carried on an AV flatbed. But these “non-conforming” vehicles will be increasingly rare in the overall vehicle mix over the years, and could be charged a differential fee to dissuade them from using the tunnel.

Businesses, including transit operators, relying on the connector across the Sound would purchase electrified AVs. Differential tolls should be used to incentivize and thus encourage growth-promoting and job-creating activities.

Creation of a joint effort to fund and manage this dynamic regional economic modeling is surely the best way to proceed. Initially, the objective is to begin this as a partnership between the CCEA-UConn, REMI, and a New York-based economics group, perhaps at SUNY-Stony Brook. If the analysis is persuasive, New York and Connecticut would then create an interstate compact to undertake the project; Congress approves such compacts – there are today almost 200. One of the most notable is the New York-New Jersey Port Authority. Such a legal framework would clearly facilitate completion of this project.