Topic/Subtopic: Growth Projections and Development



1040130-78740Topic/Subtopic: Growth Projections and Development00Topic/Subtopic: Growth Projections and Development-489585-76200SOCIO-ECONOMICS00SOCIO-ECONOMICSSocio-Economic – Growth Projections338391533147000Snapshot: Growth Projections and DevelopmentPositive growth trends have been reported in CNMI between 2012 and 2017; the U.S. Department of Commerce’s BEA report said the CNMI economy grew by 25.1 percent in 2017 based on the gross domestic product (GDP) estimates. GDP is the measurement of the overall economic activity that includes private and public consumption, government outlays, investments, and construction costs while adding exports and subtracting the imports.Much of the growth over the last five years has been attributed to the development of a new casino on Saipan as well as expansion in real estate investments and the construction sector.The 2016 CNMI Economic Report from the University of Guam’s Regional Center for Public Policy reports that key economic developments that have been driving growth in the CNMI include: ? Continuous growth in tourism ? Minimum wage increase on September 30, 2016 ? The transition period to phase out the CW-1 visa category continues until December 31, 2019 ? Job growth from the casino industry ? Signing of the Record of Decision on U.S. military plans for Tinian as a divert airfield and exercises ? Indications of no or low inflation threat (despite lack of data later than 1st Qtr. 2015)3028950137160Figure SEQ Figure \* ARABIC 38 - CNMI Population Forecasts by Various Agencies, 2019 PLUP, DPL.Figure SEQ Figure \* ARABIC 38 - CNMI Population Forecasts by Various Agencies, 2019 PLUP, DPL.30289506032500In general, economic growth and trend projects are tied closely to population dynamics, however, a 2018 population forecast report from John M. Knox and Associates notes that this is not necessarily the case for those of Northern Marianas Decent (NMD) in the CNMI. Specifically, that report notes that “NMD numbers vary little over [growth] scenarios … primarily because of the finding from the initial historical research phase that NMD population is, on a net basis, not very responsive to economic conditions. Change in historical NMD figures appears to come largely from natural increase, and the NMD population has shrunk over time.” Conversely, the report notes, the “non-NMD Resident population of the CNMI (citizens or green card holders from the Philippines, Freely Associated States, U.S., etc.) in contrast to the NMD population has historically responded to economic change with in- or out-migration.” Therefore, population estimates of this study show wider variation between “High-Growth” and “CW-1 termination and no build-up” scenarios. These studies and growth implications are also discussed in the “Land Management” section of this report.As reported in the 2019 Public Land Use Plan, the population of the CNMI has experienced growth over the last few decades including a peak population in 2000 for the main islands of Saipan, Tinian and Rota. After the garment industry left the CNMI the Commonwealth population decreased on all islands by 2010. From 2010 to 2016 the population of the CNMI has experienced minor population growth, and overall population has declined from 2000 census reported levels. Despite this, small gains in population growth are reported between the 2010 U.S. Census Bureau’s Decennial Census and the Secretariat of the Pacific Community’s population projections for 2016, retrieved in 2017. 200020102016Saipan62,39248,22049,820Tinian3,5403,1363,160Rota3,2832,5272,720As part of the Public Land Use Plan development, in January 2018 John M. Knox & Associates, Inc. prepared a report titled Population Forecasts for Master Planning for the Department of Public Lands (DPL). The Knox forecast model focused specifically on providing (i) estimates of “NMD” (Northern Marianas Descent – Chamorro and/or Carolinian) population and Homestead Award Eligibility for 2028, by island, and (ii) total population estimates for 2028, by island, to guide other plan development, although authors note that a potential secondary model purpose also involves job estimation. The Knox model assessed three growth scenarios: Scenario A is a High-Growth scenario. For Saipan, it flows from optimistic visitor arrival scenarios developed for the Marianas Visitors Authority (MVA) in a January 2017 report by consultants Horwath HTL. For Tinian, it assumes two casino hotels and construction of both military training facilities and a divert airfield. For Rota, it assumes three small upscale hotels. Scenario B is a Medium-Growth scenario, with limited change. For Saipan, it assumes visitor arrivals plateau at the level considered “sustainable” (in terms of infrastructure capacity) in the Horwath report. For Tinian, it assumes just one casino hotel plus military activities. For Rota, it assumes one upscale hotel.Scenario C is the only one assuming phase-out of CW-1 visa workers and probable attendant economic devastation – a Poor/Negative scenario. Saipan visitor arrivals would plunge, and then slightly recover. Rota and Tinian would have minimal budget-hotel development, and Tinian would be assumed to have the military training but not the divert airfield.Since the completion of this model, new information regarding the CW-1 visa program as well as military build-out including approval of the Divert airfield has been resolved, emphasizing the need to regularly assess and update economic growth projection data. What follows is a summary of the growth projections provided by the January 2018 Knox forecast model and report used in the 2019 Public Land Use Plan. Using the three growth scenarios described above, the Knox report provided 2028 estimates by island and CNMI-wide for population associated with change in labor demand for permanent residents ranging from 45,066 in Scenario C – less than the 2010 Census report of 53,883 – to 79,698 in Scenario A, with the majority of residents located on Saipan. Additional excerpts are included in Appendix I. In addition to assessing growth of resident populations, the 2018 Knox study also provides estimated change in the construction-related population. As they describe: it is particularly hard to predict exactly when construction “spikes” on large projects will occur, and the somewhat arbitrary nature of our assumptions about this in scenario specifications. That is why the principal focus of the analysis has been on population linked to relatively “permanent” operational jobs. But to give some sense of how construction booms can swell population, the following charts show “permanent” population plus additional construction-related population. We do this for the year 2025 instead of 2028, because overall our scenarios hypothesize relatively little construction activity in 2028 and much more in 2025 – thus, 2025 for most islands is not typical of normal conditions but may typify a construction “boom.” Given our scenarios, Rota shows this least and Tinian (with both casino-hotel and military projects in the first two scenarios) shows the greatest proportionate impact.Figure # - Estimated 2025 Population with Construction for Three Scenarios on Saipan, Tinian, and RotaAs indicated in preceding tables, construction-related population by 2025 is estimated in the Model to consist overwhelmingly of Non-Resident (Foreign) workers and a limited number of dependents for Scenarios A and B, predominantly Non-NMD people for Scenario C.Status, Impacts, and Responses Although the 2018 Knox analysis provides helpful growth analysis information, it is worth noting that only “Scenario C” assesses phase-out of the CW-1 program, which appears at the time of this report likely to remain a reality. However, “Scenario C” also assumes no build-up activities, which is not realistic given the 2010 “Pacific Pivot” agreement, which relocates approximately 8,600 Marines and their 9,000 dependents to Guam and envisions construction of facilities and infrastructure to support training and operations of Guam and Tinian as well as the 2016 Record of Decision for the Divert Activities and Exercises which announced the U.S. Air Force’s selection of the “Modified Tinian Alternative – North Option” as a future Divert location. A Supplemental Environmental Impact Statement (SEIS) is currently under development to address potential impacts of additional infrastructure construction for Divert-related projects. Regarding expected construction growth, the Division of Coastal Resources Management (DCRM) reports that 8,147 additional hotel rooms have been permitted through the “major siting” permitting process, with 5,329 proposed or being constructed on Saipan and 2,818 proposed or being constructed on Tinian. As highlighted in the chart below, when constructed, monthly infrastructure demands of these projects will be approximately 121,309,109 gallons of water, 75,810,652 gallons of wastewater management, 95 megawatts of power, and 340,929 cubic yards of solid waste management. DCRM reports they have added questions regarding the number of workers needed to construct and operate these projects to further support development planning dialogs with the CRM Agency Board and major siting permit applicants. Given expected military build-out and anticipated continued implementation of pending development projects, positive population growth estimated under Scenarios A and B appear to be more likely than the population decline assessed in Scenario C, however, updated analysis in this regard may be prudent. As noted in public feedback provided on the draft resources report, permitting and enforcement trends are linked to development trajectories. Although numerous projects have been permitted for development through local and federal permitting processes, at times lack of available infrastructure or shortage of workers or supplies can delay projects or stop them all together. This results in economic losses for investors as well as for the CNMI when investments are made to prepare sites with improved roads and utility infrastructure to meet demand. RecommendationsSince the 2017 Tourism Development Feasibility Study and 2018 Knox Projections, CNMI has experienced several factors that are likely to influence population trends. These include the 2018 extension of the “Commonwealth Worker” or “CW” program under US Public Law 110-229, restriction of certain worker types. Updating socio-economic growth projections with refined estimates for military build-up and “CW” phase-out data would provide for a more robust long-term outlook to inform continuing planning discussions for multiple resource areas. Development guidance should be provided that details federal and local requirements for construction projects in CNMI. This guidance should include contact information of regulatory agencies and recommendations for early coordination to avoid project permitting and implementation challenges. Detailed quarterly reports on the status of permitted projects and projects in the permitting pipeline would help support ongoing assessment of infrastructure build-out needs. Enforcement reports should also be shared between regulatory agencies to help ensure efficiency of interagency actions and monitor compliance with permit conditions, especially as they relate to protecting public health and safety and supporting compliance with development plans. ReferencesJohn M. Knox & Associates, Inc. Population Forecasts for Master Planning for the Department of Public Lands, January 2018 (Appendix A in 2019 DPL Public Land Use Plan, excerpts in Appendix I of this report) Horwath HTL. Tourism Development in the US Commonwealth of the Northern Mariana Islands: A Feasibility & Sustainability Study. Prepared for the MVA. January 2017Bureau of Economic Analysis Report, CNMI GPD Increases in 2017, University of Guam Economic Report, Department of Defense, Record of Decision (ROD) for the Guam and CNMI Military Relocation: Relocating Marines from Okinawa, Visiting Aircraft Carrier Berthing, and Air and Missile Defense Task Force, September 2010Department of Defense, Record of Decision (ROD) for the Pacific Air Forces Divert Activities, Exercise Initiative location, December 2016 ................
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