Economic Effects of the Revised Military Buildup in Guam

By Nick Leonard

Originally published at ScientificAmerican.com

In December 2002, the US–Japan Security Consultative Committee began a series of conversations about strategic military alignment in the Pacific and how to protect their associated countries in “today’s rapidly changing global security environment.” [Guam Buildup EIS, 2010] This three-and-a-half-year conversation evolved into what has been know as the Defense Policy and Review Initiative, part of which planned for the relocation of over 8,600 United States troops from Okinawa, Japan to Guam and other parts of the Pacific.

Map of Guam. Image courtesy of PMEL / NOAA.

However, in response to cuts in the United States’ defense budget, funding for a military build-up in Guam was for a time put on hold as officials tweaked details of the plan, partly with an eye to cost. Recent announcements in early May held prospects of a significant decrease in the number of military personnel to be relocated to Guam in upcoming years—current estimates are at 5000 Marines and 1200 dependents, a decrease of over 40%. In the midst of a global recession and faced with an ever-climbing federal deficit, the United States’ uncertainty is understandable; however, with funding temporarily reduced or frozen and military plans not to be complete until 2015, economic and social consequences of the revised plans for Guam are already being felt throughout that territory. [Kelman, 2012]

Joseph Bradley, Senior Vice President and Economic and Market Statistics Officer for the Bank of Guam, recently spoke to ABC News about the effects of the revised military buildup, stating:

I can’t even begin to tell you how much [Guam has been affected]. There are a number of businesses that had come into Guam in anticipation of the Military Buildup . . . those groups have already pulled out of Guam, walked away . . . because of the delays.

Since we have no idea what will happen in 2015 there is no way to estimate what the future impacts will be.

While some businesses may have “jumped the gun” in terms of development in Guam, there is no doubt the future buildup holds large economic opportunity for residents of this American territory in the South Pacific. Although fewer soldiers will put less stress on this small island than the initial planned 8600, Guam faces complex infrastructure problems to cohesively accommodate the Marines and their dependents. In addition, more military personnel on the island of Guam will likely lead to a larger tourist population and necessitate further development. With infrastructure such as wastewater treatment and electrical generation already in desperate need of upgrades and expansion, the extended timeline on the relocation project and the lack of finality in the plan itself have left numerous questions in the minds of Guam lawmakers about the best pathway for their island’s growth.

First and foremost, Guam is in need of a new wastewater treatment and disposal facility. Regardless of the military buildup, the construction of this critical facility needs to begin in the near future. However, with fewer soldiers stationed on Guam than were initially estimated, plant construction has been delayed as Guam’s local authorities and the military jostle to determine responsibility for funding it. If the new base is constructed at Naval Base Guam, which maintains its own wastewater treatment facility, Guam may be stuck with a $400 million capital investment that will serve as a sunk cost. [Taitano, 2012] However, if the new base is connected with the civilian wastewater treatment center, it is likely the federal government will subsidize a potion of the cost, making the facility more affordable. Either way, this new facility is partially the result of anticipation for the United States military buildup, and it is irresponsible to expect Guam to subsidize military personnel who, when stationed on the island, will represent a jump in population that cannot be handled by the current facilities. [Kelman, 2012]

Similarly, an increase in population and a stronger military presence in Guam will require a larger output from the Guam Power Authority. As stated in the 2010 Draft Environmental Impact Statement:

Currently, Guam has a U.S. Environmental Protection Agency waiver from various Clean Air Act requirements, which allow the use of high sulfur fuels in its electric generation plants.

In an Addendum to this report, the Department of the Navy agreed to help Guam transition to Ultra Low Sulfur Diesel (ULSD) in order to maintain clean, healthful air. This is a step in the right direction for Guam, but it may be an inefficient and wasteful capital investment in the long run.

In March 2008, Guam Bill 166 established a 25% renewable energy goal to be accomplished by 2035. Over the past few years, decreasing costs and larger availability of commercial wind turbines and solar panels have led to talk of large-scale alternative energy production development in Guam. With perfect environmental conditions for wind turbines, the Department of Defense allotted $17 million in the budget for the development of four turbines at the Naval Magazine. Rather than spending excess cash fixing an outdated and commodity-reliant facility, Guam may have larger long-term benefits from further development of wind and solar resources. While land mass may be limited, offshore facilities can be added during the development and dredging of the Apra Harbor, which will be critical to facilitate the docking of aircraft carriers that will arrive under the military’s plan. [Johnson, 2012]

The United States’ uncertainty in the development of Guam has been taxing on the residents, businesses, and utility providers of this small island. Regardless of the number of Marines transferred to Guam, immediate upgrades need to be made to the wastewater treatment facilities and electrical generation plants in order to accommodate increasing numbers of tourists and a growing population. While the scales of the projects are set to undergo review yet again, it should be noted that partial responsibility for this development lies with the United States military. The recent restrictions on federal funds for this development have left the government of Guam pondering ways to pay for such massive projects, which will support not only its residents, but also the military personnel stationed there.

Works Cited:

Guam Buildup Environmental Impact Statement.” Guam Buildup EIS – Guambuildupeis.us. Environmental Protection Agency, Sept. 2012. Web. 14 May 2012.

Johnson, Tim. “Military Buildup on Guam: Costs and Challenges in Meeting Construction Timelines.” Letter to Hilary Clinton. 27 June 2011. MS. Washington DC.

Kelman, Brett. “GWA: Dededo Base Crucial: Marines Would Justify Federal Funding for Upgrades.” Pacific Daily News. Pacific Daily News, 14 May 2012. Web. 14 May 2012.

Taitano, Zita. “MVariety.com.” Guam Asks US Congress to Authorize Buildup Funding. Marianas Variety, 11 May 2012. Web. 14 May 2012.

Uncertainty in Guam over Delayed Military Buildup.” Interview by Joseph Bradley. Radio Australia. ABC, 10 May 2012. Web. 14 May 2012.

About the Author: Nick Leonard is a senior in the Marshall School of Business at the University of Southern California. He is minoring in Environmental Studies, and has a keen interest in sustainable aquaculture and marine fisheries.

Editor’s note: Scientific Research Diving at USC Dornsife is offered as part of an experiential summer program offered to undergraduate students of the USC Dana and David Dornsife College of Letters, Arts and Sciences. This course takes place on location at the USC Wrigley Marine Science Center on Catalina Island and throughout Micronesia. Students investigate important environmental issues such as ecologically sustainable development, fisheries management, protected-area planning and assessment, and human health issues. During the course of the program, the student team will dive and collect data to support conservation and management strategies to protect the fragile coral reefs of Guam and Palau in Micronesia.

Instructors for the course include Jim Haw, Director of the Environmental Studies Program in USC Dornsife, Assistant Professor of Environmental Studies David Ginsburg,, SCUBA instructor and volunteer in the USC Scientific Diving Program Tom Carr and USC Dive Safety Officer Gerry Smith of the USC Wrigley Institute for Environmental Studies.

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