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BEST responds to Shipping Channel Study

Passengers take in the sights as the Norwegian Majesty makes its way through Town Cut, St George's in this 2008 file picture. BEST has responded to the Shipping Channel Study, which looked at the feasability of widening the Island's cruise ship channels.

The Bermuda Environmental Sustainability Taskforce (BEST) has read and reviewed the complete draft (v2) of the “Study of Bermuda's Shipping Channels to Accommodate Larger Cruise Ships” (referred to as “Channel Study”). We have prepared the following analysis and response.We note that the full study is not available on the Government website. What is available online is an overview brochure and a presentation neither of which make the whole story available to the public and a questionnaire the usefulness of which depends on respondents being fully informed. Our analysis is an attempt to assist the public in fairly evaluating the options for Bermuda's shipping channels.Executive Summary· Capital-intensive tourism-related projects such as widening and deepening the shipping channels should not be entertained prior to the development of a Long-term National Tourism Plan.· In what is an internationally-competitive marketplace, Government must first work to ensure that Bermuda remains a profitable destination for both cruise lines and the Island alike before undertaking expensive and potentially environmentally-devastating projects designed to cater to cruise ships that may never come.· Undertaking the work and investment required to widen and deepen Bermuda's shipping channels solely in the interests of accommodating larger cruise ships could well be both environmentally and economically disastrous.· Raising our air arrival numbers to those achieved as late as 2007 could have the same annual economic impact as improving access to all three ports.· Ecological impacts on the Bermuda marine environment resulting from channel modifications are a considerable concern that's the general consensus among Channel Study investigators.· As stated in the fine print of the study, the additional revenues generated by increased cruise ship arrivals would themselves be insufficient to support the channel excavations, therefore it would be necessary to subsidise the construction costs through general tax revenues.· Even if the large-scale and expensive channel dredging and blasting suggested in the study are undertaken, in just another ten or twenty years we could easily find ourselves in the same position we are today because of the continuing trend towards ever-larger cruise ship construction.· Should any channel work even be considered, the quality of the environmental and field studies should under no circumstances be compromised just so the channel enlargement process can be accelerated, given the huge potential for both negative environmental and economic impacts that could result.· On average, a land-based tourist has a direct economic impact that is nearly seven times greater than that of a cruise-based tourist and this overall economic impact is better diffused across the Island.· It is predominantly the expenditure by air arrivals that supports our 2,297 hotel industry workers and many others in the hospitality industry.· Bermuda should consider the potential conflicts between cruise and land-based visitors and the effects that these may have on visitor experiences before making any decisions to increase the lower-spending segment of our tourist population.· Improving public transportation may prove critical to maintaining, let alone increasing, the number of cruise visitors now disembarking in Dockyard and could also greatly assist in diffusing the economic impact of cruise passengers to other parts of the Island.· BEST firmly believes that Bermuda's specific advantages must be recognised, preserved, and developed into a unique tourism product, or products, ideally as part of a comprehensive tourism plan.IntroductionEarlier this year, a “Study of Bermuda's Shipping Channels to Accommodate Larger Cruise Ships” was commissioned by the Ministry of Transport. The stated intention was to form “a basis for public discourse for the Government, its citizens, and stakeholders to discuss the opportunities and constraints” associated with blasting and dredging Bermuda's major shipping channels to provide safer navigation of cruise ships into our three ports. Having now had the opportunity to thoroughly review the study, it seems apparent that the constraints, and inherent risks, associated with excavating Bermuda's shipping channels by far outweigh the potential, and uncertain, opportunities associated with doing so. Moreover, based on available statistics and study projections to 2021, it would appear that simply raising our air arrival numbers to those achieved as late as 2007 could have the same annual economic impact as improving access to all three ports.The following analysis and response will briefly critique the Bermuda Shipping Channel Study and offer evidence as to why, based on the findings presented, the Bermuda Environmental and Sustainability Taskforce (BEST) strongly believes that efforts and expenditure to improve our tourism sector would be far better spent elsewhere.OverviewWhile the Shipping Channel Study contains a great deal of information and utilised a number of technical simulations, there is no clear summary of constraints and opportunities. This shortcoming makes it very difficult to use the Study effectively for its intended purpose as a basis for public discourse or to draw any meaningful conclusions without undertaking a careful and detailed analysis of the information contained within the 160-page document. Furthermore, the study makes a number of assumptions, particularly regarding Bermuda cruising and the future of the wider cruise market, without adequately highlighting the uncertainty surrounding them, and seems to devote much space to discussing the hypothetical benefits (essentially the reasons why the study was done) without thoroughly exploring the associated costs, both economic and environmental. Moreover, dredging and blasting Bermuda's shipping channels to enable larger cruise ships to access both Hamilton and St George's is just one possible solution to improve the prospects of tourism for the Island and, as such, cannot and should not be considered in isolation. It is almost certain that alternative, more cost-effective and less capital-intensive solutions exist.UncertaintyAs noted in BEST's initial response to the Shipping Channel Study, it is difficult to understand the rationale for such major alterations before there is a clear Tourism strategy. This is particularly true given that, according to reports, the new Tourism Board itself doesn't believe that cruise ships are the way forward as far as growing the industry. It would therefore seem that the Study is premature and that such capital-intensive projects should not even be entertained prior to the development and issuance of a Long-term National Tourism Plan. In addition, the Study assumes that Bermuda will remain a viable cruise ship destination, with the Island continuing to feature on cruise schedules and increasingly so once any channel works are completed. This is far from certain, however, as shown by Carnival, Princess Cruises and Holland America's recent announcements that visits to the Island will be substantially reduced in 2012 and 2013.The study considers in detail 12 scenarios for channel development, ranging from no change to modifying all channels to enable the safe passage of Post-Panamax Tier 2 ships. What the study highlights well is the large scale of the excavations needed to enable the safe passage of cruise ships of this size. For Town Cut, for example, this would involve a more than doubling in width, with the total or partial destruction of Higgs, Horseshoe and Hen Islands, several reefs and sea grass beds and an estimated construction cost of $54.7m to $56.7m before any additional contingency costs. For Two Rock Passage, this would entail the removal of 30% of Lefroy Island, a bird sanctuary and habitat for endemic Bermuda skinks, as well as reefs and sea grass beds not mentioned in the report, and an estimated construction cost of $56.2m to $58.2m, again before the addition of any contingency costs. What is not adequately highlighted, however, is that the vast majority of large cruise ships built in the 2000s, and indeed planned for the foreseeable future, would fall into the Post-Panamax Tier 3 and 4 categories and would therefore still not be able to safely navigate Town Cut and Two Rock Passage even after the large-scale alterations the Study envisions.Given that the average lifespan of a ship is 30 years and that most ships servicing North America are sold to other markets before the end of their useful lives (both the Zenith and the Horizon are now servicing the Mediterranean market, for example), it is probable that the vast majority of Post-Panamax Tier 2 ships will no longer be in service by 2030. Furthermore, given the trend towards larger cruise ships, particularly in the North American market, it is unlikely that the future of large cruise ships will meet Post-Panamax Tier 2 size restrictions. This is particularly true given that the major constraint to building even larger cruise ships cited by cruise operators is the current width of the Panama Canal, the widening of which is scheduled for completion in 2014. Once this is completed, it is likely that large cruise ship sizes will only continue to increase and that, even if the large-scale and expensive channel modifications suggested in the study are undertaken, we could easily again find ourselves in the same position just another ten or 20 years from now that we find ourselves in today.CostsGiven the enormous environmental and economic costs associated with the proposed alterations, these did not appear to be given adequate consideration in the study.EnvironmentalFrom an environmental standpoint, there are lessons to be learned from the inadequate Environmental Impact Assesment (EIA) conducted for the Dockyard cruise ship piers. The EIA component of the Channel Study is similarly thin, by international standards, and will need to be made more robust if it is to serve its purpose. Despite the lack of considered investigation, the Channel Study did outline that the two principal ecological communities of concern are coral reefs and sea grasses and that “The general consensus among investigators was that ecological impacts on the Bermuda marine environment resulting from channel modifications are a considerable concern.” It is important to note that the total economic value of Bermuda's coral reefs was estimated in a 2007 study to be $722m annually and that 14 percent of tourists interviewed as part of this study confirmed that they would not come to Bermuda should the coral reefs lose their “pristine” quality. It will be critical to weigh findings such as these into any thorough cost-benefit analysis as it is possible that the economic costs of the required reef destruction and loss through sedimentation could already outweigh the economic benefits of additional cruise passengers before the ecological costs are even taken into account.Importantly, should the decision be taken to make any of the channel alterations discussed in the study, an independent and adequately budgeted environmental assessment by a reputable company will be necessary to protect our natural assets and minimise unforeseen costs during a construction phase. A great deal of the $30m in cost overruns on the Dockyard cruise pier project, for example, resulted from a misguided attempt to push the project through without adhering to proper procedures. The quality of the environmental and field studies should therefore under no circumstances be compromised to accelerate a channel excavation process given the huge potential for both negative environmental and economic impacts that could result.EconomicGiven Bermuda's current economic situation and the potentially prohibitive costs of funding such a capital-intensive project, financing the channel modifications suggested in the study does not appear to have been given adequate attention. From what is discussed in the study, however, it is critical to note that, even if the funds can be obtained, it would take an estimated 17 to 30 years to pay down the construction cost from the additional revenues generated by increased cruise traffic alone. As mentioned in the fine print, the additional revenues generated would themselves be insufficient to support the channel alterations and general tax revenues would therefore be necessary to subsidise the construction. As budget cuts have recently been made to several essential Government services, using general tax revenues to subsidise channel modifications would inevitably lead to further budgetary cuts in other areas and additional financial hardship. Furthermore, there is no guarantee that the additional revenues will even cover the cost of construction, financing and maintenance, particularly given recent announcements by several cruise lines that they will be reducing their number of visits to the Island in the immediate future. Again, if the trend towards ever-larger cruise ships continues, which looks very likely, these ships will not physically fit into Bermuda's harbours in the future whether or not the proposed excavations are done.In addition to the basic construction costs of channel modification, the necessity of incurring extra costs to even make such modifications worthwhile was not even considered in the study. City Mayor Charles Gosling, for example, has estimated that preparing the Hamilton waterfront for large modern cruise ships would cost upwards of $200m, which is nearly four times the estimated construction cost of modifying Two Rock Passage itself! Furthermore, Kenneth Bascome and Charles Gosling have stated that neither the Town of St George nor the City of Hamilton have the funds available to make the dock upgrades that would be necessary to accommodate larger ships and, short of taking out additional debt or making further significant cutbacks in other areas, it is clear that the Bermuda Government does not have such funds available either.lTomorrow, in part two, BEST examines some alternatives.