Russ Handegard, West Fargo, Published May 26 2013
Letter: Diversion raises serious questionsThe more I read and the more I think about the proposed diversion, the more questions I have about the financial analysis. Any unbiased evaluation of cost/benefit or return on investment leads to serious questions. The leap in cost between a $30 million Sheyenne Diversion and a $2 billion Fargo diversion is mind-boggling.
I recently read (per Sen. John Hoeven, R-N.D.) that the cost for flood fighting in Fargo has averaged $4 million per year and was simply not sustainable. The return on $2 billion to save $4 million is only two-tenths of 1 percent per year. Who would accept that rate of return even in today’s market?
Another huge question relates to the 6,000 to 7,000 acres of farmland displaced by the canal. Land prices have increased by a multiple of 3 to 5 in the past few years, raising the current value to more than $50 million. In addition, the land removed from production would generate $4 million to $8 million per year in revenue, more than offsetting the average annual expense incurred by Fargo, resulting in a net negative overall rate of return. One can also assume the diversion will not be free of maintenance expense.
The issue of sunk costs also comes up when you consider that during my lifetime and even before, hundreds of millions of dollars have been spent flood-proofing the river corridor. As a professional engineer, I find it hard to believe the river cannot be contained at the water’s edge. I seem to recall some entity stating that the entire city could be permanently protected to 43 feet for $300 million or less.
I do not fundamentally have a problem with the concept of a Fargo diversion, but I don’t see how the current proposal can stand up to financial scrutiny.
I do have a problem with kicking the problem upstream. I believe Fargo’s problem can be solved within its own borders and steps can be taken to regulate runoff basin wide. That appears to me to be more equitable and more economical.