Climate Change and Winter Storms: the Cost of D.C.’s Snowzilla
Winter storms are disrupting east coast cities with increasing frequency. It climate change to blame? What is the most cost effective solution available to local government planners?
In January 2016 Winter Storm Jonas dumped 17.81 inches of snow on Washington D.C., effectively shutting down the city for three days. A foot and a half is not a massive quantity, but it was an amount the city was unprepared for. Even with crews working around the clock a shortage of plowing and deicing equipment made it impossible to keep side streets and residential areas open to vehicle traffic.
The District of Columbia Department of Transportation (DDOT) is accustomed to dealing with moderate amounts of snow. Snowfalls of one to three inches are relatively common during winter months. But in recent years “outlier” storms that wreck havoc have become more common and have stretched historically sufficient resources beyond capacity. According to the National Oceanic and Atmospheric Administration the northeastern United States experienced twice as many extreme snowstorms during the second half of the twentieth century compared to the first half.2 Five of the ten worst blizzards in D.C.’s 225 year history have occurred since 1980. All ten have occurred since the industrial revolution.3 Washington D.C. is not alone; a recent study by MIT climatologists showed a clear increase in the frequency of major snowfall events in eight large northeast cities over the last century.4
So, what does all this snow have to do with climate change? Isn’t global warming about raising temperatures and melting ice caps? As it turns out, the laws of physics establish a simple connection between a warming climate and extreme weather. A warmer atmosphere holds more moisture, and when a storm from moves through that moisture is released as precipitation.4 In sub-zero temperatures, that precipitation is snow.
An increase in severe winter storms creates significant challenges for Washington’s DDOT. If blizzards were more frequent the snowplows and deicing equipment used to remove the snow would have high utilization rates that would justify the large capital investment required to purchase a large snow-removal fleet. At present the system is characterized by a low volume of snow-removal equipment that is underutilized most of the year but experiences unpredictable demand surges at infrequent intervals.
This inefficiency comes at a high cost: the $55 million bill for Jonas was more than the combined total of the District’s snow-removal budgets for the past seven years.5 The steep cost was mainly attributed to out-of-state contractors hired to help clean up the mess during a time of high demand across the east coast. Without adequate budgetary resources to pay the bill, city officials made over $24 million in illegal credit card payments before J.P. Morgan turned off the city’s credit.5 Adding to the District’s budget woes is an estimated $32.8 million in lost tax revenue for the week. i,6
How can such a vexing problem be solved? With more heavy snowfall expected this winter, is DDOT’s resource allocation as efficient as it can be? DDOT’s current strategy is to own limited resources and to hire surge contractors as needed. The current resource pool (recently expanded by 20 units) includes 330 pieces of equipment and 750 DDOT-employed personnel.7 This number is clearly insufficient for the largest storms: Jonas required the hiring of 3,500 additional pieces of equipment from contractors as far away as Florida.5
This year’s snow removal budget is $6.2 million and provides for DDOT ownership and operation of 330 pieces of heavy equipment. That means each DDOT-owned plow costs approximately $19,375 annually to own, maintain and operate. During Jonas it cost $55 million to rent 3,500 piece of equipment for less than a week. That’s approximately $15,714 per plow, per week. Clearly renting heavy equipment during surging prices is an expensive proposition. Owned equipment is far cheaper to field, but what about the acquisition cost? Exact prices vary significantly based on the age, condition, and size of the desired piece of equipment, but $100,000 each is a reasonable estimate. At this price 3,500 pieces of equipment would cost $350 million to purchase and $67.8 million annually to operate.ii No wonder city officials have opted to roll the dice again this winter and hope for the best.
In reality the equipment could have other uses. Front end loaders and salt trucks could spend non-winter months contributing to other infrastructure projects or leased to construction companies. Still, there are no easy answers. Voters always balk at a tax increase, and the only alternative would be to cut city funding for other programs. If winter storm frequency continues to increase the decision point will continue to shift. One thing is clear: if the city council does not commit more resources to building up DDOT’s fleet the city will continue to pay millions of dollars in rental bills while leaving millions in sales tax revenue on the table.
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End Notes:
i. Calculated based on $570 Million in lost sales revenue from D.C. area businesses and a sales tax of 5.75%.
ii. 3,500 pieces of heavy equipment purchased at an acquisition cost of $100,000, with an annual operating cost of $19,375.
Sources:
- Weather.com. “Winter Storm Jonas: Where Does it Rank Historically?” Published 28 April 2016. Accessed 2 November 2016. https://weather.com/storms/winter/news/winter-storm-jonas-rank-in-history
- National Oceanic and Atmospheric Association. “Climate Change and Extreme Snow in the U.S.” Published 25 January 2016. Accessed 2 November 2016. https://www.ncdc.noaa.gov/news/climate-change-and-extreme-snow-us
- Ambrose, Kevin and Wes Junker. “Where Snowzilla fits into D.C.’s top 10 snowstorms.” The Washington Post. Published 23 January 2016. Accessed 2 Nov 2016. https://www.washingtonpost.com/news/capital-weather-gang/wp/2016/01/23/where-snowzilla-fits-into-d-c-s-top-10-snowstorms/
- Cohen, Judah and Jason Furtado. “How climate change may be producing more blockbuster snowstorms”. The Washington Post. Published 9 March 2015. Accessed 2 November 2016. https://www.washingtonpost.com/news/capital-weather-gang/wp/2015/03/09/how-climate-change-may-be-producing-more-blockbuster-snowstorms/
- Davis, Aaron. “D.C. spent record amounts on snow removal, prompting emergency actions to pay creditors.” The Washington Post. Published 3 May 2016. Accessed 3 November 2016. https://www.washingtonpost.com/local/dc-politics/dc-spent-record-amount-on-snow-removal-prompting-emergency-actions-to-pay-creditors/2016/05/03/48b04986-10b2-11e6-81b4-581a5c4c42df_story.html
- Morphy, Erika. “Winter Storm Jonas Cost DC Area $570M” GlobeSt.com. Published 27 January 2016. Accessed 3 Nov 2016. http://www.globest.com/sites/globest/2016/01/27/winter-storm-jonas-costs-dc-area-570m/?slreturn=20161004122312
- “District of Columbia Winter Snow and Ice Plan.” District Department of Transportation. Accessed 3 Nov 2016. http://ddot.dc.gov/page/district-columbia-winter-snow-and-ice-plan
Fascinating piece. I didn’t realize that DC charged all of this to credit cards! And that JP Morgan cut off their credit. That sentence definitely caught my eye. (“Without adequate budgetary resources to pay the bill, city officials made over $24 million in illegal credit card payments before J.P. Morgan turned off the city’s credit.”) I did want to clarify one component of it, however: the credit card payments they made were not illegal. Based on the Washington Post story you cited, they were just 20 times over their usual limit. They had access to the credit but were not accustomed to using it. JP Morgan, to play it safe, cut them off after that point.
FCF, thanks for the comment.
To clarify, the use of city credit cards to pay the contractors was not illegal, but the size of several payments was. Pursuant to Section 1-204.51.b.1 of the DC Code, “No contract involving expenditures in excess of $1,000,000 during a 12-month period may be made unless the Mayor submits the contract to the Council for its approval and the Council approves the contract (in accordance with criteria established by act of the Council).” The issue was that several contractors were paid well in excess of $1 million without Council approval.
Once JP Morgan realized that city officials at DDOT and the Department of Public Works were skirting the law by making multiple payments under the $1 million threshold they became concerned that they might face legal battles to get the credit card bills paid. The mayor’s office has claimed that they have the authority to take necessary action during a declared state of emergency, but there is no legal provision that allows the executive branch to suspend the city’s contract law.
Thanks for this post! This is a really tricky problem to solve. In many similar cases, a robust contractor market could grow up to surge resources that are rarely needed. One of the big issues here, though, is that the storms will hit the entire eastern US at the same time, meaning that the market can’t just maintain a fleet of plows and move them around when once-a-decade storms happen. There may be no avoiding keeping fleets of equipment in each city.
I’ll keep an eye on this story going forward; as a native of Washington, DC, I’m vested in how this plays out!
Spencer
This is really interesting and I actually had a friend start a business to tackle this very type of problem. He wanted to create an insurance product that would help cities and companies (ie. ski resorts) better protect themselves from financial risks associated with climate events. These type of products to exist in other markets (see: weather derivatives http://www.investopedia.com/articles/optioninvestor/05/052505.asp). One issue with these type of products is that municipal budgeting does not align with how these insurance contracts are structured. Also, it is very difficult to appropriately calibrate the contracts based on the variability of the weather and the long time horizon that you would require to truly smooth out weather variability. Do you think a weather insurance scheme could ever work for cities?
Very interesting to hear about snow woes from another city! Calgary (in Canada) only has only 1M people and we spend $30-40M a year on snow removal. Many of our trucks are dump trucks during the summer and then they add plows & sanding equipment for the winter months. We still have major issues when a huge snowfall occurs. One of the biggest compounding factors is the fact that an entire region is usually hit with the snowfall which makes it incredible difficult to obtain extra resources from your closest municipalities.
Could there be a business model for managing & deploying excess snow removal equipment throughout an area?
I remember living through Snowzilla last winter in DC – it was brutal!
In addition to the economic argument presented above, cities should advocate for prompt snow removal to promote the safety of local citizens. Treacherous roads and sidewalks covered with ice and snow can lead to increased emergency room visits. Consequently, some states have enforced fines to mitigate accidents. New Jersey and Connecticut have passed laws to fine drivers who have not cleared snow from the roof of their cars. Additionally, states could consider fines for driving on the road during a “state of emergency” or not promptly shoveling the sidewalk.
Jeff Brady, “Not Clearing The Snow Off Your Car Before Driving Could Cost You,” NPR, March 3 2015, Accessed on November 7, 2015. http://www.npr.org/2015/03/03/390410217/not-clearing-the-snow-off-your-car-before-driving-could-cost-you
I was there for that storm as well, it was insane! I think Michael posed an interesting question above, about deploying excess snow removal equipment throughout an area. It might make sense to study weather patterns and have cities that are close to each other, yet that have a low correlation of extreme snow events, go in on snow removal equipment and staffing together, this way they could form a co-operative, and pool costs, and have a better response time to be able to get the surge equipment they need. This would obviously bring along some additional challenges, including tensions that might arise if one city ends up getting more storms than the other cities in the co-operative, in which case the other cities may not want to pay an equal share towards the equipment. This concept would function very similarly to an insurance policy.
The point on cutting city programs is a bit hasty. The real problem with regard to the budget in D.C. is that Congress has not set aside sufficient funds for plowing although it is important to continuing government operations. The lack of planning and concurrence between the city and federal government highlights a critical friction point in environmental readiness planning that will be pertinent for a range of climate change related problems in the future.
Very interesting topic! The abnormal climate changes definitely caught many cities off guard and incurred huge losses. Another interesting phenomenon is for places like middle eastern countries where drought is more expected, there has been increasing occurrences of heavy rain storms. I was caught in such rain storm while I was in Dubai in recent years. The whole transportation infrastructure was paralyzed and caused huge losses and inconvenience to the city and the citizens.
Thanks for the great post! As a native DCer who has gone through a handful of these crazy blizzards, I have been pretty shocked at the extent of ‘shut-down’ in response to piles of snow that do not seem so mammoth. I also wonder about alternative markets that might develop in the future in response to the infrastructural blockages (e.g., commercial drone food deliveries, etc.)