Posted on July 25, 2022
Beyond hurricanes, erosion, subsidence and sea-level rise, add one more looming threat to Louisiana’s rapidly vanishing coast: inflation.
Three bids advertised this year for state coastal restoration and flood protection projects have come in about 25% over estimate, with higher costs especially hitting materials such as steel, cement and asphalt, as well as diesel for dredging operations, officials said Wednesday. The low bids amounted to around $62 million, compared to estimates of nearly $50 million.
The difference between estimated costs and average bids was far more dramatic: Average bids came in nearly 50% above what officials expected the work would cost.
While no projects have been delayed yet, the state must ready itself for that possibility in the future if costs continue to spiral, said Bren Haase, director of the state Coastal Protection and Restoration Authority. The agency oversees Louisiana’s massive effort to beat back the tide of coastal erosion and protect communities from flooding.
“It certainly is having a significant impact on what we’re doing, on how we’re viewing things into the future,” Haase told a meeting of the CPRA’s board. “There may come a time when it just doesn’t make sense to award a bid. The cost may be so high that it makes sense to perhaps wait three or six months or so, see if the market adjusts, hopefully in our favor, and try to re-advertise the project.”
With inflation hitting nearly every aspect of life, from groceries to gas, its effect on projects to counteract the slowly developing threats wiping out the coast inch-by-inch may not be high on the priority list for the average Louisianan. Nevertheless, the state can ill afford any delay.
As state officials repeatedly seek to explain to the rest of the nation, Louisiana has lost land roughly equivalent to the size of Delaware since the 1930s. It could lose as much as 4,000 square miles – two more Delawares – in the next half-century if no action is taken to stop it.
For that reason, the CPRA spends billions of dollars each year building levees and restoring marsh and coastlines, financed through various methods, including federal and state dollars as well as proceeds from settlements over the 2010 BP Deepwater Horizon spill.
Its coastal master plan lays out a 50-year, $50 billion strategy. It aims to reduce land loss and protect communities from flooding as natural subsidence, human-caused erosion and sea-level rise exacerbated by climate change threatens to inundate vast sections of south Louisiana.
The CPRA currently has 104 projects underway, including 36 under construction, with the rest in either the engineering and design or planning phases. Haase said the authority has so far not encountered a situation where projects could not be completed due to cost increases.
One strategy the agency is considering is structuring bids in ways that allow for alternatives if prices fall. Clauses to shift risks from contractors to the CPRA for issues such as fuel-price adjustments could also help, Haase said.
“This is a significant issue that we’re going to have to grapple with,” board chairman Chip Kline said, adding that the authority would first seek to find the extra money through various streams if needed.
“When you’re talking about a barrier island project that is $140, $150 million, when you’re talking about a marsh creation project in Barataria or Breton, or anywhere in south Louisiana, that is in excess of $100 million, when you’re talking about a sediment diversion that is billions of dollars – these are significant numbers,” Kline said.
Board member Laurie Cormier, who represents Calcasieu and the Sabine Basin, asked whether the authority could continue with other projects if a pause for certain bids becomes necessary.
Haase said that would be the case and the authority was planning for various possibilities. He stressed that he mentioned the potential for a pause on certain bids only as an example, with no specific plan to do so currently envisioned.
“We’re in a coastal crisis, so the pause of six months made the hair of my neck stand up,” Cormier said.
