Cargo on the move: options for infrastructure and air quality improvements at the San Pedro Bay ports

United States residents all benefit from freight transit that puts foreign-made goods into stores in the United States. Ten percent of the world's ship-container traffic either originates or ends in the United States. The Ports of Los Angeles (LA) and Long Beach (LB) combined received a total of 14,000,000 cargo containers in 2010, making it the sixth largest port facility in the world combined and the largest in the United States. An astounding 40% of the entire nation's goods enter through the two ports. Thus, the Ports of Los Angeles and Long Beach play a crucial role in bringing in products that provide millions of jobs nationwide and contribute billions of dollars to the national economy. These Ports are also major drivers of the local economy, serving as the second largest source of jobs in the greater five-county Los Angeles Region. Although the Ports have a massive impact on California's economy in terms of jobs and economic activity, these benefits do not come without costs. Such costs include a significant contribution to Southern California's air pollution, which generates some of the worst air quality in the nation. Currently these costs are not being properly borne by those that generate them. The State of California bears the burden of the increased healthcare costs generated by the goods movement industry, primarily through increased asthma rates and premature deaths due to this poor air quality. Southern California communities are also extremely congested by the increased traffic generated by the movement of goods in and out of these Ports. The purpose of this thesis is in part to justify the need for a funding stream to help combat these extraordinary costs. I argue it is neither efficient nor fair to place the burden of these costs, generated by the goods movement industry that benefits the entire country, upon California's state and Southern California local governments. A payment stream needs to be found for assistance to help mitigate the air quality damage and the deteriorating infrastructure and the needed structural improvements. I evaluated three funding options using three criteria: economic efficiency (disrupts the California economy the least), equity (to those who would pay for the costs), political feasibility (would it be acceptable to State Legislators and California voters). These options include approving more general obligation bonds, increasing the gas tax or instituting a per container fee on all cargo processed at the Ports of LA/LB. All three options could raise sufficient revenue for the needed improvements, estimated at $40 billion, but would have different benefits and limitations. I conclude that instituting a container fee would be the most economically efficient, equitable, and possibly the most politically feasible.