Demand Drivers | Coastal Index | The Data Center

Demand Drivers

What is a Demand Driver?

The water management cluster is driven by demand from both public and private sources. These demand drivers (shown in green in the graphic below) perform major environmental work including coastal restoration and protection, urban water management, and subsidence management. What ties them together are that they fund projects that manipulate land and water primarily for the purpose of flood protection. The demand drivers contract with advanced services companies to plan, design, and monitor the work, and then contract with heavy construction companies to implement the work. This section quantifies the economic footprints of several demand drivers of water management.

Buckets

U.S. Army Corps of Engineers Spending
Louisiana Coastal Protection and Restoration Authority (CPRA) Spending
Mitigation banks
Export Potential

U.S. Army Corps of Engineers Spending

What is this demand driver?

The Army Corps leads some projects that fall under CPRA’s Master Plan, including the Hurricane and Storm Damage Risk Reduction System (HSDRRS). The Army Corps also funds and administers some of its own programs in Louisiana. The Southeast Louisiana Urban Flood Control Project (SELA), for example, is an Army Corps program that supports Southeast Louisiana parishes’ drainage programs. Note that in the early 2010s, Army Corps construction costs were high due to the implementation of HSDRRS and SELA.

Louisiana CPRA Spending

What is this demand driver?

The CPRA develops and implements the state's Coastal Master Plan, but the CPRA does not lead every coastal restoration and flood protection project in the Master Plan. The CPRA actually allocates to partner agencies the money and authority to lead many master plan projects. For the projects that the CPRA leads itself, the CPRA executes construction and services contracts. The totals below include payments made through purchase orders over the course of a fiscal year (not the total value of active contracts during the fiscal year, some of which may span multiple years).

Construction contracts go through a state open-bid process through which the lowest bid is selected, according to state law. Services contracts are entirely different from construction contracts. CPRA puts out Requests for Proposals (RFPs) or Requests for Statement of Interest and Qualifications (RSIQs) for certain regular services about every 18 to 24 months. For each RFP/RSIQ, approximately five to ten companies win three-year IDIQ, which generally range from $3 to $5 million. IDIQ stands for "Indefinite Delivery, Indefinite Quantity," which means that the full amount of the contract may not be realized. CPRA issues to contract winners relatively small task orders for services.

Mitigation Banks

What is this demand driver?

Mitigation banks are private companies (for-profit and nonprofit) that restore wetlands for the sale of future credits to companies and agencies that impact wetlands within the restoration watershed. Companies are required to mitigate wetland impacts before building under the Clean Water Act’s "no net loss" of water resources stipulation. ^[note] Mitigation banks represent a smaller but steadier demand driver than CPRA or the Army Corps. Nonetheless, mitigation banks have a large environmental footprint. Thousands of acres of wetlands have been initiated—or approved for restoration—by mitigation companies since 2010. Credits vary in price and acreage, depending on geography, demand, and the method that the local Army Corps district uses to calculate impacts.

According to a private company that monitors the compensatory mitigation credit marketplace, the average sales price of a credit in this data is $40,275, which was used to calculate the dollar value of wetland mitigation credits sold for the chart below.

Export Potential

Why is this important?

All regional economies generate wealth from the production and sale of goods and services. Products are either sold to the local population or “exported” for sale to customers outside the region. It is the export of products and services to other regions that chiefly drives regional growth and development. ^[note]. Available data on Army Corps expenditures nationwide provides a window into the potential export market for Louisiana’s water management companies. The data shows that significant demand for water management exists nationwide, and Louisiana companies are winning Army Corps contracts for work outside of the state.