Wednesday, May 2, 2012

Tiny Bubbles (Bursting)

An unavoidable side effect of planning is over-reliance on forecasts:  forecasts for population, forecasts for pollution, forecasts for stormwater, forecasts for impervious surfaces, forecasts for sea level ... forecasts, forecasts, forecasts! We end up debating and arguing about things that don't really even exist, and may never, except as concepts in the soothsaying minds of planners.

Simon Johnson is an economist at MIT who knows a good deal about forecasting.  He spent a substantial part of his career as a forecaster for the International Monetary Fund. Here is what he said during a 2010 interview about economic forecasting, an endeavor which is likely more "scientific" than any forecast considered by our County:
SIMON JOHNSON: You know, economic forecasting is inherently an impossible task. Between now and the end of next year, the world will be hit by three major shocks, probably.
DAVIDSON: You mean that's just on average over the last century or whatever, there's...
JOHNSON: Yes, exactly. Stuff happens. Okay? You know, the thing you're studying is subject to so much chaos in a mathematical sense, so much randomness, and so making any forecast is going - inherently got this problem.
BLUMBERG: Economic forecasting is big business. Any large company you can think of spends millions a year trying to get a handle on what's coming. So why are all these serious business people spending so much money on forecasts that they surely know are not all that reliable? Again, Simon Johnson.
JOHNSON: I would call it a necessary evil. There's so much imprecision. There's so much, you know, lagging in terms of our updating, that in some sense, we'd be better off without forecasts. We'd better off, you know, making up our minds afresh every day. But the problem is the businesses, the institutions, all involve thinking about the future and planning for the future. And you can't do that without taking a view of the future.
One of the forecasts that our County is required to consider under the GMA is the population projection made by the State's Office of Financial Management (OFM). The last time OFM made a population forecast was in 2007, but since then (paraphrasing Simon Johnson), a lot of stuff has happened, okay?

For GMA purposes, the OFM makes population forecasts every five years. In doing so, it creates a high, medium, and low population forecast for each County. Just recently, the OFM has come out with its provisional 2012 population forecast, which predicts population out to 2040. Before we look at that, let's see how well the previous forecasts have predicted our population in retrospect, keeping in mind Dr. Johnson's description of forecasting as an "impossible task."

Based on census data, our actual population in San Juan County in 2010 was slightly lower than the lowest OFM forecast made in either 2002 or 2007. That's right; we missed all forecasts, albeit the lowest only slightly, to the low side.  Based on that, it would appear our growth bubble has truly burst. If the goal of the Friends, State, and County has been to control or even prevent growth, it would appear they may have achieved that goal for us. Relative to the projections that have been bandied about, we have beaten the growth habit.

What does the 2012 forecast look like? The forecasts are much lower than earlier ones. The 2012 "high" forecast is lower than even previous "medium" forecasts. And, for the first time, the OFM projections include the prospect of population decline. The latest "low" forecast has population around here declining at a fairly rapid  clip.

I have summarized the data in the table below. Under the GMA, the County is required to consider this information [RCW 36.70A.130(1)(c)], and it would seem prudent now to include in our plans at least a contingency for declining population.

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