President Donald Trump may have terminated the wrong treaty with Canada.
In the 1960s, under the Columbia River Treaty, Canada agreed to build three dams to regulate river flows into the United States. By holding back some of the spring runoff, the Canadian Treaty dams reduced flood risk downstream in places like Portland and increased the amount of usable electricity generated in the United States. In exchange for flood protection and hydropower benefits, the United States agreed to pay Canada and supply it with valuable, carbon-free, electric power every year, valued at $150 million to $350 million (U.S. dollars), depending on electricity prices.
All this was fine for about the first 60 years of the treaty, but times have changed. The formula used to calculate the Canadian payment is now obsolete; what was supposed to equal half of the downstream power benefits from the Canadian dams now represents almost all the downstream power benefits. What this means is that electric ratepayers in Washington, Oregon, Idaho and Montana contribute hundreds of millions of dollars to British Columbia’s provincial budget every year with very little in return. In an ironic twist, U.S. ratepayers in the Northwest are paying for one of the finest public health-care systems in the world, but it is for Canadians.
How did we get into this fix? The original treaty signed in 1964 started out providing great benefits to both countries. Canadians were happy to have flood control and power benefits without having to pay hundreds of millions of dollars for dam construction. The United States picked up that tab. And the United States got flood control and power benefits worth more than those payments. The United States also won a provision that allowed the payments to end in 2024 because it was expected that 60 years would be more than enough time to pay for the dams. And that was correct.
By 2002, the United States had fully paid the entire construction bill for the Canadian dams, and because those payments are ongoing, we have now paid 30% over that cost. At this rate, we will pay for the dams a second time in 20 to 40 years, depending on electricity prices.
What went wrong?
The Canadians are not to blame. They agreed that either country could terminate the treaty as early as 2024 with 10 years advance notice. The United States could have stopped payments in 2024, except we missed that deadline by five years. The earliest we could stop payments now would be 2030, but we would have to give notice today.
Northwest leaders are not to blame. In 2013, a broad spectrum of federal agencies and Northwest states and tribes came together and sent a recommendation to the U.S. State Department that it was time to fix the treaty by cutting power payments, securing flood control and adding ecosystem protection. The recommendation gave the State Department until 2015 to reach an agreement or else, it was stated, they should evaluate “other options.” For many, other options included terminating the treaty.
The blame rests with the State Department. It failed to secure an agreement with Canada by 2015. In fact, it spent more than four years looking at the six-page recommendation from the Northwest before even starting negotiations in May 2018. And it has the funny idea that Canada is more likely to agree to a lower payment if we continue to overpay them under the outdated treaty. Not surprisingly, it hasn’t worked. No progress has been reported in almost two years of “negotiations.”
The path forward is simple. The State Department needs to provide notice to Canada that it intends to terminate the old treaty as soon as possible, essentially 2030, and start in earnest negotiating a new Columbia River agreement for the modern era that provides flood-risk benefits, maximizes energy and power production from carbon-free hydropower, and protects and restores ecosystem functions. Such an agreement will benefit both countries and put an end to payments for dams that were built and paid for decades ago.