Miami International Airport expansion: economic benefits and environmental costs

Miami International Airport is in the process of expanding its operations over the long run. Having just completed two new terminals in succession, plans are presently in the works to replace the original terminal, which is quite dated. Replacing this terminal will be the final piece of the puzzle to allow MIA to be the leading transportation hub for South Florida, and a critical infrastructure link between the United States and Latin America, and the Caribbean. The economic case for this expansion is fairly easy to understand, but the economic benefits of such an expansion need to be weighed against the environmental issues that such an expansion will bring about.

Pros to Expansion

The expansion of MIA to this date has allowed the airport to have modern facilities. The airport's website notes the enhanced security and customs clearance facilities at the new terminal, and promotes the wider range of retail options that the newer terminals have. The original terminal was simply not built with commerce in mind -- it was built as a transport facility before airports were known as major retail hubs. Thus, there is considerable incremental revenue to be gained simply from improving retail at MIA. But the airport will also benefit substantially from the expansion, because the renovation will allow for MIA to maximize its capacity in a way that the current, dated facility cannot achieve.

The main economic benefit lies with the increased traffic and transportation. If there is to be an expansion of trade between the U.S. And Latin America, in particular through the lowering of trade barriers, Miami is uniquely positioned both geographically and culturally to take advantage of this. The airport is run by the county, which means that Miami-Dade County has an imperative to ensure that the airport is capable of being the hub airport of the region, and drawing trade to the county. There are competing major airports in both Broward (FLL) and Palm Beach counties (PBI). Miami also competes for port facilities with Fort Lauderdale, and the airport/port combination is a major infrastructure investment that can continue to make Miami the hub. There are more distant threats from Atlanta, Houston, LAX, DFW, and the New York airports, all of which also have many connections in the Americas and can draw trade away from MIA. Thus, MIA has to ensure that it takes advantage of the competitive advantage that it currently enjoys over those other airports, by having the most modern facilities. The economic benefit of MIA to the county is $33.7 billion, so the value of the airport expansion is going to be measured in the billions, if not tens of billions, in terms of its worth to the county and city of Miami (Miami Airport, 2015). A new terminal replacing the old one can provide for better service both for passengers and freight, and make MIA the major transit point for people and goods traveling throughout the Americas.

Another pro-to the expansion is that it puts a modern face on the city. The most recent terminal is a means of doing that, as one of the major international gateways to the United States. But just as important is the idea that MIA will benefit from representing itself well in new terminals. All major emerging economies are building new airports, such that older, dilapidated airports are a sign that a country or city cannot be taken seriously as a 21st century power. There is an element of egoism in this, but the reality is that if Miami wants to present itself as a 21st century economic power, it needs to back that up with a modern airport. They are two-thirds of the way there after the recent expansions, and the final expansion will solidify this position.

Cons

The major con is that more airport expansion is destructive to the environment. There is not room to expand MIA without overtaking surrounding lands, such as industrial lands or swamp. It could actually be argued that the alternative to allowing this expansion is to build a new airport in land reclaimed from the Everglades, so expanding MIA would actually be the lesser of two destructive options. Replacing a terminal that already exists is a relatively benign option, except for the climate impacts. Encouraging growth in air travel by reducing transaction costs thereof is not necessarily going to be good for the environment. As the annual submerging of Alton Road indicates, Miami-Dade County has some pretty compelling reasons to take climate change seriously, even if the folks in Tallahassee do not (McKie, 2014).

There are other cons as well with this plan. The investment in South Florida via the airport is going to cost billions. In addition to adding carbon, it will add to the region's tax burden. This expansion is basically just a replacement and upgrade of an existing facility. Thus, it does not have the same potential incremental benefits that a new facility might. Thus, there is less upside, which makes the downside of the cost and the environmental destruction that would be required to make any meaningful upgrades or expansion possible, all the more likely.

Lastly, building a massive new expansion for Miami seems almost silly. With sea levels rising, the whole works will be underwater by the end of the century, according to most estimates. In the short run, there is definitely a compelling economic case for further airport expansion, but in the long run, there might well be better things for the county to spend its money on.