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CDE, Upjohn Institute Delve into Economic Fallout of Train Derailment

CSU’s Center for Economic Development, W.E. Upjohn Institute Release Initial Report on Economic Consequences of East Palestine Train Derailment  Report is the first in a series examining the magnitude of economic losses, remediation responsesReport is the first in a series examining the magnitude of economic losses, remediation responses

CLEVELAND, Ohio (May 4, 2023) – Researchers with the Center for Economic Development at Cleveland State University (CED), in partnership with the W.E. Upjohn Institute for Employment Research, have launched an ongoing effort to track the economic consequences of the February 3, 2023, Norfolk Southern train derailment.

This initial report focuses strictly on the effects felt throughout the village of East Palestine, with special attention paid to the evacuation area. It covers the period from the date of the derailment until two weeks afterward—coinciding with the mandatory evacuation length of time ordered by the office of Ohio Gov. Mike DeWine—and serves to frame the early economic impacts on the community.

The report analyzes three areas expected to experience an impact from the Norfolk Southern derailment: government, business/commercial and household costs.

According to the study, the total economic impact of governmental costs will reach approximately $1.8 million. The total annualized household loss is estimated to be $10.3 million. And the loss of labor income could hit $3.6 million—enough to have supported 88 jobs in Columbiana County.

On the evening of February 3, 2023, a Norfolk Southern general merchandise freight train traveling from Madison, Illinois, to Conway, Pennsylvania, derailed in East Palestine, Ohio, upheaving the lives of between 1,500 and 2,000 residents who were forced to evacuate because of the risk of explosion.

Reports indicate that of the 139 railcars on the freight train, 30 contained hazardous materials (combustible liquids, flammable liquids, and flammable gas, including five cars carrying vinyl chloride).  Of the tank cars that derailed, 11 were carrying hazardous materials and caught fire, subsequently damaging an additional 12 railcars.

While train derailments are not uncommon in the United States (The U.S. Department of Transportation’s Federal Railroad Administration reported an average of 1,475 train derailments per year between 2005 and 2021), little has been done to examine the economic costs to the communities impacted by these disasters.

“While so far we have only been able to assess limited short-term impacts, we know that the community and residents of East Palestine will be dealing with the consequences of this for a very long time to come,” said Molly Schnoke, interim director of Cleveland State’s Center for Economic Development.

“We hope that in the future we can provide a clearer idea of just how much this has affected the community and its economy.”

The report examines Norfolk Southern’s response to the disaster, including the establishment of the Norfolk Family Assistance Center in East Palestine, which provided those affected with reimbursement for travel expenses and other evacuation costs, as well as the establishment of a $1 million community support fund as a “down payment,” the company said, on its commitment to help rebuild the village.

The study points to the well-documented impacts of a 2012 derailment in Paulsboro, Pennsylvania, a toxic spill believed to be comparable to the East Palestine derailment.

While a comprehensive economic impact figure does not exist for the Paulsboro accident, in which a bridge collapsed and seven cars containing vinyl chloride plunged into Mantua Creek, the report does find that “in the short term, residents’ lives were massively disrupted by the loss of productivity and place. In the long term, the identity of the city, its residents, and its economy fundamentally changed.”

“With this study, we establish that harm done to a small community resonates with the much larger economy,” said Iryna Lendel, Senior Director of Upjohn’s Center for Regional Economic and Community Development and a co-author of the study.

“This is a very conservative look at how such accidents directly affect some residents and cost all taxpayers indirectly through their municipalities, counties and states. We did not even look at economic impacts from health consequences or reputational losses.”

The full report, titled The Economic Consequences of the East Palestine Train Derailment, can be found here.

Additionally, the Center for Economic Development at Cleveland State invites residents of East Palestine and the surrounding area to participate in a brief survey to record their economic experiences.  That survey can be found here.

About the Center for Economic Development at CSU

The Center for Economic Development is part of the Levin College of Public Affairs and Education at Cleveland State University. It conducts applied research and provides technical assistance as a think tank for regional economic development. Its areas of expertise include industrial analysis, the performance of economic clusters, equity and inclusion, innovation, entrepreneurship, economic impact, and program evaluation. The center’s researchers apply academic rigor to data-driven analyses and have a well-earned reputation for conducting unbiased, sound, and policy-relevant studies.

About the W.E. Upjohn Institute for Employment Research

The W.E. Upjohn Institute for Employment Research is a nonprofit, nonpartisan research organization devoted to finding and promoting solutions to employment-related problems. Institute research focuses on causes of unemployment and efforts to mitigate its effects; education and training systems to improve workers’ employability and earnings; and the influence of state and local economic development policies on local labor markets.