Thursday, October 13, 2011

More comparative advantage

The upper Midwest has a real advantage over many Sunbelt cities in the west in one aspect; water resources.  Here is a story in a related tangent from the LA Times about Texas' vaunted cattle herd being sent out of state because of drought.

Texas has suffered more than $5.2 billion in agricultural losses this year from the dry spell, including in the cattle industry. No relief is in sight and the state climatologist says this could be the start of a 10-year drought, part of changing weather patterns worldwide.

This emphasizes one of the ways that cities in the upper Midwest can focus on their strengths.  Obviously Chicago is not going to start cattle ranching.  But there are many businesses that have large water needs.  Little known fact:  before Prohibition Chicago was a leading producer of malt liquor, and Peoria was a leading whiskey producer.  In fact Illinois produced more whiskey than Kentucky before Prohibition. 

"Peoria provided the perfect alignment of everything you needed for the production of alcoholic beverages: good spring water filtered by limestone, a river that provided transportation, a rail hub and lots of corn," said Brian "Fox" Ellis, a local historian and storyteller.

 "You also had the experience of two of the biggest groups to settle this area: Germans and Irish. Both knew how to distill, and both were thirsty," he said.

The river provided another benefit, said Ellis.

"The oak trees that lined the banks provided wood for cooperage houses that sprung up," he said.
Those cooperage operations thrived, making all the barrels needed in whiskey and beer production.
That production generated business beyond building barrels. Peoria's unquenchable thirst for distilling beverages was bringing 100 freight trains to town every day by 1880.

The spent sour mash and other byproducts were used to fatten thousands of head of cattle that passed through the Peoria Stockyards.

However, I would caution cities in this position to not use taxpayer money to try and lure businesses to the waterpark up north.  Rather, that cities should focus on making their water services as good as possible so that it provides businesses in the region a real comparative advantage.  Providing cheap water to residents and businesses is something that Midwestern cities do well, and they should focus on maintaining excellent water resources.

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