CREATE Studies Impact of Customs and Border Protection Inspections on the U.S. Economy

USC announced today the National Center for Risk and Economic Analysis of Terrorism Events (CREATE) completed a study that estimates the impacts of wait times at major ports of entry on the U.S. economy due to changes in customs and border officers staffing.

The study concludes adding 33 customs and border protection officers (1 at each of the selected 33 land and airport locations studied) will potentially lead to an increase in GDP of $61.8 million and employment gains of 1,053 jobs in the U.S.

“We estimate that every additional officer, if placed at ports of entry with high traffic volume would, on average, lead to 33 additional jobs being stimulated indirectly in the U.S. economy," said Adam Rose, principal investigator of the study and Professor of Public Policy at the USC Sol Price School of Public Policy. He also noted this outcome is not a standard “multiplier," which pertains to ordinary economic activity, but instead refers to the gains from alleviating potential bottlenecks at peak times.

Inspection of people and vehicles at U.S. border crossings are vital to homeland security. The benefits of these activities include the avoided losses in terms of lives, property and economic activity resulting from a terrorist attack. However, inspections, which are part of U.S. Customs and Border Protection’s mission of enforcing hundreds of U.S. laws, generate various spillover effects relating to the delays in the flows of passengers and cargo across U.S. borders.

On the passenger side, delays decrease the amount of tourism and business travel into the Country, and thus an associated loss of spending stimulus. On the freight side, delays translate into increases in various explicit transportation costs, such as additional fuel. Implicit costs such as the value of lost time impact both.

Reducing wait times for passenger vehicles and trucks at land-based U.S. ports of entry and for airline passengers at U.S. airports, through the addition of customs and border officers, will reduce these negative spillover effects and generate a significant savings to the U.S. economy.

In turn, reduced wait times at land crossings increase the number of visitors from Canada and Mexico, whose spending stimulates the U.S. economy. Also, the reduction in wait times results in lower transportation costs, which makes goods imported from Canada and Mexico cheaper. This not only expands trade from these countries, but helps U.S. companies who use these goods as inputs into their manufacturing processes increase the competitiveness of U.S. exports worldwide.

Operations research and economic analysis methods were used to translate changes in security expenditures into changes in wait times and then to changes in travel demand, business transportation costs and to the value of an individual’s time. Other major contributors to the study were outside consultant Bryan Roberts and CREATE team members Isaac Maya, Nathaniel Heatwole, Dan Wei, Misak Avetisyan and Oswin Chan.

Established in 2004 as a Department of Homeland Security Center of Excellence and funded by the DHS Science and Technology Directorate, CREATE is an interdisciplinary national research center based at the University of Southern California in the Sol Price School of Public Policy and the Viterbi School of Engineering. The Center is focused on risk and economic analysis of homeland security-related topics.