MILWAUKEE, Wis.—Jobs and the economy are changing so fast and furiously in the Great Lakes Basin that Ohio Governor Bob Taft says he can’t take notes quickly enough. In between signing two historic water-protection agreements last week, Governor Taft and other Great Lakes states leaders paused for a 30-minute lecture from one of the region’s top economists.

Bill Testa, a vice president and director of regional programs at the Chicago Federal Reserve Bank, began by observing that manufacturing was the basin’s cash cow in the 20^th century and will remain a productive and important sector. But, he cautioned, factories are rapidly shedding jobs, so the people of the Great Lakes must reinvent themselves and their economy if they intend to thrive in the 21^st century.

Opportunities exist in nanotech, biotech, and other growth sectors now emerging in the knowledge economy, according to Mr. Testa. And the talented, mobile people who excel in high-tech fields typically prefer places that offer healthy lifestyles and recreational opportunity. So, he concluded, as the region’s economy evolves, pristine waterways, vibrant urban living, and quality education are becoming the new keys to prosperity. 

“That was a fascinating presentation,” Governor Taft said later. “We can and must harness the Great Lakes’ power to drive the regional economy for today’s families and future generations.”

But whether that realization—and the two agreements that would facilitate it, which the governor and many other Midwestern leaders signed in Chicago and here last week—can be translated into action remains an open and urgent question.

Beyond the Standard Approach
Clearly, Great Lakes leaders of all political stripes see the need to rebuild the regional economy with modern ideas and jobs. Governor Taft, a Republican, and Michigan Governor Jennifer Granholm, a Democrat, tout plans to expand life science research and development. Wisconsin Governor Jim Doyle, a Democrat, and Minnesota Governor Tim Pawlenty, a Republican, see a bright future in alternative energy research and development. Illinois Governor Rod Blagojevich, a Democrat, is betting on the homeland security industry, while New York Governor George Pataki, a Republican, likes microchips.

Attracting such promising industries and providing the skilled workforce they require, however, take something other than what has long been, and continues to be, the standard approach: Rolling back taxes, slashing regulations, and staking out new government programs that say “open for business.” Competing successfully in the Information Age demands strategic initiatives and thoughtful investments that retrain unemployed and under-skilled workers, retain graduates from the region’s world-class universities, and revitalize cities and waterways—precisely what the two just-signed agreements envision.

One of them, signed on December 12 by members of Congress, state officials, mayors, and tribal leaders gathered at Shedd Aquarium in Chicago, is a historic plan for rehabilitating the waters of the Great Lakes ecosystem. The other, an international agreement signed the next day by the Great Lakes’ American governors and Canadian premiers at a ceremony held here, is a landmark pact that aims to control the exporting of water from the basin.

The ceremonies in Chicago and here culminated years of public process, organizing, and political negotiation. They also marked the beginning of another process that could be just as lengthy and difficult. Each agreement would strengthen the regional economy, enhance Great Lakes culture, and preserve a globally unique natural ecosystem. But both face bumpy, slow rides along their separate roads to final implementation.

Rebuild It and They Will Come
The Strategy to Restore and Protect the Great Lakes, signed in Chicago, calls for new policies and a $20 billion investment to clean up toxic pollution, restore coastal wetlands, stop the spread of invasive species, and remodel waste treatment plants to eliminate sewage spills in lakes and rivers. The huge public works project, if fully funded, will put hundreds of thousands of people to work on important jobs like fixing sewers, infuse much-needed capital into scientific research and technological development, and markedly improve the quality of life in the basin’s major central cities, most of which are located on waterfronts or riverbanks.

Civic leaders hailed the plan as a fresh start for a region whose legacy of industrialization and suburbanization not only created great wealth, but also left behind abandoned urban areas, greasy rivers, and an unfortunate nickname: the Rust Belt.

“I can’t overstate what a major step forward this is for the Great Lakes,” said Chicago Mayor Richard Daley. “For the first time, we’re all on the same page with a common vision. We have a guide of future investment. We have priorities. And today we have a commitment to move forward. Now is a time for the action.”

If that agreement aims to repair the damage done by 19^th- and 20^th-century industrialism, The Great Lakes-St. Lawrence River Basin Sustainable Water Resources Agreement, signed in Milwaukee, aims to prevent new damage. The agreement boosts stewardship of the world’s largest freshwater resource by establishing new, region-wide guidelines to protect lakes, rivers, and streams from out-of-basin water demand and local overuse. It also promotes conservation and improves water supply monitoring and water-demand forecasting. The agreement is widely viewed as an essential tool to secure economic and environmental stability in a world where clean, fresh water is increasingly scarce.

“Together with yesterday’s launch of the restoration strategy, this marks a new chapter for the Great Lakes,” Governor Taft said at the signing ceremony here. “In the lakes we hold a great treasure in trust for our children and grandchildren. To the extent they have been damaged, we must restore them. Where they retain their value, we must preserve them.”

Not surprisingly, the next challenge facing the restoration plan is all about the $20 billion, an amount that virtually guaranteed a contentious debate even before Great Lakes leaders signed it. Officials recommend an immediate, $300 million boost in federal investment for the Great Lakes in 2006 to initiate the plan. But will President George W. Bush’s next budget embrace that recommendation? A preview of the vigorous discussion that question will trigger was already on display at the plans’ highly public Chicago signing ceremony.

“Not all collaborators are in a position to make aggressive funding commitments today,” said Congressman Vern Ehlers, a Republican from Michigan. “From the federal perspective, commitments were ready to be made until three things happened this year. Their names were Katrina, Rita, and Wilma. That totally changed the federal budget perspective for this year and the next few years.”

“This is the ninth [Great Lakes] report in five years,” said Congressman Rahm Emanuel, a Democrat from Illinois. “I hope it’s the last. There is nothing when it comes to the Great Lakes that [financial] resources can’t take care of. We know what needs to be done. Now we need to do it. It’s as simple as that. The truth is the fiscal budget is tight. But there’s no shortage of resources. It’s a choice of priorities.”

Local matching funds also will be essential to leverage federal dollars. So the responsibility of state leaders, many of whom continue to wrestle with deficits, is to develop innovative ways to raise new capital.

Two Agreements, Two Big Opportunities
Even though Great Lakes governors and premiers signed it, the Sustainable Water Resources Agreement, which establishes a legal framework for regulating major withdrawals, faces perhaps an even more daunting challenge. The agreement must pass through eight different state legislatures in similar form, obtain Congressional approval, and gain the support of provincial governments in Ontario and Quebec. These procedures could take decades, considering the fierce resistance to new water-use laws in states like Michigan and Wisconsin.

But such tasks are not impossible. There is a growing consensus that a significant investment in improving the health of the Great Lakes today ultimately prevents the need for much larger, future expenditures in restoring or repairing harbors, sewers, and wetlands. There is also a deepening understanding that clean, accessible waterways are essential not only to sustain existing industry but also to attract future employers and employees.

Mr. Testa, the federal bank economist, pointed out that the region is actually well positioned to capitalize on the improved prospects that implementation of the two agreements would engender.

For example, he said, the Midwest Health Investors Network reports that 17 percent of the national funding for life sciences research and development goes to Great Lakes universities and laboratories. Since 1986, knowledge workers in the Great Lakes have published more scientific papers in the field of nanotechnology than any other region. And 14 of the world’s top 50 universities—based on the number of Noble Prizes, Fields Medals, cited research, and other measures of their scientific horsepower—are located in the Great Lakes states and provinces.  

After citing this evidence, Mr. Testa suggested that the basin’s states commission a detailed study of the shifting role of water in what the Great Lakes economy is becoming. That, he said, could lend more force to appeals for new policies and funding to sustain the region’s unmatched water resources in a healthy condition. 

“Over time, our standard of living is climbing,” he said in Milwaukee, before Great Lakes leaders signed the new water withdrawal pact. “And as it climbs, people value the environment more and more than they did before. We want to maintain manufacturing. It’s too important to neglect. But as we move towards the knowledge economy, places with environmental amenities and natural beauty are where people will want to live and run their business.”

Andy Guy directs the Michigan Land Use Institute’s Great Lakes project. Reach him at aguy@mlui.org.