Declining Border Crossings: An Econometric Study of Border Crossings in Whatcom County */Une Diminution Du Nombre De Visites Transfrontalieres : Une Etude Econometrique Des Visites Trans-Frontalieres a Whatcom County *

The number of persons crossing the border between Canada and the U.S. is much lower today than it was 10 to 15 years ago. The lower volumes are a surprise given the strength of the Canadian dollar and the fact that population centres on both sides of the border are larger than in the past. For many years people speculated that the US-Canada exchange rate had a strong influence on the number of people crossing the border. When the Canadian dollar was strong in the early 1990s, border crossings were quite high. The Canadian dollar weakened relative to the US dollar in the mid and late 1990s and border crossings fell concurrently. However, when the Canadian dollar began to strengthen in 2003, border crossings did not increase as expected. Heightened border security since September 2001 and the arrival of category killer retail stores in Canada are two factors often blamed for the lower volumes. Understanding the decline in volumes at the border is important if we want to predict the border impacts of events such as the 2010 Olympic Gaines and the Western Hemisphere Transportation Initiative (the US's passport requirement bill). The model in this paper of Canadians traveling to the U.S. and returning on the same day suggests that the relative price of gasoline is a key reason the strong Canadian dollar has not caused more Canadians to travel south across the border. Other factors considered in the model include the relative price of clothing, cigarettes, and milk, as well as wages and new store openings in Canada. Internet sales and the relative price of electronic goods are discussed, but not included in the model. Some rules of thumb suggest that border crossings by Canadian same-day travelers should have increased by a factor of three in recent years with the rise in the Canadian dollar, when there has in fact been virtually no increase. The model presented in this paper suggests that even without increased border security, the increase should have been only a factor of one-half. That is, the impact of increased border security is not as large as many people want to believe. It may also be important to note that the relationship between border crossings and the Canada-U.S. exchange rate changed in September 2001. The analysis in this paper shows there was a relatively strong statistical relationship between border crossings and exchange rates prior to September 2001, and then virtually no relationship after September 2001. RESUMES Le nombre de personnes qui traversent la frontiere entre le Canada et les E.-U. est beaucoup moins important aujourd'hui qu'en comparaison avec la situation il y a 10 a 15 annees. Ces volumes moins importants sont surprenant vu la force du dollar canadien et le fait que les centres de population des deux cotes de la frontiere sont plus grands aujourd'hui. Pendant plusieurs annees, on a pense que le taux d'echange entre le Canada et les E.-U. avait un impact important sur le nombre de personnes traversant la frontiere. Au debut des annees 1990 quand le dollar canadien etait fort, le nombre de visites transfrontalieres etait relativement eleve. Quand la valeur du dollar canadien a diminuee au milieu et vers la fin des annees 1990, le nombre de ces visites a diminue aussi. Toutefois, quand le dollar canadien a commence a devenir plus fort en 2003, le nombre de visites transfrontalieres n'a pas augmente comme attendu. Un niveau de securite a la frontiere depuis septembre 2001 et l'arrivee de grands magasins de detail a rabais representent deux facteurs souvent cites pour ce nombre de visites transfrontalieres moins importantes. Il est important d'essayer de comprendre ce declin dans le nombre de visites transfrontalieres si nous voulons predire les impacts a la frontiere des evenements tels que les Jeux Olympiques de 2010 et le Western Hemisphere Transportation Initiative (la legislation americaine concernant l'obligation d'avoir un passeport). Le modele presente dans cet article cible les Canadiens faisant une visite aux E. …

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