Declining population of PR challenge for the economy

Around 300,000 Puerto Ricans moved to the mainland during the last five years.

Here's an article on the site of the New York Federal bank discussing this issue: http://libertystreeteconomics.newyorkfe … drain.html

Well the Zika issue and the number of people leaving will likely play out well politically in making the board careful with taking actions that are likely to increase the exodus, increase the unemployment and make hospitals poorer.
Hope the board is careful and not go hog wild with squeezing money out of the system for bond holders. Board needs to be careful or makes matters worst and provide even more political fire. 

If they screw it up, the US will have to come up with a true cash bailout which they been trying to avoid.

It is like 'thinning the herd'. Not necessarily a bad thing.

So if the lower income group is leaving the island does that mean less people on public assistance

I would not say it's mainly the lower income group leaving the island. Plenty of Educated and Professionals. I would say its more middle class and upper middle class...people losing jobs etc. Brain Drain.

Utility costs are largely fixed. Declining residents and businesses
decreases the base among which to spread utility infrastructure and operating costs.  Therefore, costs to maintain the same utilities per user increases.  Theoretically, the user decline could be substantial enough that capacity (power plants, water treatment facilities, etc.) can be taken off line, but most utilities cannot scale up and down that efficiently.  So, don't hope too much for locals to leave.

ReyP :

If they screw it up, the US will have to come up with a true cash bailout which they been trying to avoid.

Doubtful Rey, particularly in our lifetime, in my opinion.  Bondholders will lose out long before the U.S. feels compelled to prop up PR.

An excellent point that utility costs are largely fixed, especially operating costs (infrastructure costs are sunk).  As with most things, Puerto Rican emigration seems to bring both advantages and disadvantages for those looking to immigrate.

The obvious advantages are lower costs for land and pre-existing housing.  Lower costs as well for many services, as a decrease in demand means a drop in price, at least for all of those goods which my economist friends refer to as "elastic".

Public utilities and many public services however are more "inelastic," less sensitive to the effects of supply and demand on cost.  However, even here we can protect ourselves.  Others have written elsewhere on the forum about the wisdom of backup generators to provide power when PREPA fails.  Recent (last couple of decades) advances in solar power generation make solar electricity an increasingly attractive means of providing residential power on the island, and the cost of an individual's producing solar power (i.e. the kw/h cost of solar) sets a limit on the price imposed by PREPA.  Simply, if PREPA sets the electricity price too high, buy solar panels.

Similarly, water is another public utility that can be, and frequently is supplemented by individual consumers.  Cisterns are common on the island, and though they frequently supply non-potable water, the addition of a residential reverse-osmosis water purifier can provide the potable water needs at a fairly low cost per gallon. 

While it is painful to witness these demographic changes to Puerto Rico, I must confess that I am fascinated by them, and by the opportunities that they pose for those who can see them.

There are some folks who are moving here to take advantage of Act 20, or whatever it is called.  I have met some of them in the 'high rent district' near where I live.  Most have multiple homes in various parts of the world.

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