Estimating the economic benefits of forward-engaged naval forces

In preparing for the 1997 quadrennial defense review, US Navy leaders asked us if we could quantify the economic benefits of forward-engaged naval forces and communicate them to policy makers. Until this point, the only evidence of such benefits was anecdotal. Forward-engaged naval forces are US-based ships deployed to such areas as the Mediterranean Sea, the Persian Gulf, or the western Pacific Ocean. Forward engagement affords the opportunity to work with regional states in shaping the international security environment and also enables rapid reponse to unexpected crises. Using a methodology based on oil-futures prices, we estimated the economic benefits of crisis response by forward-engaged naval forces for the 1990 Iraqi invasion of Kuwait. We showed that the economic benefits to the United States and its trading partners are conservatively in the tens of billions of dollars.