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The Raster Storage Environment Settings can be set for geoprocessing tools that have a raster dataset as an output. One of the storage settings available is the compression setting.
When using the Mosaic to New Raster model tool, the compression setting is not working.
This tool is based on the Create Raster Dataset tool. By default, the Create Raster Dataset tool is set with LZW compression.
Create a raster dataset and use the Mosaic tool.
If the LZW compression is acceptable, continue to use the Mosaic to New Raster model tool.