News

While presenting research Tuesday about the value of trails to a community’s economic vitality and residents’ health and property values, Megan Lawson realized she was preaching to the choir, in this case the Billings Chamber of Commerce Trails Committee.

Still, what the economist with Headwaters Economics in Bozeman had to say gave trails proponents — in this case, a group that includes home builders, planners, attorneys and bicyclists — information they can use to justify the group’s goal of completing Billings’ Marathon Loop of trails.

…But constructing trails is not enough, Lawson told the group. Even the communities with the nation’s best trail systems need businesses like restaurants, lodging, shuttle service, even guides, to support trail users. “Successful communities,” she said, “have figured out ways to get people from trails into the town’s businesses.”

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…According to researchers at Headwaters Economics, a Bozeman, Montana-based nonprofit, most Western counties, whatever their politics, generally allow risky home construction. This, in turn, puts a growing burden on the U.S. Forest Service, which bears the brunt of the region’s firefighting costs. In 2015, the agency spent more than half its $6.5 billion budget on wildfire-related activities, largely because of pressure to defend private property.

Counties and other local governments “are absolutely central” to containing those costs, says Ray Rasker, Headwaters executive director. But “it’s very rare, at the end of a fire, that a community concludes that it should have better land-use planning.”

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…While decisions on where to develop are made at the local level by private citizens and municipal planners, the costs of fighting fires are mostly picked up by taxpayers at the state and federal level. With that safety net in place, builders and dwellers alike are more comfortable taking the gamble on property susceptible to wildfires.

“When things go wrong, the cost of that is borne by someone else,” said Ray Rasker, executive director of Headwaters Economics, a Bozeman, Mont., nonprofit research group that focuses on natural resources management. “That’s the disconnect.”

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It’s a truism California’s harsh 2016 fire season has proved all over again: Wildfire is not the problem; the problem is people living in dangerous places.

As an economist, I would add that the reason people continue building on fire-prone lands, despite the known hazards, is because we have the incentives all wrong. Wildfire presents a classic case of a moral hazard, which is what occurs when someone takes a risk knowing someone else will bear a great deal of the cost if things go wrong.

…For too long policies have been set mostly in reaction to the last, worst fire. Now we have to bring together the firefighting community, city and county leaders, legal scholars and federal land managers to craft a set of rewards — and penalties — that will result in safer communities in the highly flammable West and the rest of the nation.

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…National parks inject a lot of cash into local economies, often bringing in 10 times their operation’s costs in profits.

Better still, National Parks are proven job creators. Still, it’s natural for people to be dubious and only time will tell the economic impact the park will have for the locals…

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What makes California’s wildfires so expensive? It’s primarily that a lot of people live in the wilderness areas, according to Chris Mehl, policy director with the Montana-based nonprofit research group Headwaters Economics.

Fire agencies often devote the majority of their resources to protecting homes: between 33 and 90 percent of the cost of suppressing fires is spent on structure protection, according to Mehl.

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…During the forum titled “Winning the West,” economist Ray Rasker and others cited data and polling results that highlight the vital roles public lands play in the economic prospects and quality of life in Western counties.

Conventional wisdom among Utah’s political leaders and rural county commissioners is that national monuments and federal land management stifle economic development.

But economic data suggest the opposite is true, according to Rasker, director of the Montana-based Headwaters Economics. What Headwaters has found, in short, is: Public lands good, protected public lands better.

“The West has consistently outpaced the rest of the country in terms of job growth, personal income and per capita income. There is something unique about the West,” Rasker said.

He found that a county’s per capita income is $4,360 higher for every 100,000 acres of protected public land in its boundaries.

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…Dr. Kimiko Barrett, a geographer at the non-profit research group Headwaters Economics, agreed and added that local decision makers have an important part to play in reducing the threat of fire.

After the devastating Cedar fire in San Diego in 2003, the city implemented strict brush management policies for homeowners with regular on-site inspections.
“The unfortunate thing,” Barrett said, “is that awareness often comes after the fact.” We shouldn’t wait, she said, for a devastating fire to remind us that we must protect ourselves against disaster.

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In fact, the more pedestrian- and bicycle-friendly a small town is, the more desirable it will be for potential buyers and renters, experts say. And the more likely real estate prices are to rise, particularly when those brand-new subdivisions and fancy new condos come online.

For example, homes near walkable, and often bikeable, trails enjoy premiums of between 5% to 10%, according to an analysis by Headwaters Economics, a research group focused on community development and land management issues. Other surveys have put that percentage even higher.

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“What we’re telling the public now is, ‘Reduce the risk of fires – if you so choose.’ Imagine if we tried driving our cars like that,” says Dr. Ray Rasker, who is also executive director of Headwaters Economics, a nonprofit research firm based in Bozeman, Mont. “Why not use regulations, building codes, and subdivision design standards, development codes and ordinances that say, ‘Look if you’re going to build there, there are certain conditions you have to meet first’?”

…The need for action continues to grow. As bad as wildfires have been in recent years, research shows they’re likely to get worse as the US population increases and people build more homes in the WUI, more than 80 percent of which remain undeveloped.

“We keep building more and more homes in harm’s way,” Rasker notes. “Unless we get a handle on development, we’re really not addressing the problem.”

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Mark Haggerty, an analyst with the nonpartisan research group, Headwaters Economics, in Bozeman, Mont., says he sympathizes with the need to move to cleaner fuels but says industry has a point. Transitioning to natural gas is a long-term investment, he says. “We will become dependent on natural gas, and its price is volatile, more so than coal.”

…Haggerty says the effective royalty rate is actually more like 5 percent, because coal is sometimes sold through company-affiliated brokers, complicating the calculation of the value of coal sales….In any case, the Interior Department is considering raising the minimum royalty rate. Haggerty says that’s a good idea and urges the federal government to establish a trust that would hold federal coal revenues for the benefit of struggling coal communities across the country.
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Around Idaho and the West, cities often are growing rapidly while rural places are being left behind. In urban areas, employment today is higher than before the recession, whereas in rural areas jobs have not yet recovered.

As elected officials discuss how to reinvigorate the rural West, some have pointed to federal lands as the cause of economic struggles.

Headwaters Economics asked whether federal lands are an economic liability or an asset to rural communities. We divided the rural West’s 276 counties into four quarters, according to their share of federal land.

On average, from 1970 to 2014, rural counties in the top quarter of federal land grew much faster than similar counties in the bottom quarter of federal land: Population grew four times faster, employment grew three times faster and personal income grew twice as fast…,

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When it comes to having the strongest job growth across the widest array of industries over a long period, Colorado and its neighbors didn’t just sprint out of the Great Recession, but they are winning the marathon too, according to an analysis of counts from the U.S. Bureau of Labor Statistics.

“Distance is no longer an obstacle in the West. We have our own momentum,” said Ray Rasker, executive director of Headwaters Economics in Bozeman, Mont.

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Population decline in rural America is especially concentrated in the West. There’s a lot of wide-open land there, but most people, and young people especially, live in the cities. Half the jobs in Oregon, for example, are now in three counties in and around Portland, according to a study by Headwaters Economics. Almost two-thirds of Utah’s jobs are along the Wasatch Front, which runs from Salt Lake City to Provo.

…Much of the money coming into Wheeler County these days is from government benefits like Social Security and from stock dividends. Non-labor sources of income—things besides wages—were 58 percent of total income in the county in 2013, according to Headwaters Economics.

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As the coal industry faces one setback after another, MontanaPBS News & Public Affairs Producer Beth Saboe looks at how the conflict over coal is playing out in the small town of Colstrip.

The program includes several interview segments with Mark Haggerty of Headwaters Economics. Mark discusses his recent report, Planning for Montana’s Energy Transition, which discusses how while Montana is likely to experience relatively small impacts, coal-dependent communities in Eastern Montana are likely to feel the acute effects of job losses and declining tax revenue in the coming decades.

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Small, vulnerable counties will suffer the most from a plan to get rid of one type of federal support for counties that have national wildlife refuges. Instead of abolishing these payments, Congress can hold the line on spending by re-targeting funds to the counties that need them most.

“…Instead of simply cutting the revenue-sharing program, Headwaters Economics has proposed reforms that would reallocate the same appropriation among counties, shifting payments from relatively urban and wealthy counties to relatively isolated rural counties.

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Retirees and urbanites seeking more pastoral settings are pushing farther into places that firefighters must now protect. And these modern-day settlers have been supported by municipalities looking to expand their tax bases, and by technology that lets people live and work anywhere they can get an Internet connection, said Ray Rasker, executive director of Headwaters Economics, a research organization that provides consulting services to communities and governments on fire prevention.

“…It adds up to more people dying, more houses burning, and agencies devoting more than half of their fire budget to defending homes,” he said.

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Economist Ray Rasker says the total value of nature-related commerce across the entire Greater Yellowstone area may be two or three times greater than that generated in the parks alone.

…Tourism dollars represent a mighty engine for the regional economy, Rasker says, but so does people’s desire to play, work, and live close to protected public lands. One study found that for every 100,000 acres of protected public land in Greater Yellowstone and other nonmajor metro areas in the West, there has been a corresponding rise of $4,360 in per capita income.

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There is a new analysis by some deep thinkers here in the West — Montana, to be exact — that suggests that there might be a factor that helps to slow the depopulation of what the demographers call “nonmetro” counties. And that factor is … more federal land.

Not more than there is now. But more than other places.

The new study from Headwaters Economics, a policy shop in Bozeman, finds that rural communities with lots of federal land nearby have grown much more, in terms of population, economic activity and total and per capita income, than have similar counties with little or no federal land.

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…It’s easy to conclude that federally managed lands impede economic growth.

But a new study by Montana nonprofit Headwaters Economics shows that’s not necessarily the case. Overall, rural Western counties with more federal land performed noticeably better by four key economic indicators than counties with less public land. Not only that, but counties with land protected as national parks, wilderness, national conservation areas, national monuments or national wildlife refuges — land with little or no extractive resource production — fared best of all for personal and per-capita income growth.

“We’re data-driven, and our reflex to hearing (recent anti-public lands) rhetoric is to look at the data,” says Megan Lawson, the study’s author. “There are certainly rural places that are struggling, but that’s not the primary story we’re seeing across the West.”

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