Media Coverage

…A study released last fall by Headwaters Economics, a Montana-based nonprofit, found that Montana and Wyoming, despite widely differing effective tax rates, haven’t seen much difference in drilling activity.

"It doesn’t seem to be affecting where companies drill," said Mark Haggerty, one of the study’s authors…

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Guest Column: by Ray Rasker, Headwaters Economics— …The price of fighting forest fires has been increasing substantially, now accounting for close to half of the Forest Service’s budget and costing the taxpayer billions. Yet we have failed to address the root causes of these escalating expenses…

Across the West today, only 14 percent of private land adjacent to forests has homes on it. But this relatively small percentage is tremendously expensive.  When combining local, state and federal efforts, the cost to protect homes from forest fires exceeds $1 billion per year.  If 50 percent of the forested private lands were developed, fire fighting costs could exceed $4 billion, almost the size of the Forest Service’s entire budget.

A recent case study analysis of Montana by Headwaters Economics illustrates the gravity of the problem.  On average, protecting homes from forest fires in Montana costs $28 million annually.  If no restrictions are placed on future home construction, the costs likely will rise to $40 million by 2025.

Climate change has increased costs even further.  From past evidence, we know that a one-degree increase in average summer-time temperature is associated with a doubling of home protection costs.  So in Montana, with additional development and hotter summers, the cost of protecting homes from forest fires could exceed $80 million by 2025.… (more…)

…A study put forward by the advocacy group Damascus Citizens for Sustainability questions the economic benefits to communities that comes with gas drilling in terms of economic development.

The study, or series of reports, was performed by Headwaters Economics, a Montana-based nonprofit research group, and examined counties in the Western United States with an economic focus on oil and gas extraction and other forms of mining. It compared those counties to others of similar size (populations of 57,000 or less) that had broader-based economies.

In a summary about the prospects of using oil, gas or coal as a strategy for growth, the study reported that counties that used that strategy “under-performed” other similar counties in several important areas that impact the economy, including the incomes of workers in non-energy jobs, economic diversity and the education level of the population.

The study, which was made public in the fall of 2008, can be found at Headwaters Economics: Energy.

The study gives specific examples of how gas extraction is currently affecting two counties on Colorado’s West Slope. It says, “On the positive side, energy development on the West Slope has created new economic opportunities, reduced unemployment, spurred rapid in-migration, and raised wages for many workers. On the negative, fast growth has exacerbated inflation, housing, and commuting pressures; contributed to a growing wage and wealth gap; and made it more difficult for other industries to thrive.”… (more…)

…With its expanses of relatively pristine nature and a modern infrastructure, the US West is unique, says Ray Rasker, executive director of Headwaters Economics, a nonprofit in Bozeman, Mont. The region has long been a magnet for immigrants. But late-20th-century arrivals were not, as they once had been, mostly people seeking to work the land. Resource extraction, once a mainstay, is an ever-shrinking portion of western economies.

Between 1970 and 2000, nonlabor jobs fueled 86 percent of this growth. Mining, timber, and agriculture (including ranching) contributed only 1 percent. Now, 93 percent of jobs in the West have no direct link to public lands, says Rasker. But wilderness areas, in conjunction with infrastructure like airports, correlated closely with areas that saw the greatest growth.

“The major contribution is that it creates a setting,” he says, and that’s what immigrants want. Conserving rather than exploiting nature makes more economic sense, he says. People move here to live near nature.… (more…)

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Environmental economist Ray Rasker is wary. “Incentives matter, but disincentives matter, too,” says Mr. Rasker, executive director of Headwaters Economics in Bozeman. “I believe in providing economic incentives for companies and landowners that do extraordinary things, but you can get results much more cheaply and effectively by penalizing polluters who put out CO2.”… (more…)

…Attracted by the clean air, open spaces, relatively low costs of living, and access to recreation, western states have experienced boundless growth in recent years. Many newcomers come for the scenery, buying homes smack dab in the forest, despite decades of data showing these areas to be prone to fire.

But with federal firefighting forces at the ready, these homeowners have little cause for concern, according to Ray Rasker, an economist and executive director of Headwaters Economics, of Bozeman, Mont. “Local counties can permit subdivisions without having to incur most of the costs of fighting fires,” Rasker said in an earlier interview. “The firefighting costs are paid by the national taxpayer. It amounts to a subsidy, basically.”

With global warming, the fires are only expected to worsen in coming years. Melting snowpack no longer keeps forests moist through dry summer months. Beetles that were once killed off by winter deep freezes are propagating and creating ever-growing swaths of dead, easily ignited trees. “We’re only starting to see the magnitude of the problem,” Rasker said.

According to a study by Rasker’s group, about 14 percent of private land surrounding national forests in the West has been developed and an estimated $1 billion is now being spent annually by federal land management agencies to protect homes in these areas. Expect both numbers to continue to rise, Rasker said.

“We’re asking firefighters to risk their lives to protect homes,” Rasker said. “If you build in harm’s way, you should at least be responsible for that.”… (more…)

…This tremendous expansion [of the Wildland Urban Interface (WUI)] has not only made wildfires more dangerous, it has made them more expensive. A recent audit by the General Accounting Office detailed the tremendous increase in the costs of fighting wildfires (hitting $1.9 billion in 2006 and $1.37 billion in 2007) and wildland fire managers place most of the blame for the rising costs on fighting more fires in the expanding WUI. Analysts have pegged the costs of protecting homes as high as 50 to 90 percent of the total of all wildland fire management costs.

As bad as the WUI problem has become for wildland fire managers, a new study published by the Montana-based, independent non-profit research organization, Headwater Economics, shows that it could become much worse. Headwater Economics researcher, Patty Gude and her colleagues, found that only 14 percent of the available WUI in western states is currently developed, leaving 86 percent available for new construction.

The researchers worked to identify the extent of residential development adjacent to publicly-owned forest lands in the West using census data and maps from the Protected Area Database as well as the National Land Cover Dataset.

Gude says that the results even surprised the research team. “We expected to see something different in terms of how much is developed. We thought the extent would be much greater, but it is actually only a small proportion of what it could be. That means the potential exists for the problem to be much worse. If protecting homes from fire is expensive now, the cost when more land is developed may swamp the firefighting agency’s budgets entirely.”… (more…)