Media Coverage

Now that demand for coal looks to be in a permanent decline, reserves to deal with that economic dislocation aren’t there.

‘Colorado’s system hasn’t allowed those communities to make long-term savings and investments,” said Mark Haggerty, a researcher with Headwaters Economics in Bozeman, Mont. “We have created a fiscal crisis in these communities. They are being left on their own.'”

A story of fire, stolen lands, and how hard it is to get the U.S. to follow its own laws.”

Wyoming’s once-vital mineral economy is convulsing, as demand for coal wanes and operators consolidate and go bankrupt …Wyoming lags behind other Western states in terms of personal income growth, higher education attainment, and employment in high-value sectors like manufacturing.  

To a large extent, those lagging economic indicators can be traced to fossil fuel reliance. A recent Headwaters Economics report states the problem: ‘Wyoming’s decision to be dependent on energy commodity taxes has caused an economic and political ‘mineral tax trap’ wherein a political culture and commitment has developed around protecting the self-interest of low taxes and the status quo.’”

Wyoming’s once-vital mineral economy is convulsing, as demand for coal wanes and operators consolidate and go bankrupt — leaving counties owed tens of millions of dollars and hundreds out of work. So it goes for Western states riding the boom-and-bust cycles of mineral dependence.

Wyoming lags behind other Western states in terms of personal income growth, higher education attainment, and employment in high-value sectors like manufacturing.  

To a large extent, those lagging economic indicators can be traced to fossil fuel reliance. A recent Headwaters Economics report states the problem: “Wyoming’s decision to be dependent on energy commodity taxes has caused an economic and political ‘mineral tax trap’ wherein a political culture and commitment has developed around protecting the self-interest of low taxes and the status quo.” That commitment to coal was in full force this March, when Wyoming passed a law making it harder for utilities to decommission unprofitable coal-fired power plants. 

Democratic presidential candidates are rallying behind the idea of stopping new leases to extract fossil fuels from federal lands, with the majority of the field pledging to act on the issue if elected in 2020.

Regardless of the political viability, cutting federal leasing could have broad consequences — politically and financially — for swaths of the United States.

It would take years for production to be affected by simply barring new leases, and a crisis likely wouldn’t immediately hit communities that depend on federal development, said Mark Haggerty, an economist at Headwaters Economics in Montana.

“It would probably just shift the level of activity, increasing boom impacts on some places and bust impacts on others,” Haggerty said.

Today’s monster fires result largely from three human forces: taxpayer-funded fire suppression that has made the forest a tinderbox; policies that encourage construction in places that are clearly prone to burning; and climate change, which has worsened everything.

Behind these three forces is a massive economic perversity: Society masks the costs of building on the edges of the forest, a zone that planners call the “wildland-urban interface,” or the WUI. 

“In some instances, would it just be cheaper to buy the land and keep it from being developed? The answer’s clearly yes,” says Ray Rasker, executive director of Headwaters Economics, a Montana-based research group that focuses on disasters.

Previously too-wet-to-burn parts of the Pacific Northwest face an increasing risk of significant wildfires due to the same phenomenon: Climate change is bringing higher temperatures, lower humidity and longer stretches of drought.

The risk is amplified by development patterns throughout the Pacific Northwest.

A 2013 Headwaters Economics survey of development within 550 yards (500 meters) of forestlands found that just six counties along the western foothills of Washington’s Cascade mountains host more homes in such zones than all of California.

Funding to protect working farms and forests, wildlife and outdoor recreation in Montana is greatly insufficient — by tens of millions of dollars — to keep pace with growing demand, according to a first-of-its-kind report.

“The most successful state-level funding programs we analyzed follow a general pattern: They invest in a wide range of outdoor opportunities; they are accessible to a wide range of communities; they can be used to leverage other funding sources for a net total gain; and they are fully accountable and transparent,” Pohl said.

Gov. Steve Bullock has announced his appointments to the new Montana Climate Solutions Council, a group dedicated to developing policies and plans for reducing carbon emissions and adapting to the changing climate.

Mark Haggerty, a council member and research director for Headwaters Economics, said he foresees using his work, which focuses on why some places do better than others, to help the council think through the transition to a new energy economy.

“For me, it’s about how communities adapt to change — not just climate change — but the economic transitions happening in our state in general,” he said.

I used to work as a wildland firefighter. I spent four years with the Forest Service doing that, and I’ve always maintained an interest in policy and developments in the wildfire realm. I happened to learn a couple interesting things last year.

One was, I found a report that Headwaters Economics put out, saying that land use planning could probably be the most effective tool for preventing home losses in the wildland urban interface and maybe even more so than logging, which is frequently cited as a measure to mitigate severe wildfire.

Ray Rasker, who has researched wildfire for more than a decade as the executive director of Bozeman-based nonprofit Headwaters Economics, makes a bold claim about wildfire and its human impacts.

“We don’t have a forest fire problem, we have a home ignition problem,” he said. “As soon as you come to that realization, it changes your view on wildfire.”

Within that understanding, Rasker sees an opportunity for relief. If communities across the U.S. can become better adapted to wildfire by using preventative measures to reduce home losses, the thinking goes, they’ll be more resilient in the face of fire.

More than 50% of local residents spend a third or more of their income on rent, according to data from Headwaters Economics. That number is significantly higher than other tourist and recreation towns that the study examined. In many of these places across the West, government officials and year-round residents are going to extreme measures to attract new employees and keep the community intact. 

Like other destinations, Moab is facing an identity crisis: does it cater to the tourists and the wealthy or does it try to salvage its funky vibe that lured desert rats, thrill seekers, artists and immigrants here?

Ever since the end of the last recession, wealthier Americans such as the Nathansons have been moving to small, recreation-focused communities across the West, according to a recent report from the nonprofit organization Headwaters Economics. The influx of new money is transforming once-sleepy logging or ranching towns in ways that are both good and bad — revitalizing communities but driving housing costs beyond what’s affordable for many residents.

“Who is benefiting from these booms in recreation communities?” asked Megan Lawson, an economist at Headwaters and author of the study. “Who is not?”

The report found that since the Great Recession rural and semi-rural Western counties with a lot of recreation opportunities — hiking, biking, snowmobiling and skiing — have grown while rural counties without those amenities continue to shrink.

The Mountain West is home to huge swaths of public land. A new web-based tool is now showing people exactly where that land is and which agency is managing it.

“In general, the more public land a county has, the more growth in per capita income, employment and population,” Ray Rasker says.

In urban counties, public lands offer unique recreation opportunities, something Rasker says offers economic benefits. But, urban areas aren’t the only ones to see these positives, he says.

“You have other communities that are very rural and very isolated, and the role that public lands play in those places might be less about recreation and wilderness, and there might be more related to grazing or resource extraction,” he says.

“It’s not all about timber production anymore,” said Mark Haggerty, a researcher at Headwaters Economics who focuses on rural counties and their relationship with federal public lands and local economic development trends.

Haggerty spends much of his time comparing U. S. Forest Service Timber Cut and Sold Reports with Gross Receipts from Commercial Activities. “The first thing to point out on gross receipts is that this revenue earned by the Forest Service for activities on public lands. That’s what becomes the basis for the revenue-sharing payments back to local governments,” Haggerty said.

Haggerty supports of a different approach to addressing the challenges of county payments from commercial activity revenue: creation of a National Resources Trust. The trust would stabilize payment and eliminate the challenge of annual appropriations through Congressional budgeting.

The trust “gets to the idea of using resources to generate wealth. And you can think about wealth in a variety of different ways, not just in the way of creating annual receipts to fund local governments. It could, in theory, if it were to pass, create a real opportunity for communities and federal land managers to work together to re-think the way we’re valuing public land resources, timing extractions, considering market prices, all of that,” Haggerty said.

“You can throw firefighters at the problem as a defensive measure all day long, but the way to solve this problem is through land-use and building codes,” said Doug Green, fire safety manager with the Sister-Camp Sherman Fire District.

Through a coordinated team of land-use planners, foresters, economists and wildfire risk modelers, CPAW, funded by the U.S. Forest Service, integrates land-use planning with fire management to help communities draft a customized plan to reduce wildfire dangers.

A new report found that towns near plenty of outdoor recreation attract new residents and higher incomes. But this could also mean higher costs of living, affordable housing challenges, and encroachment into vulnerable landscapes.

“We already knew that having outdoor recreation nearby brings tourists to your community,” says Megan Lawson, an economist at Headwaters and author of the study. “But what we didn’t have great information on was whether that tourist and those amenities translate into people actually wanting to move to and live in these communities.”

“Outdoor recreation is being seen as a legitimate economic development strategy,” says Lawson. “It’s not just ski bums and dirt bags any more that are the face of an outdoor recreation economy. It’s the entrepreneurs that are moving to a community, bringing their families and their businesses.”

“It’s important to recognize that recreation is not a silver bullet for every place. It’s not the case where you build a trail, people will come, the rivers will flow with milk and honey and all of our problems will be solved. It’s one option in the toolbox. But for some places, it might be a good fit.”

Across the West, as development expands into this interface… it is a kind of ticking firebomb.

Almost half of new homes built in the U.S. are in this interface where development meets highly combustible vegetation….

Retrofitting may be costly, but building new homes to be wildfire-resistant can significantly reduce loss, says Kelly Pohl with Headwaters Economics, a nonprofit land management research group. A study by the group shows the cost is not prohibitive.

Montana lawmakers have chosen a study of state and local tax policy as their top priority during the 18 months before the 2021 legislative session.

Headwaters Economics, a research firm, suggested the state’s tax structure is not generating revenue in areas where the economy is growing, such as the service sector and investment income. Instead, it relies on declining revenues from oil, gas, mineral and timber production. Commerce also is increasingly taking place online and the state is not levying taxes on sales made by out-of-state companies, officials have noted.

Montana lawmakers will take a comprehensive look at state and local tax policy over the next two years. Legislators say a changing economy and increasing population means Montana should consider new ways of collecting taxes…

According to a report presented to state lawmakers last year by Bozeman based Headwaters Economics, “Montana likely is not taxing the economy where it is growing.”

The Headwaters report says that when it comes to jobs and income, Montana is transitioning from producing goods to providing services.