News

…Recreation and tourism are not just for fun; for many states, they are big business, providing much needed jobs and tax revenue. As resource dependent industries, however, they are also highly vulnerable to the impacts of climate change.

A recent report by Headwaters Economics details the effects of climate change on downhill skiing and recreational fishing in Montana. In this region, the “crown of the continent”, the majority of jobs, population and income growth over the last three decades have been tied to the natural amenities and resources of the region. Though small relative to the size of Montana’s economy, the report notes that these industries are closely tied to the “quality of life” that attracts businesses, residents, and tourists to the region.… (more…)

…Among the many issues raised for states by the rapid development of fossil fuels, like the burgeoning Marcellus Shale gas boom in Pennsylvania, are two pressing fiscal issues: first, how to raise funds fairly from industry activities; and second, how to distribute these funds to mitigate local impacts while investing in economic growth.

Today, Pennsylvania is the only major natural gas state that lacks a severance tax. A loophole in state law also excuses natural gas development from local property taxes. The absence of these two critical revenue streams denies Pennsylvania the opportunity to apply the lessons of recent energy booms in the American West…

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By Mark Haggerty, Headwaters Economics— U.S. Agricultural Secretary Tom Vilsack just announced that this year’s ‘transition’ payments to counties from the Secure Rural Schools and Community Self-Determination Act (SRS) will again ‘contribute to rural communities becoming self-sustaining and prosperous.’

The Secretary stressed that these payments ($389 million) fund local roads and schools—important for communities still feeling the after-effects of the recession. They do much more.

In the West, federal spending is important, but equally so are federal public lands. How SRS payments are funded and distributed is a key factor in determining how public lands are managed, and the kinds of jobs available in rural communities.… (more…)

By Julia Haggerty, Ph.D., Headwaters Economics— Fossil-fuel booms such as the one surrounding the Marcellus Shale in Pennsylvania raise two pressing fiscal issues for states: how to raise revenue fairly from industry activities, and how to distribute it effectively. But Pennsylvania is the only major natural-gas state without a severance tax, and a loophole in state law also excuses gas developers from local property taxes. The absence of these revenue streams will prevent Pennsylvania from applying the lessons of recent energy booms in the American West.

Headwaters Economics, an independent, nonprofit research group based in Montana, has studied energy and fiscal policy at the county and state levels. Our research shows how Pennsylvania could avoid the mistakes of other states and benefit from its natural-gas supplies…… (more…)

Op-Ed by Ray Rasker, Headwaters Economics— As the West boomed, the role of commodity production in the overall economy shrank. From 1990 to 2008, farming, ranching, forestry, lumber and wood products manufacturing, hard rock mining and fossil fuel development cumulatively contributed less than 3 percent of all new jobs across the West.

In 2008, these sectors combined constituted roughly 7 percent of all jobs in the rural West, and 3 percent in the West as a whole.

Within this economic context, our research sought to explain differences in county economic performance. Specifically, we examined factors such as population growth, the timber industry, education rates, government jobs, and the change in county unemployment rates from November 2007 (just before the recession officially started) to November 2009.

We documented a relationship between the size of the boom and the size of the bust. The faster an area’s population grew from 2000 to 2007, on average, the faster the area tended to lose jobs during the recession.

Similarly, those counties doing poorly at the start of the recession were more likely to continue to do poorly and lose jobs at a relatively faster rate.

Second, counties that were more timber dependent lost jobs at a faster rate during the recession. As in the past, specialization in resource extraction left counties vulnerable to sudden changes in commodity prices and in this case the housing market’s decline.

Third, a county’s education rate (the percent of adults with a college degree) was positively associated with lower rates of job loss. This finding is consistent with the Bureau of Labor Statistics’ projection that future jobs expected to be in highest demand will require a college degree.… (more…)

By Ben Alexander, Headwaters Economics— Debate over a possible new national monument covering the Otero Mesa has erupted again. Given the importance of this issue, now is the time to discuss the economics of how a monument could impact southern New Mexico and whether it would be beneficial to residents.

Let’s start with the area’s economy. The region’s economy has strong ties to the military, though since the mid-1980s these jobs have been declining. In contrast, services and professional sectors and retirement and investment income have grown independent of this decline and provided a complimentary economic alternative to military bases.… (more…)

By Mark Haggerty, Headwaters Economics— …Oregon’s public lands, some of America’s most spectacular, provide tremendous economic value through timber, salmon, and recreation, while providing a high quality of life that attracts people and businesses to the state.

To provide for sustained long-term growth, Oregon must take advantage of all of the integrated economic and fiscal benefits — timber but also the water, wildlife and scenery — provided by its federal lands.

One key component of leveraging these diverse forest values into growth is to ensure that federal payments (PDF) to the state’s counties for nontaxable lands continue to provide stable benefits for local schools and governments

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…While the Cowboy State gets a thumbs-up for forging ahead with wind energy production, a new report from Headwaters Economics finds the state will have to do much more than that to take advantage of its potential in the emerging green economy.

Report author Julia Haggerty says their analysis is an in-depth look at the Rocky Mountain States, and Wyoming is lagging behind overall. Haggerty sees a need for stronger state policies and incentives:

She says Wyoming needs a deliberate strategy on the green economy front to create consistent growth:

Energy efficiency products, components and services are cited as examples of green economy potentials for Wyoming.

Colorado is listed in the report as the state doing all the right things to take advantage of luring green companies and industries, as well as tapping into available federal money. Montana, Utah and New Mexico were also analyzed.… (more…)

…The number of homes built in the wildland-urban interface — private land where human development can intermingle with undeveloped forests on neighboring public land — is a concern across the West, according to Ray Rasker, executive director of Headwaters Economics, which has extensively studied the costs of fighting wildland fires.

A 2007 study by the nonprofit surveyed every county in the West, documenting the percentage of the wildland-urban interface that was developed. The study found that Boulder County — where 60 percent of the wildland-urban interface has been developed — ranked No. 1 in Colorado for dense development in that fire-prone area and No. 10 across the 11 Western states. According to Headwaters Economics, Boulder County has 5,409 homes spread across 57 square miles of wildland-urban interface.…

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…Conservation and restoration don’t just preserve green. They also create it — as in money.

That’s the conclusion of a new report produced for Audubon New Mexico. The study, “The Economic Benefits of Southern New Mexico’s Natural Assets,” was conducted by Headwaters Economics in Montana and coalesces data from state and federal agencies and other sources to look at the return on investment of such environmental efforts….

….Chris Mehl, who worked on the report for Headwaters Economics, said the southern New Mexico region is blessed with an abundance of natural resources and is poised to get a ‘twofer.’ ‘You can create immediate labor and jobs in the community with restoration and conservation work, and see those translate into more jobs down the road,’ he said…

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By Ben Alexander, Headwaters Economics— The recession has been difficult across the West and especially so in Central Oregon. With 20-20 hindsight, it is now clear that a heavy reliance on real estate, construction and related finance is perilous.

Such an economic foundation is too narrow by itself to sustain long-term prosperity and resilience. With high land and home prices, specifically in Bend and Sisters, recruitment interest dwindled and existing companies considered departure.

But the downturn also forced a restructuring that has improved the region’s economic competitiveness. Central Oregon is a special and unique place with many advantages. The region’s challenge is to sustain its desirability as a place to live to help create a broader range of industry diversity, especially in high-wage, high-skill sectors.… (more…)

…Over the past decade, severe wildfire seasons have outnumbered the mild ones, in the nation and in the Ninth District. The cost of fighting wildfires has risen with the flames, taxing the resources of government agencies charged with putting out fires. Last year, the U.S. Forest Service alone spent over $1 billion fighting wildfires, mostly in the western part of the country.

In the district, the intensity of recent fire years and the resulting costs are most evident in fire-prone Montana. Over most of the past decade, state government incurred average annual fire suppression costs of over $20 million—just a fraction of total firefighting costs in the state. Costs peaked at $65 million in the 2007 fire season, requiring a special legislative session to cover a budget shortfall. “What we’ve seen is a really substantial escalation in the number of fire seasons where we burn a lot of acres, and a lot of those acres are threatening communities, so we tend to spend a lot of money,” said State Forester Bob Harrington….

….Headwaters Economics, a research group based in Bozeman, Mont., analyzed daily fire suppression costs for 18 large wildfires that burned in Montana during 2006 and 2007. The study found that each additional house within one mile of a wildfire was associated with a $7,900 increase in suppression costs. For conflagrations in areas with relatively dense development, about 30 percent of the cost of fighting those fires was related to structure protection. Another study of large wildfires fought by the U.S. Forest Service found that as total home values within 20 miles of a fire ignition increase, so do firefighting costs…

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By Julia Haggerty, Headwaters Economics— While Colorado has not been immune to the global recession, a recent study finds that the state’s green economy has been a bright spot of economic dynamism during challenging times and that the growth of Colorado’s clean energy sector has outpaced that of all other Rocky Mountain States.

That did not happen by accident. Colorado’s strategy of targeted public policy and strong support for business has made it a competitive center of clean tech innovation that leads the region in almost every indicator, including capturing the most clean energy-related jobs, venture capital, and public funding.… (more…)

By Julia Haggerty Ph.D., Headwaters Economics— New Mexico’s combined strategy of targeted public policy, strong leadership, and support for business has made it a regional and national clean energy leader, increasing its green jobs faster than other Rocky Mountain States.

The states with the best early results and strongest competitive position are those able to capture new energy opportunities–not only power generation facilities and manufacturing jobs, but investment and employment in the myriad technologies, products and services related to a growing worldwide demand for clean energy, conservation and energy efficiency.

New Mexico’s success shows the importance of both policy and political guidance at all levels of government, from county commissioner to U.S. senator. The state’s aggressive outreach program, backed by strong incentives–including property tax breaks, bonding, and worker training–has attracted new jobs and investment to the state.… (more…)

By Julia Haggerty Ph.D., Headwaters Economics— During the recent economic downturn, Montana’s wind industry has been a welcome bright spot, creating jobs, revenues for landowners and supporting county and state treasuries.

One important question now facing Montanans is how the state can leverage its renewable resources to cultivate a broader green economy that generates jobs, taxes and investments.

Headwaters Economics recently completed a report–Clean Energy Leadership in the Rockies: Competitive Positioning in the Emerging Green Economy–that compares how Montana, Colorado, New Mexico, Utah and Wyoming are taking advantage of clean energy opportunities.… (more…)

Colorado’s green economy has been boosted by more than $796 million in venture-capital investment and $300 million in federal stimulus funds in the past decade, according to a study on green-job growth in the West.

Between 1995 and 2007, environment-related and renewable-energy-related jobs in Colorado grew by 30 percent to 17,008, the study by Headwater Economics, a nonprofit research group in Bozeman, Mont., showed.

‘The numbers are still small, but this has been a growing area, and Colorado has attracted venture capital, even during the recession,’ said Chris Mehl, Headwaters policy director.

The green economy’s venture-capital investments were made in the state between 1999 and 2008, the fifth highest among states, according to the study.… (more…)

A Montana-based nonprofit is studying why Deschutes County has struggled more during this recession than other similarly populated areas that, like Deschutes, saw strong growth before the economic downturn. Headwaters Economics’ study aims to provide an analysis about how the county can better diversify its economy, how it has done so in the past and how it can become more resilient to recessions. The information gathered by Bozeman-based Headwaters will be used to learn why businesses come to Deschutes County, what keeps them here and the pros and cons of operating a business in the area.

Headwaters is interviewing people from a county in Idaho and another in Utah, which had pre-recession growth rates and economic environments similar to Deschutes County, to try to determine why those two counties have suffered less than Deschutes during the recession.… (more…)

…Why the big cost increase? The Headwaters Economics report cites three factors: wood, weather, and WUI — the Wildland-Urban Interface. Wood is a result of forest management practices that allow fuel to accumulate. Weather is a hotter, drier climate. And the WUI zone is an increasingly attractive place to build homes, which means there’s more property to be protected from wildfires.

Such developments benefit from “perverse incentives” and a lack of accountability: “People who develop in forested areas, and local governments that allow such new subdivisions, do not pay their share of fire fighting costs. The majority of firefighting expenses instead are paid by the Forest Service, BLM, and the Federal Emergency Management Agency.”

…If you live where wildfires are a possibility, it might be a good idea to make sure your county commissioners get a copy of this report — deterring development in the WUI is one way to save tax money.… (more…)

…In a study that ONDA commissioned to examine the potential economic benefits of designating the Badlands area outside of Bend as a federal wilderness area, the Montana-based non-profit research firm Headwaters Economics found that counties with protected federal lands, including wilderness, outperformed their counterparts in a number of key economic indicators, including per capita income, job and population growth.

:There is a lot of complaining about public lands, but from an economics perspective having public lands is a good thing and demonstrably so,” said Ben Alexander who helped write the Badlands report for ONDA.

It’s a phenomenon that has played out not just across the Western United States, but also around the world where entrepreneurs and educated members of the workforce are seeking out so-called quality of life destinations, identifying the places they want to live and locating there. Wilderness and other protected areas like national parks, it turns out, factor significantly into those decisions. In some cases, the transplants bring their businesses or their jobs with them, in other cases the jobs are following the skilled workforce, explained Alexander.… (more…)

By Ray Rasker, Executive Director, Headwaters Economics— Fighting wildfires costs U.S. taxpayers $3 billion annually, more than twice what it cost a decade ago. Unfortunately, this expense is almost certain to continue to grow, and — unless action is taken — firefighting costs could at least double again in the next 15 years because of expanding residential development on fire-prone lands and increased temperatures associated with climate change.…

In an effort to curb the rising expense of fighting forest fires, Headwaters Economics has developed a report that outlines ten possible solutions, ranging from increased education to changes in insurance or mortgage laws.

The research white paper shows that we have the knowledge and solutions needed to address this problem, and the report, Solutions to the Rising Costs of Fighting Fires in the Wildland-Urban Interface, enjoys the support of former Director Kennedy and Dale Bosworth, former Chief of the Forest Service.… (more…)