The-Role-of-Metal-Mining-in-the-Alaska-Economy
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The-Role-of-Metal-Mining-in-the-Alaska-Economy
The Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-EconomyHOMAS MICHAEL POWER Professor of Economics Economics Department University of Montana Missoula. Montana 59812 406 243 4586 tom.power@mso.umt.edu37288Note: The affiliation of the author is provided only for identification. This is not an official publication of the University of Montana. This report The-Role-of-Metal-Mining-in-the-Alaska-Economywas prepared by the author as an independent economic consultant. The conclusions reached are solely the responsibility of the author and do not necesThe-Role-of-Metal-Mining-in-the-Alaska-Economy
sarily reflect the position of the University of Montana, its Economics Department, or either the Southeast Alaska Conservation Council or the NortherThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economy economies of the Fairbanks and Juneau areas. Metal mining played a very important part in the original European settlement of Alaska, and. more recently, revenues from North Slope oil development have played a very important role in the development of the modern Alaskan economy. Because of these im The-Role-of-Metal-Mining-in-the-Alaska-Economyportant historical roles of mineral development, it is often assumed that the future development of the Alaskan economy will also depend on the furtheThe-Role-of-Metal-Mining-in-the-Alaska-Economy
r development of the State’s metal deposits. This report investigates the factual basis of metal mining's assumed importance in Alaska’s economic futuThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyent of Alaskan jobs and personal income: about 2,000 of Alaska’s 400,000 jobs and $87 million of Alaska’s $18.6 billion of personal income in the year 2000. Even after applying any reasonable •‘multiplier" to these numbers, metal mining would continue to provide only a small sliver of total Alaskan The-Role-of-Metal-Mining-in-the-Alaska-Economyjobs and income.2.In the "mining dependent" cities of Fairbanks and Juneau, metal mining is directly responsible for about one and two percent of totaThe-Role-of-Metal-Mining-in-the-Alaska-Economy
l jobs, respectively.3.This very modest role of metal mining is often obscured by exaggerated estimates of metal mining’s impact built around double aThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economylished almost a century ago.4.Because of its capital and land intensive nature and relatively modest use of labor, the payroll associated with Alaska metal mining represents only about 8 percent of the Sl.l billion value of metal mine production.5.During the 1990s. while the real value of metal prod The-Role-of-Metal-Mining-in-the-Alaska-Economyuction in Alaska rose 83 percent, from about S600 million to $1.1 billion, metal mine payroll rose only 5 percent.6.Although metal mining, because ofThe-Role-of-Metal-Mining-in-the-Alaska-Economy
its capital intensity, conưibutes significantly to local governments' property tax bases, its contribution to total local government revenues, includiThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyairbanks-North star Borough. The Greens Creek Mine contributes about one-half of one percent of the revenues received by local governments in the City and Borough of Juneau.7.Mine license taxes and production royalties on state owned minerals yield only a few million dollars each to total state reve The-Role-of-Metal-Mining-in-the-Alaska-Economynues that total almost $6 billion even without counting the revenue flows into the Permanent Fund. Together these two sources of revenue from metal miThe-Role-of-Metal-Mining-in-the-Alaska-Economy
ning contribute less than one-tenth of one percent of total Alaskan government revenues.8.Despite the high wages paid in metal mining, that industry iThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyment and payroll: (2.) the life of a contemporary metal mine tends to be relatively short, 5 to 15 years: (3.) the labor needs of metal mining operations are constantly falling as technological change displaces workers: only constant expansion of mine production can offset this: and (4.) environment The-Role-of-Metal-Mining-in-the-Alaska-Economyal damage associated with metal mining discourages people and businesses from locating near mining operations.9.Inadequate reclamation laws and reclamThe-Role-of-Metal-Mining-in-the-Alaska-Economy
ation bonding requirements can leave state governments with large reclamation financial obligations and near permanent damage to the natural environmeThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economymed special role of oil production and transportation, mining, other natural resource industries, manufacturing, and the federal government as key economic drivers is incomplete and inadequate. It cannot explain the ways in which the Alaskan economy has been changing. For instance, during the 1990s The-Role-of-Metal-Mining-in-the-Alaska-Economywhile employment in these key sectors declined 25 percent, employment in other sectors expanded 25 percent. While real income from these sectors decliThe-Role-of-Metal-Mining-in-the-Alaska-Economy
ned 7 percent, income from other sectors expanded by 31 percent. The Alaskan economy is more diverse and resilient than the popular economic base viewThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyly important source of local economic vitality. Because people care where they live, and act on those preferences, and economic activity follows those residential choices, the attractiveness of communities and landscapes has become an increasingly important part of a local area's economic base. To t The-Role-of-Metal-Mining-in-the-Alaska-Economyhe extent that metal mining activities threaten this, they can undermine rather than enhance the local economic base.These conclusions about the limitThe-Role-of-Metal-Mining-in-the-Alaska-Economy
ed role of expanded metal mining in supporting the ongoing economic development of Alaska are not new. In 1969 the Institute of Social. Economic and GThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economys and Economic Development.''1 That report also concluded that mineral development had limited capacity to support economic development because the mineral industries were becoming less and less labor intensive and were playing a steadily shrinking role in the overall economy. That earlier report al The-Role-of-Metal-Mining-in-the-Alaska-Economyso pointed out that mineral developments in isolated areas were unlikely to stimulate economic development in the area surrounding the mineral site beThe-Role-of-Metal-Mining-in-the-Alaska-Economy
cause very few of the mineral development expenditures would flow through the local economy. Finally, that report emphasized that wtiile the role of mThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyportunities were playing an increasingly important role in the determination of economic well-being. The relative economic values associated with the natural landscape were shifting from extractive1 Mining and Public Policy In Alaska: Mineral Policy. Public Lands and Economic Development, Arion R Tu The-Role-of-Metal-Mining-in-the-Alaska-Economyssing and Gregg K. Erickson. SEG Report No. 21. June 1969.2toward non-consumptive natural resource values. Over thirty years later, all of these pointThe-Role-of-Metal-Mining-in-the-Alaska-Economy
s remain very important when it comes to the crafting of rational natural resource policy in Alaska.2.The Relative Importance of Alaska Metal MiningA.The Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyt of Alaska, it is natural to see metal mining as a vital part of Alaska’s economic base. As the Fairbanks' University Park Elementary students put it on their website: “If it weren’t for gold, we wouldn’t even be here."The resources and economic activities that supported Alaska’s economic developme The-Role-of-Metal-Mining-in-the-Alaska-Economynt in centuries and decades past are important in understanding the state’s history, but they are unlikely to be a very good guide to the current andThe-Role-of-Metal-Mining-in-the-Alaska-Economy
future economy of Alaska. Successful economies change and develop. Those that stay stuck in their early developmental history are likely to stagnate aThe Role of Metal Mining in the Alaskan Economya report prepared for theSoutheast Alaska Conservation Council Northern Alaska Environmental CenterbyTH The-Role-of-Metal-Mining-in-the-Alaska-Economyimber, and agricultural towns are rarely vital, prosperous economies. For the last two decades, it has been rural counties that are mining and farming dependent whose economies have lagged the most.2 For example, the timberdependent counties of northern Maine, the mining counties of Appalachia and c The-Role-of-Metal-Mining-in-the-Alaska-Economyopper towns of the West, and the farm counties of the Great Plains have all seen ongoing economic depression and population loss.If we look at just frThe-Role-of-Metal-Mining-in-the-Alaska-Economy
om where Alaskan residents receive their money income and where they are employed, the role of metal mining appears to be relatively minor, a small slGọi ngay
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