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The bottom line is this: It's vital that frenzied energy development in Colorado slow down so local governments and economies can reap the long-term benefits of oil and natural gas development. Link to Article  Quality Drives Montana’s Economic Success By Ray Rasker Election season is upon us and it’s time once again for politicians to talk about the economy. This time, let’s do it with some facts in hand. The common lament, faithfully repeated by newspapers and politicians across the state, is that we rank towards the bottom, if not dead last, in many key economic indicators, like per capita income. After reading these accounts, one can’t help but feel depressed and want to blame someone. But let’s be fair. Montana is for the most part a rural state. Our biggest county, Yellowstone County (Billings) has a population of less than 140,000. Yet every time we hear a lament abut how poorly we’re doing, we rank ourselves with the rest of the country. It means we’re stacking our rural numbers up against states like Colorado with Denver, Arizona with Phoenix and Tucson, and Utah with Salt Lake City. It’s okay, or even a good thing, that Montana does not have a Salt Lake City or Denver. When we look at Montana’s economy, we should compare ourselves to like-sized places in the West. Let’s see how we stack up. Let’s compare ourselves to the rest of the West with places with population centers of 140,000 or less. From 1990 to 2005, our rate of job growth was the same as the rest of the (small-sized) West (2.3% per year). The same is true for the rate of growth in real personal income (5% per year). Where we really excelled was in per capita income growth. While in the rest of the rural West, per capita income grew by 1.3% per year from 1990 to 2005, in Montana ours grew by 5.7% per year. Why is that? A big part of the reason is Montana’s ability to attract investment and retirement income, which today represents over one third of all personal income in the state. To put this into perspective, age-related income (retirement, disability, and Medicare payments) in Montana is now twice the personal income from people employed in farming, ranching, mining, oil and gas development and the wood products industry – combined. While this doesn’t mean that we’ve become a retirement destination, it does beg the question: why Montana? What are we doing to attract so much retirement and investment income? Another important fact for Montana is our growth in wages. From 1990 to 2005, the average annual wage in Montana grew by 3.4% per year. In our similarly sized peers in the West, the average annual growth was only 0.4% per year. Again, why Montana? What are we doing right? Our high growth in knowledge-based industries has a lot to do with this. Today there are 4.5 times more people employed in service industries than in the goods producing industries, and fortunately, service industries today no longer means only low-wage tourism jobs. Places like Bozeman, Missoula, Kalispell, Helena, Butte, and Billings excel in their ability to attract high-wage service workers in finance, medicine, technology, and information, with wages at least $10,000 per year above the state average. With our high quality of life and pristine environment, our universities and regional airports, we excel in our ability to attract and retain people who want to live and do business in Montana. Our quality attracts those who came here to retire. It also keeps long-time residents from leaving. It attracts investment income, and entrepreneurs who create well-paying jobs. This fall, as we head for the polls, lets keep these facts in mind. Montana as a whole is doing quite well and the reason is no fluke. Our free-flowing rivers, national parks and wilderness areas, our wide-open ranchlands and friendly communities – these are the qualities that are rapidly disappearing throughout the West. Montana is doing well because we’ve worked hard to protect them. This essay appeared in the Bozeman Daily Chronicle (MT) on July 19, 2008 and in the Butte Standard (MT) on July 20, 2008. New York Times Magazine (May 18, 2008) Drilling for Defeat? By David Sirota ..."According to Headwaters Economics, a Montana-based research group, the energy sector currently employs only 1.3 percent of the region’s work force. And mining generated just 2.9 percent of all personal income in the five natural-gas-producing Western states in 2006. By contrast, retirement benefits, service jobs and professional industries generated about 55 percent of the region’s income. Many of these sectors have an interest in reducing energy development. After all, retirees, professionals and tourism businesses often come to the region for the open spaces." 'Lots of drilling is great for the industry,' said Headwaters Economics' associate director, Ben Alexander. 'But is it good for the region as a whole?' The political battle for the West will be won by whichever party offers the most convincing answer. Link to Article Washington Post (July 5, 2008) Closed-Door Deal Could Open Land in Montana By Karl Vick "The Bush administration is preparing to ease the way for the nation's largest private landowner to convert hundreds of thousands of acres of mountain forestland to residential subdivisions. The deal was struck behind closed doors between Mark E. Rey, the former timber lobbyist who oversees the U.S. Forest Service, and Plum Creek Timber Co., a former logging company turned real estate investment trust that is building homes. Plum Creek owns more than 8 million acres nationwide, including 1.2 million acres in the mountains of western Montana, where local officials were stunned and outraged at the deal." ...."'Now that Plum Creek is getting out of the timber business, we're kind of missing the loggers,'" said Ray Rasker, executive director of Headwaters Economics, a nonprofit that studies land management in the West. 'A clear-cut will grow back, but a subdivision of trophy homes, that's going to be that way forever. It's kind of the ugly face of the new economy.'" Link to Article New York Times Magazine (May 18, 2008) Drilling for Defeat? By David Sirota ..."According to Headwaters Economics, a Montana-based research group, the energy sector currently employs only 1.3 percent of the region's work force. And mining generated just 2.9 percent of all personal income in the five natural-gas-producing Western states in 2006. By contrast, retirement benefits, service jobs and professional industries generated about 55 percent of the region's income. Many of these sectors have an interest in reducing energy development. After all, retirees, professionals and tourism businesses often come to the region for the open spaces." 'Lots of drilling is great for the industry,' said Headwaters Economics' associate director, Ben Alexander. 'But is it good for the region as a whole?' The political battle for the West will be won by whichever party offers the most convincing answer. Link to Article High Country News (May 12, 2008) Boom! Boom! By Francisco Thorp "In western Colorado, an energy boom of unprecedented proportions has been layered on top of a thriving amenity economy. Which will come out on top?" ...'This economic diversity is key to long-term growth, says Ben Alexander of Headwaters Economics, an independent nonprofit research group. 'People are earning real money in this job market, and that's a great thing.But, he warns, regions with economies that are overly dependent on energy development - places like Gillette and Rock Springs, Wyo., southeast New Mexico, and Big Horn, Mont. - are 'less resilient, more volatile, and over the long run, they can grow more slowly.' Link to Article New York Times (Feb. 24, 2008) Once Immune, Utah is Feeling Economic Dip By Kirk Johnson "In the economic boom that thundered through Utah over the last few years, many people saw a kind of perfect chemistry at work." "What demographers call Utah's special story -- its population is the youngest in the nation by far and one of the fastest growing, mainly from large Mormon families -- was paying off, melding with a surging engine of growth in Utah's backyard and throughout the world. ..."And the wave of affluent retirees, except for Utah's southwest corner in St. George, has mostly gone elsewhere, remaking towns like Grand Junction, Colo., and Coeur d'Alene, Idaho. In the five states that are Utah's immediate neighbors -- Nevada, Idaho, Wyoming, Colorado and Arizona -- Utah's economy is least dependent on -- or in a downturn, least helped by -- the 'nonwage' income that retirees have to spend from annuities and investments, according to Headwaters Economics, a nonprofit research group in Bozeman, Mont. Link to Article Missoulian (December 30, 2007) Plum Creek subdivisions could strain fire budget By Michael Jamison "...State and county leaders discussed budgets strained by infrastructure needs in neighborhoods that not so long ago were working woods. Now, those far-flung homeowners want roads and snowplows and police and bus routes to schools, but property tax revenues from the new subdivisions don’t begin to cover the costs. As far as those worries are concerned, not much has changed here at the end of 2007, except perhaps that more people than ever are watching and wondering. The singular exception is with regard to fire, where two things happened this year to ratchet up the discussion about Plum Creek’s land management. First, a red-hot wildfire season sent state firefighting costs soaring into the tens of millions of dollars, forcing lawmakers to redirect money that was to be spent elsewhere. Second, Bozeman-based Headwaters Economics completed a long-term analysis of expected future firefighting costs if more of the land is developed. Link to Article Denver Post (November 29, 2007) State economy finds strength in diversity By Aldo Svaldi "Diversification and growth in the Colorado economy will keep the current energy boom from driving up wages and hiring as much as it did during the 1970s. But in some counties, energy-industry development could displace non-energy jobs and sources of income, leaving those economies more vulnerable in the long run. 'Energy is important but less important than it used to be in the past. Diversity leads to stronger long-term growth over time,' said Ben Alexander, associate director at Headwaters Economics, an independent, nonprofit research group based in Bozeman, Mont. Link to Article Billings Gazette (September 19, 2007) Fire costs to grow, group says By Mike Stark "Fighting fires in forested areas where more people are building homes will only get more expensive and dangerous in Montana and across the West, according to a report from a group of economists released Tuesday. Headwaters Economics of Bozeman examined private land in the "wildland urban interface" - areas that abut fire-prone forests - in 11 Western states and found that 14 percent of it has been developed. What worries Ray Rasker, the group's director and lead economist, is what might happen if some, or all, of that remaining 86 percent is built up, especially given the increased costs of fighting wildfires in recent years. Link to Article Link to San Francisco Chronicle Editorial Link to Wall St. Journal Editorial (preview only) Link to Our Study — West-wide Wildland Urban Interface Analysis Seattle Post-Intelligencer (July 26, 2007) Corner of State Sets Pace to Save Forests By Joel Connelly P-I Columnist "An increase in value-added manufacturing has kept people at work in the mills. The economy diversified with service-related industries. Retirees discovered that this is an affordable corner of the state. God's unspoiled out-of-doors was an economic asset. Still, 'responsible management areas' will make a difference. 'Assuming standard multipliers, it is reasonable to assume timber-related employment could increase on the order of 220 to 440 jobs,' said an economic assessment prepared by Montana-based Headwaters Economics." Link to Article Link to Our Study — Timber, Restoration Forestry and Wilderness in Northeast Washington Bozeman Daily Chronicle (Dec. 12, 2006) Growing Trend: Development Tally Shows Past 5 Years Have Altered Valley By Walt Williams "[Ben] Alexander said one troubling trend about the figures compiled by his organization was that the growth in the number of acres used for new homes has increased faster than the growth in population." Link to Article Maps to accompany the article and additional information. Washington Post (Dec. 2, 2006) In West, Conservatives Emphasize the 'Conserve' By Blaine Harden "'The New West is best understood as islands of urban economics in a rural setting,' said Ray Rasker, executive director of Headwaters Economics, a think tank in Bozeman, Mont. 'They are made possible by a combination of environmental amenities combined with the presence of transportation, especially good airports.'" Link to Article Reprinted in The Seattle Times (Dec. 15, 2006) Westerners Are Coming Back to Conservation Link to Article. LA Times (Nov. 26, 2006) Circling the Welcome Wagons Equity-rich boomers who yearn for wide-open spaces are heading for the Rocky Mountain West—Montana in particular—where the locals are waiting. With pitchforks. By Jim Robbins "And a Third Coast. In the Rocky Mountain West, nearly 'all net new jobs are in service—engineers, architects, maid, waiters,' says Ray Rasker, executive director of Headwaters Economics, a nonprofit research firm in Bozeman, the seat of Gallatin County (the population of which, by the way, has shot up 55% in 15 years)." Link to Article Smithsonian (Aug. 2006) Cowboys and Realtors The mythical West lives on - even as the wealthy, the leisured and the retired buy into Big Sky Country. An essay. By Blaine Harden "Retirement income, most of it belonging to newcomers, is the primary engine behind this economic transformation. For Montana as a whole, it amounts to about three times the combined income from farming, ranching, logging, and oil and gas exploration, according to Ray Rasker of Headwaters Economics, a nonprofit research group in Bozeman." Link to Article
Headwaters Economics Banner photo has been generously provided by Alex Diekmann. |