Mixed Economies in Rural Alaska

Transcription

1 Mixed Economies in Rural Alaska PADM 628-Spring 2018 Carolyn Hall, Florence Kargi, Bristan Keller

2 Background: Alaska s Economic Landscape The oil and gas industry generates a substantial share in Alaska s economy with average earnings of more than 2.5 times the average for Alaskan industries (Fried, 2017) State revenues come from four major sources: petroleum revenue; non-petroleum revenue sources (licenses, permits, fines, etc.); federal revenue; and investment revenue (Dept of Revenue, 2017). 92% of Alaska s unrestricted revenue came from O&G in 2013 (Fried, 2017).

3 The BIG Picture Economic Sustainability: the ability of the economy to support a defined level of economic production indefinitely, without impeding future economic development External Factors: the Federal Government

4 Background Economics: Yukon-Kuskokwim Delta Natural resources include fishing, gold, wildlife refuge High unemployment rate Mixed economy (subsistence & wages)

5 Background Economics: North Slope Fosters O&G development through its ANC subsidiaries. Supports infrastructure Pumps cash into local as well as state economy Co-existence of subsistence activity & resource development

6 Yukon-Kuskokwim Delta How Big is the YK-Delta? Yukon-Kuskokwim Delta is located in Southwest Alaska It covers 75,289 square miles of wetlands, tundra & mountains (as big as the state of Louisiana) Bethel is the hub, there are 50 villages along the coast of the Bering Sea and on the banks of the Yukon-Kuskokwim rivers

7 Natural Resources in the YK Delta Commercial Fishing (with the last few years it has declined) Development of the Donlin Gold Mine (lot of controversy) National Wildlife Refuge (Under Federal law, its purpose is to conserve fish & wildlife populations & their habitats) GNU Residents Transports Honda Foreman ATVs in 18 Lunds Commercial Fishermen in Platinum, AK 2010

8 Yukon Kuskokwim Delta Demographics According to the National Employment Monthly Update, the national average unemployment rate as of February 2018 is 4.1 percent whereas Alaska is at 8.2% The Kusilvak area is at a 22.3% unemployment rate Bethel area is at a 14.6% The NSB is 8.5% (ADLWD, 2017)

9 Poor but Rich in Preserving the Traditional Lifestyle Practices & Language Although the area is considered poor according to these standards, we are considered rich because we still carry on our language, traditional practices & subsistence lifestyle Combining cash-paying jobs and subsistence activities is the way most households in remote areas get along. A recent survey found, for example, that 78% rural Alaskans combine jobs and subsistence fishing, hunting, and other activities

10 People in the Yukon-Kuskokwim Delta still practice a Subsistence Lifestyle

11 External Factors 5-Year Program The Trump administration has re-written the current 5-Year program regarding oil and gas (O&G) development to open all of Alaska to industry with the exception of part of the Aleutian Basin. Industry Interest Industry may want to take advantage of the new 5-Year Program, but it would be a gamble considering how much more it is expensive in the Arctic than the Gulf of Mexico. However, the thought of discovering a rich oil well is enticing.

12 Executive Order (EO) 13783, Promoting Energy Dependence & Economic Growth Section 1 (a), It is in the national interest to promote clean and safe development of our Nation s vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation. Moreover, the prudent development of these natural resources is essential to ensuring the Nation s geopolitical security. (EO 13783, 2018) Revoked EO 13653, Presidential Memo regarding carbon pollution and Mitigating impacts on Natural Resources, and Climate Change and Natural Security, the Presidential Climate Change Action Plan, and Climate Action Plan Strategy.

13 Revenues and Community Budgeting Property taxes on the NSB and gas producers are the main source of revenue which supports a high percentage of local government jobs (AOGA, 2014). Industry job include oil related service jobs through ANC subsidiaries. In 2016, oil property taxes attributed to 96.7% of NSB revenues.

14 Increasing & Diversifying Revenues With the new direction the Trump administration, communities have an increased opportunity to generate more revenues than the previous administration. These increased revenues lead to an increase in property taxes which impact local government budgets. These increased revenues can lead to an improvement in infrastructure and human capital, which are essential for economic growth. Due to the limited resources in the YK Delta and other rural communities, the benefit is much greater than most urban cities, and may drastically improve the availability of certain goods in these areas.

15 O&G Development

16 Subsistence vs. O&G Development

17 Conclusions Basic framework of NSB practices could be applied to resource development Likely to have minimal direct impact on subsistence economy External factors may benefit future resource development and management

18 Sources EO (Executive Order) 13783, 3 C.F.R., Retrieved from: