Public Goods versus Public Services: Public Goods versus Public Services: Economic and fiscal impacts of natural Gas Economic and fiscal impacts of natural Gas Development in the Jack Morrow Hills of Wyoming. Development in the Jack Morrow Hills of Wyoming. by by Roger H. Coupal Roger H. Coupal Department of Agricultural and Applied Economics Department of Agricultural and Applied Economics University of Wyoming University of Wyoming David T. Taylor David T. Taylor Department of Agricultural and Applied Economics Department of Agricultural and Applied Economics University of Wyoming University of Wyoming Roy Allen Roy Allen U.S. Bureau of Land Management, U.S. Bureau of Land Management, Wyoming State Office Wyoming State Office Nathan Nathan Nibbelink Nibbelink Wyoming Geographical Information Science Center Wyoming Geographical Information Science Center University of Wyoming University of Wyoming
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Public Goods versus Public Services: Public Goods versus Public Services: Economic and fiscal impacts of natural Gas Economic and fiscal impacts of natural Gas
Development in the Jack Morrow Hills of Wyoming.Development in the Jack Morrow Hills of Wyoming.
bybyRoger H. CoupalRoger H. Coupal
Department of Agricultural and Applied EconomicsDepartment of Agricultural and Applied EconomicsUniversity of WyomingUniversity of Wyoming
David T. TaylorDavid T. TaylorDepartment of Agricultural and Applied EconomicsDepartment of Agricultural and Applied Economics
University of WyomingUniversity of WyomingRoy AllenRoy Allen
U.S. Bureau of Land Management,U.S. Bureau of Land Management,Wyoming State OfficeWyoming State Office
Nathan Nathan NibbelinkNibbelinkWyoming Geographical Information Science CenterWyoming Geographical Information Science Center
University of WyomingUniversity of Wyoming
ObjectivesObjectives
Investigate the public an private good relationships in oil and Investigate the public an private good relationships in oil and gas gas developmentdevelopmentIdentify the scope of the tradeIdentify the scope of the trade--offs imposed on local decisionoffs imposed on local decision--makers.makers.Estimate economic and fiscal impacts associated with preservatioEstimate economic and fiscal impacts associated with preservation n versus development decisions. versus development decisions.
The Issue: (The Issue: (““faustian faustian decisiondecision””))
The NEPA process imposes on local communities a choice between pThe NEPA process imposes on local communities a choice between public ublic services ( the public goods they provide) and natural resource rservices ( the public goods they provide) and natural resource related public elated public goodsgoodsPublic services versus public goodsPublic services versus public goods
Roads, Roads, health, health, schools, schools, emergency servicesemergency services
wildlife,wildlife,recreation,recreation,water quality,water quality,quality of lifequality of life
VS.
Jack Morrow Hills Area in relation to the State of WyomingJack Morrow Hills Area in relation to the State of Wyoming
Description of the areaDescription of the area
The Jack Morrow Hills (JMH) area is located in the high The Jack Morrow Hills (JMH) area is located in the high desert area abutting the Wind River Mountains in desert area abutting the Wind River Mountains in Southwest Wyoming. Southwest Wyoming. Encompasses:Encompasses:three Areas of Critical Environmental Concern and three Areas of Critical Environmental Concern and seven wilderness study areas. seven wilderness study areas. 251,853 hectares of federal, state, and private land and has 251,853 hectares of federal, state, and private land and has the only remaining free roaming, high desert elk herd that the only remaining free roaming, high desert elk herd that reside there on a year round basis, which fuels the debate.reside there on a year round basis, which fuels the debate.Dominant uses within the area include, minerals Dominant uses within the area include, minerals exploration and development, wildlife, grazing, and exploration and development, wildlife, grazing, and recreation. recreation.
Oil and Gas AssumptionsOil and Gas Assumptions
7.58%SWWYO Tax Revenue/Assessed Valuation Natural Gas:
7.11%SWWYO Tax Revenue/Assessed Valuation Crude Oil:
80.95%Assessed Valuation/Price Natural Gas:
93.66%Assessed Valuation/Price Crude Oil:
0.005387Jobs Per MMCF of Natural Gas (AJE):
0.000072Jobs Per Barrel of Crude Oil (AJE):
$188.14Earnings Per MMCF of Natural Gas:
$2.50Earnings Per Barrel of Crude Oil:
$3,613.38Total Impact Per MMCF of Natural Gas:
$34.16Total Impact Per Barrel of Crude Oil:
$3.00Price Per MCF of Natural Gas:
$26.00Price Per Barrel of Crude Oil:
Assumed Gas Production TrendsAssumed Gas Production Trends
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
No ActionAlt AAlt BAlt C
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
No ActionAlt AAlt BAlt C
Assumed Oil Production TrendsAssumed Oil Production Trends
The critical concern was what would happen to the The critical concern was what would happen to the resident elk herd if oil and gas development were resident elk herd if oil and gas development were
expandedexpanded
Estimated the economic and fiscal impacts based upon the agencieEstimated the economic and fiscal impacts based upon the agencies s identified alternatives.identified alternatives.Comparison between alternatives in terms of fiscal and economic Comparison between alternatives in terms of fiscal and economic impacts.impacts.wildlife estimates were based upon judgment calls by state and fwildlife estimates were based upon judgment calls by state and federal ederal agency biologistsagency biologists
Seasonal Elk Range in relation to location of gas wells Seasonal Elk Range in relation to location of gas wells in Southwest Wyomingin Southwest Wyoming
Wells with a 3 km. impact area identified
Seasonal Pronghorn Antelope Range in relation to Seasonal Pronghorn Antelope Range in relation to location of gas wells in Southwest Wyominglocation of gas wells in Southwest Wyoming
Wells with a 3 km. impact area identified
Seasonal Mule Deer Antelope Range in relation to Seasonal Mule Deer Antelope Range in relation to location of gas wells in Southwest Wyominglocation of gas wells in Southwest Wyoming
Wells with a 3 km. impact area identified
Wildlife AssumptionsWildlife Assumptions
Expenditure per day EstimatesExpenditure per day Estimates
$54.46$0.54$55.00Non-resident Non-consumptive users
$171.15$68.47$239.62Non-resident Antelope Hunters
$82.01$57.05$139.06Non-resident Deer Hunters
$167.99$71.41$239.40Non-resident Elk Hunters
Local Expenditures
Non-localExpenditures
Total Expenditures
Expenditures
Assumed Elk Hunter Day TrendsAssumed Elk Hunter Day Trends
0
100
200
300
400
500
600
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
No Action & Alt BAlt A & Alt C
MethodMethod
use BLM estimates of oil and gas production levels and recreatiouse BLM estimates of oil and gas production levels and recreation use n use changeschangesmodel wildlife impacts to be consistent with agency biologist model wildlife impacts to be consistent with agency biologist ““judgmentjudgment””estimatesestimatesUse a input output model and fiscal impact model developed for sUse a input output model and fiscal impact model developed for south west outh west wyomingwyoming
Model structure:Model structure:IO model:IO model:
partial survey based model that localizes oil and gas, recreatiopartial survey based model that localizes oil and gas, recreation, and agricultural n, and agricultural sectors.sectors.IMPLAN based IMPLAN based -- most federal agencies and many state agencies increasingly most federal agencies and many state agencies increasingly rely on IMPLAN for consistency cost issues.rely on IMPLAN for consistency cost issues.
Fiscal modeling: system of log Fiscal modeling: system of log -- log equations, estimated using SURlog equations, estimated using SUR
County_ Rev = CR(rural _ pop,urban_ pop,agrland,MineralPRod)
County_ exp = CR(rural _ pop,urban_ pop,agrland,MineralPRod)
Results:Results:
$1.000$1.0000.927Resident Recreation
$0.991$0.8881.173Local Govt. Revenue
$0.980$0.8601.117Total Employment
$0.980$0.8451.174Total Earnings
$0.987$0.8721.178Total Impacts
$0.988$0.8781.180Direct Impacts
Changes relative to the base (no action alternative)
$13,785,583$13,778,703$12,771,602$13,778,703Resident Recreation
$17,360,911$15,549,022$20,544,989$17,515,119Local Govt. Revenue
1,8241,6002,0781,860Total Employment
37,670,14032,491,82145,144,90338,446,126Total Earnings
439,502,678388,193,577524,643,105445,396,630Total Impacts
343,499,956305,186,318410,185,095347,544,467Direct Impacts
Alternative C Resource Tradeoff
Alternative B Protection
Alternative A Production
No Action Alternative
0.8
0.9
1
1.1
Production
ProtectionTradeoff
Total EarningsTotal JobsSWWYO Tax RevenueNet Resident Recreation Benefits
Relative impacts from the three scenariosRelative impacts from the three scenarios
Conclusions, research enhancements, etcConclusions, research enhancements, etc..NEPA has a tendency to put local communities in the middle of thNEPA has a tendency to put local communities in the middle of the e battlegroundbattlegroundThere needs to be a broader discussion of win There needs to be a broader discussion of win -- win ideas; compromise win ideas; compromise tends to be a long term unstable solution: a solution that everytends to be a long term unstable solution: a solution that everyone equally one equally despises.despises.
Policy issues:
Modeling Issues:
Incorporation and improvement of the fiscal impact modelingIncorporation and improvement of the fiscal impact modelingenhanced ecological modelingenhanced ecological modelingOthers?Others?
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