ECONOMIC AND ENVIRONMENTAL IMPACTS OF THE GOGEBIC
TACONITE MINE
Aleksei Bogdanov and Zamira Simkins, PhD
2013 Wisconsin Economic Association Annual Meeting
IntroductionGTAC iron ore mine proposal:• Open pit mining: est. 8 mill tons/year for 35 years• Taconite plant: less than 30% iron in ore → enrichment • Waste disposal: est. 3 tons of ore = 1 ton of taconite pellets
Public controversyEconomic benefits (NorthStar Economics, 2011):• Economic impact study: 12 counties, IMPLAN model• 700 mining jobs, average labor income of $82,984 per year
• Est. total payroll: $59.5 mill per year• $17 mill in total state & local tax revenue per year• Total impact (direct, indirect, induced): $604 mill per year
Environmental and other concerns:• Water quality (acid mine drainage)• Air quality (asbestos-like fibers)• Flora & fauna (e.g., wild rice)• Livable communities• Infrastructure, tourism, etc
Undergraduate research projectObjective:• Assess the potential economic and environmental impacts of the
GTAC mine on Ashland and Iron counties
Methodology:• Literature review (Murdoch, 2007; Carter, 2012; etc)
• Mining is a boom and bust industry• Economic impact study
• Comparative analysis of similar mines supports NorthStar Economics economic impact study results
• Interviews: local businesses; no response from GTAC• Environmental impact study
• Public survey
Public survey: Methodology• 20 questions: 5 mandatory target questions, 15 supplemental• Institutional Review Board approval• Survey launched July 16, 2013; closed August 19, 2013• Survey samples:
(1) Self-reported: Ashland Daily Press disseminated a link to online survey anyone could complete
(2) Random: Ashland and Iron county households were randomly selected based on infofree.com database records and contacted by phone
• Qualtrics – survey administration & data management website
Public survey: Data issues• Self-reported survey: N = 862
• Self-selection error → biased results• Random survey: N = 102
• Sample-frame error - only households with phones surveyed• Non-response error: 51% response rate → 49% no response• Small sample-size error:
• 9.65% margin of error at 95% confidence level• If N > 370, 5% margin of error at 95% confidence level
• Results are a good proxy of the public’s view on the mine but may not fully represent the entire population
Public survey: Random sample results• Respondents reported good knowledge and understanding of
the mine: mean 7/10 • Most respondents opposed the mine: 44.12% “absolutely
opposed” and 17.65% “generally opposed” it• Most respondents believe the mine would have a “mostly
negative” impact on local transportation infrastructure, “only negative” impacts on the environment, and a “somewhat positive” impact on the local economy, businesses, and employment opportunities
• When asked if they would be interested in working at the mine, 66.34% answered “absolutely not” and 19.80% “most likely not”
• Ashland and Iron counties do not have the necessary supply of mining workers to meet the mine’s potential demand for labor
Public survey: Key results
Ashlan
d cou
nty,
WI
Iron c
ount
y, W
I
Bayfie
ld co
unty
, WI
Dougl
as co
unty
, WI
Fores
t cou
nty,
WI
Gogeb
ic co
unty
, MI
Iron c
ount
y, M
I
Oneid
a cou
nty,
WI
Price c
ount
y, W
I
Sawye
r cou
nty,
WI
Vilas c
ount
y, W
I
Was
hbur
n cou
nty,
WI
Other
WI c
ount
y
Other
MI c
ount
y
Other
MN co
unty
Other
state
0
10
20
30
40
50
60
15
8
13
40
30
31 1
7
0
38
2 24
53
47
Percent of respondents by county and state
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
3 3 3
23
3 2
12
4 31
13
4
1 23 4
2 20 0 0
11
43
5
12
43
9
5
20
9
34
3
10
5
12
0 0 0
18
Percent of respondents by industry of employment
Self-selected sample Random sample
Public survey: Key results
Mean
Standard deviation
0 1 2 3 4 5 6 7 8 9
7.72
2.02
7.02
2.39
Self-rated knowledge of the mine (0 if no idea, 10 if excellent)
Random sample
Self-selected sample
Public survey: Key results
Fully support it Generally support it
Neutral Generally oppose it
Absolutely oppose it
0
10
20
30
40
50
60
70
80
11
3 2
12
73
1114 14
18
44
Percent of respondents by their position on the mine
Self-selected sample
Random sample
Public survey: Key results
Absolutely Most likely Maybe Most likely not Absolutely not0
10
20
30
40
50
60
70
80
90
2 15
11
81
2 3
9
20
66
Percent of respondents rating their interest of working at the mine
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
30
10
5
19
17
11
24
13
11
16
28
20
8
16
2
Public views on the economic impact of the mine, % of respondents
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
30
10
6
2120
14
18
1110
16
28
22
12 12
1
Public views on the local business impact of the mine, % of respondents
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
30
11
5
21
25
11
17
11
15 15
28
19
1110
3
Public views on the employment impact of the mine, % of respondents
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
30
35
11
4
17
31
11
15
1113
14
21
31
8
11
3
Public views on the labor earnings impact of the mine, % of respondents
Self-selected sample
Random sample
Public survey: Key results
0
5
10
15
20
25
30
35
40
5 56
1211
23
38
45
1819
2123
12
Public views on the transport infrastructure impact of the mine, % of respondents
Self-selected sample
Random sample
Public survey: Key results
0
10
20
30
40
50
60
70
5 42
6 4
16
63
1 0
4
31
13
28
23
Public views on the tourism impact of the mine,% of respondents
Self-selected sample
Random sample
Public survey: Key results
0
10
20
30
40
50
60
70
80
90
5 31
42
7
78
02 1
25
15
24
33
Public views on the environmental impact of the mine, % of respondents
Self-selected sample
Random sample
Conclusion• GTAC mine promises significant economic benefits• Local area does not have a sufficient supply of mining workers
to meet the mine’s labor demand• Low concentration of iron in ore makes the mine vulnerable to
commodity price fluctuations• Public strongly opposes the mine • Public’s environmental concerns to be addressed in
environmental study