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University of Minnesota Morris Digital Well University of Minnesota Morris Digital Well
University of Minnesota Morris Digital Well University of Minnesota Morris Digital Well
Undergraduate Research Symposium 2013 Undergraduate Research Symposium
4-2013
Natural Resources a Curse or a Blessing: Evidence from Williston, Natural Resources a Curse or a Blessing: Evidence from Williston,
ND ND
Alissa Melberg University of Minnesota - Morris
Follow this and additional works at: https://digitalcommons.morris.umn.edu/urs_2013
Part of the Agricultural and Resource Economics Commons, and the Growth and Development
Commons
Recommended Citation Recommended Citation Melberg, Alissa, "Natural Resources a Curse or a Blessing: Evidence from Williston, ND" (2013). Undergraduate Research Symposium 2013. 5. https://digitalcommons.morris.umn.edu/urs_2013/5
This Book is brought to you for free and open access by the Undergraduate Research Symposium at University of Minnesota Morris Digital Well. It has been accepted for inclusion in Undergraduate Research Symposium 2013 by an authorized administrator of University of Minnesota Morris Digital Well. For more information, please contact [email protected].
Presented By: Alissa MelbergAdvisor: Bibhudutta Panda
April 20, 2013
United States North Dakota
Unemployment Rate 8.3% 3.6%
Real GDP 0.39 6.33
Real GDP per capita -0.52 5.31
*Five period averages expressed as a percentage
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cru
de
Oil
Pro
du
ctio
n (
in m
illi
on
s)
Year
Crude Oil Production in North Dakota
0
20
40
60
80
100
120
140
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Dri
llin
g R
ig C
ou
nt
(ave
rag
e n
um
be
r p
er
da
y)
Year
Drilling Rig Count in North Dakota
Information on Williston Literature Review Data on various aspects Concluding remarks
Located at the heart of the Bakken Shale deposits
County seat for Williams county
Oil discovered in 1951 on Clarence Iverson Farm
Drilling became intensive but slowly died off by the 1980’s
Realized that there was 11 million barrels of oil sitting under the ground that were inaccessible
Post 2007 oil production was in full swing again Two processes contributed to the sudden surge
Hydraulic Fracturing
Horizontal Drilling
CROSS-COUNTRY EVIDENCE
Gylfason (2000) Sachs and Warner (2001) Dutch Disease
REGIONAL EVIDENCE
Gunton (2003) 2 Main Theories
▪ Competitive Advantage Theory
▪ Forward Linkages
▪ Final-Demand Linkages
▪ Dependency Theory
DATA COLLECTION
North Dakota Workforce Intelligence
Bureau of Economic Analysis
Census Data American Community
Survey Bureau of Labor Statistics Williston Economic
Development Center
EMPIRICAL ANALYSIS
Empirically draw inferences about the Comparative Advantage and Dependency theories found in the literature
Population Growth
Area 2000-2007 2007-2011
United States 1% 1%
North Dakota 0.2% 1%
Williston 1% 4%
*Numbers reflect annual percentage change
Several Linkages to test for in data
▪ Forward Linkages
▪ Backward Linkages
▪ Final-Demand Linkages
New Hires Average Establishments
Industry 2000-2007 2007-2011 2000-2007 2007-2011
Mining 11% 51% 5% 20%
Utilities 11% 44% NA 10%
Construction 13% 57% -3% 17%
Manufacturing 3% 15% -1% -0.8%
Transportation 10% 64% 6% 35%
*Numbers reflect annual percentage change
Growth Rate in Real Wage for Williams County
Industry 2000-2007 2007-2011
Mining 21% 37%
Utilities NA 22%
Construction 14% 38%
Manufacturing 11% 10%
Transportation 13% 42%
*Numbers reflect annual percentage change
Test the following economic indicators in industries not directly related to mining:
▪ New Hires
▪ Average Establishments for Each Industry
▪ Real Average Yearly Wage
New Hires Average Establishments
Industry 2000-2007 2007-2011 2000-2007 2007-2001
Retail Trade 3% 18% -2% 0%
Real Estate 18% 35% 3% 16%
Agriculture 4% 5% NA NA
Wholesale Trade 6% 41% 2% 10%
Information 0% 0% -1% 1%
Finance 0% 6% 0% 10%
Professional Services 9% 30% 7% 11%
Administration -12% 37% 1% 6%
Educational Services 1% 5% -2% 6%
Health Care 2% 9% 2% 2%
Arts and Recreation -4% 6% NA -2%
Accommodation Services 3% 25% -1% 6%
*Numbers represent annual percentage change
Growth Rate in Real Wage for Williams County
Industry 2000-2007 2007-2011
Retail Trade 3% 14%
Real Estate 20% 37%
Agriculture NA NA
Wholesale Trade 11% 38%
Information 2% 5%
Finance 3% 8%
Professional Services 15% 24%
Administration 3% 23%
Educational Services 2% 5%
Health Care 2% 5%
Arts and Recreation NA 2%
Accommodation Services 4% 24%
*Numbers represent annual percentage change
0
200
400
600
800
1000
1200
Nu
mb
er
of
Bu
ild
ing
Pe
rmit
s
Year
Number of Building Permits Given
0
200
400
600
800
1000
1200
1400
1600
1800
2010 2011 2012 2013
To
tal H
ote
l Ro
om
s
Year
Number of Hotel Rooms in Williston
Data shows evidence of the following linkages:
▪ Forward
▪ Backward
▪ Final-Demand
Dependency Theory
Too short term to know exactly what will happen
Data does not support it at this time
Dutch Disease
Overheating of the economy
Ultimately will hurt development of the region
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
2005 2006 2007 2008 2009 2010 2011 2012
To
tal R
en
t fo
r O
ne
/Tw
o B
ed
roo
m A
pa
rtm
en
ts
Year
Williston Rent Inflation
Several other social indicators that are important in showing the economic growth of Williston include the following:
▪ Growth of Williston in Acres
▪ Health
▪ Crime Rates
▪ Environmental Concerns
0
2000
4000
6000
8000
10000
12000
14000
2003 2006 2009 2010 2011 2012 2013
Acr
es
pe
r S
qu
are
Mile
s
Year
Growth of Williston in Acres
0
50
100
150
200
250
300
350
400
450
500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total Crime Index Offenses
Only two hospitals in Williston▪ Trinity Health – 6 physicians
▪ Mercy Medical – 4 physicians
Increased population may require more doctors and health care facilities
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
Williston District 1 Enrollment Rates
New drilling processes create brine More than 1,000 accidental oil spills in the last
year of production Releases of the chemicals cause harm to:
▪ Streams
▪ Wetlands
▪ Farmland
▪ Drinking Water
There is a strong evidence for Comparative Advantage Theory
▪ Whether this is sustainable or not only time will tell
Data does not support the Dependency Theory argument
Increased wage rates and prices provide some precursor to Dutch disease effect which might affect small business in long run
Socioeconomic issues need to addressed
"American Community Survey." United States Census Bureau. N.p., n.d. Web. 24 Mar. 2013. <http://www.census.gov/acs/www/>.
Boyd, D. "Oil Boom Creates Infrastructure Needs." The American Oil and Gas Reporter(2011): n. pag. Print.
Chambers, William T. "Kilgore, Texas: An Oil Boom Town." Economic Geography 9 (n.d.): 72-84. Web.
"City of Williston, North Dakota - Department Information." City of Williston. N.p., n.d. Web. 24 Mar. 2013. <http://www.cityofwilliston.com/DepartmentContent.aspx?DeptID=WND.CW.BNP>.
Clouser, Rodney. "The Economic Impact of Agriculture and Natural Resources in Volusia County, Florida." IFAS Extension Florida University (2005): 1-8. Web.
"Crime Homicide Reports." North Dakota. N.p., n.d. Web. 24 Mar. 2013. <http://www.ag.state.nd.us/reports/bcireports/crimehomicide/crimehomicide.htm>.
"Data on Various Economic Indicators." NDWIN - North Dakota Workforce Intelligence Network. N.p., n.d. Web. 24 Mar. 2013. <https://www.ndworkforceintelligence.com/>.
"ELSI - Elementary and Secondary Information System." National Center for Education Statistics. N.p., n.d. Web. 24 Mar. 2013. <http://nces.ed.gov/ccd/elsi/tableGenerator.aspx>.
Gunton, T. "Natural Resources and Regional Development: An Assessment of Dependency and Comparative Advantage Paradigms." Economic Geography 79 (2003): 67-94. Web.
Gylfason, T. "Natural Resources, Education, and Economic Development." Paper Presented at the 15th Annual Congress of the European Economic Association (2000): n. pag. Web.
Holeywell, Ryan. "North Dakota's Oil Boom Is a Blessing and a Curse." North Dakota's Oil Boom Is a Blessing and a Curse. N.p., Aug. 2011. Web. 24 Mar. 2013. <http://www.governing.com/topics/energy-env/north-dakotas-oil-boom-blessing-curse.html>.
Ismail, K. "The Structural Manifestation of the ‘Dutch Disease’: The Case of Oil Exporting Countries." International Monetary Fund Working Paper 10.103 (2010): n. pag. Web.
James, Alex, and David Aadland. "The Curse of Natural Resources: An Empirical Investigation of U.S. Counties☆." Resource and Energy Economics (2010): n. pag. Print.
Kelsey, Timothy W. "Economic Impacts of Marcellus Shale in Bradford County: Employment and Income in 2010." Marcellus Shale Education and Training Center (2012): 1-21. Print.
Key, James. "The History of Oil in the Williston Basin." Rockin' the Bakken - Oil In Williston. N.p., n.d. Web. 24 Mar. 2013.
MacPherson, James. "Williston, North Dakota Oil Boom Comes With Wealth, Worries." The Huffington Post. TheHuffingtonPost.com, 22 May 2012. Web. 24 Mar. 2013.
"North Dakota WIB Pivot Reports." Longitudinal Employer-Household Dynamics. N.p., n.d. Web. 24 Mar. 2013. <http://lehd.ces.census.gov/>.
Sachs, J. D., and A. M. Warner. "The Curse of Natural Resources." European Economic Review 45 (2001): 827-38. Print.
"State and County QuickFacts." United States Census Bureau. N.p., n.d. Web. 24 Mar. 2013. <http://quickfacts.census.gov/qfd/index.html>.
"Williston Area Development Foundation." Williston Area Development. N.p., n.d. Web. 24 Mar. 2013. <http://www.willistondevelopment.com/>.
Thanks to Professor Panda for all the help that he provided throughout the year.
Any Questions???