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Thinking About Alaska’sRemote Economies
Prepared for
Village Management InstituteJune 2003
Steve ColtInstitute of Social and Economic Research
University of Alaska Anchorageemail [email protected]
Our Fragile Alaska Economy: Real Income Growth Since 1990
$813
$251
$78
- $500 $0 $500 $1,000$1,500$2,000$2,500$3,000
Millions of 1998 $
LABORINCOME
INVESTMENTINCOME
GOVTTRANSFERS
(INC PFD)
Changes in “Basic” Jobs during 90s
1,810
5,080
1,390
2,340
380
4,600
890
420
-6,000 -4,000 -2,000 0 2,000 4,000 6,000
TOURISM
AIR CARGO
SEAFOOD
MINING
OIL AND GAS
TIMBER
FED CIVILIAN
MILITARY
Key Features of the Economy of “Rural-Bush Alaska”
(Marshall / Rogers 1999)
• Alaska Natives in the majority• Lack of Agriculture• Mixed cash /non-cash economy
• For these reasons, models from Lower 48 may not work….
Other Key Elements of Alaska’s Remote Economies
• Off the highway network• Off the utility grid• Difficult environmental conditions• (For some --) Far from ocean
transport• (For some --) Not well connected to
Internet
Example: Fuel Cost per kWh: Anchorage vs. Remote Alaska
2
9
0
2
4
6
8
10
cent
s pe
r kW
h
Anchorage high-wind communities
Still Other Key Elements of Alaska’s Remote Economies
• Part of the United States economy• Part of the global economy• Part of the United States
Alaska looks more like US over time
Employment Mix by Census Class of Worker
0%
20%
40%
60%
80%
100%
AK 1990 AK 2000 ANC-MatSu
US 2000
Self
Govt
Private Wage
• But,• Remote Alaska does not look more
and more like Urban Alaska
Change in W&S Employment during 1990s
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Urban Maritime-non-
native
Maritime-mixed Maritime-
Native
I nterior-
Native
Wage and Salary Employment
Remote Alaska vs. Entire Alaska
Alaska Economic Trends October 2000
Remote Alaska vs. Average Alaska
Alaska Economic Trends October 2000
Remote Alaska is Different
There are Many remote economies!
• Maritime Alaska• Interior Alaska• Southeast Alaska• North Slope Borough
Wage and Salary Employment
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Anch Alaska POW Wade-Hamp
other
trade svcs
govt
Maritime Alaska – A Fading Star?
(Closed Ward Cove Cannery, Craig)
Our Fragile Economy:Farmed salmon dominates world
marketsWorld Salmon Supply
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
thou
sand
s of
met
ric
tons
Other Wild
Alaska
Farmed
Value of Alaska salmon is down
Wholesale Value, Ex-Vessel Value, & Processing Margin After Adjusting for Inflation: All Alaska Salmon
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
1600.0
1800.0
Note: "Processing Margin" = First Wholesale Value - Ex Vessel Value
FirstwholesalevalueEx-vesselvalue
Processingmargin
Shifting Exports in Southeast
OK, So What?
• How can village leadership respond to these challenges?
• Will the future be like the past?
Capitalizing on What’s Different
• Local knowledge of wild places• Capitalizing on government• Matching people to jobs
– Utility operators
• Capitalizing on Infrastructure Needs
• (?) Exporting human resources
Why do People Visit Alaska
Why do People Live in Alaska?
Bristol Bay Wildlife Refuges:20,453 visits (1996)
fishing hunting vis. Ctrs other
Bristol Bay Wildlife Refuges:$2.4 million visitor expenditure
(1997)
sportfish sport hunting
incidental nonconsumptive
Visits
Expenditures
fishing hunting vis. Ctrs other
sportfish sport hunting
incidental nonconsumptive
Bristol Bay NWRs
Capturing the Value from Tourists
• The Potential:– Average AK $ per person per trip?– $1,258 in 2001– Of which, how much on gifts/souvenirs?– $119– how much on Alaska Native arts/crafts?– $92– How much on clothing?– $58
Capitalizing on What’s Different
• Stewards of wild places• Capitalizing on government• Matching people to jobs
– Utility operators
• Capitalizing on Infrastrcture Needs• (?) Exporting human resources
Three Kinds of Infrastructure:
• Physical – generators, wind turbines, roads, schools
• Human Capital – people with the right skills in the right place at the right time
• Social Capital – communities and utilities that work together to sustain the electric system
• All three are worth investing in!
A Critical Point about Physical Infrastructure:
• Capital cost usually paid by others,– but,
• O&M cost usually paid by local people– So, Key question:
• Does this new infrastructure decrease or increase the O&M cost and/or general cost of living?
Two Types of Infrastructure: Example
• New Swimming Pool– Could cost $30,000 per yr to heat
• New Wind Generators– Could reduce the cost of diesel fuel
Rural Projects and Jobs
• Much or most rural project money flows immediately to urban areas
• Example (weatherization):• About 75% of weatherization
project dollars flow to urban areas. (weatherization)
Capitalizing on What’s Different
• Local knowledge of wild places• Capitalizing on government• Matching people to jobs
• Utility operators
• Capitalizing on Infrastrcture Needs• (?) Exporting human resources
Are you willing to export people?
• This is a social question– However,
• There is a tradeoff – projects that support a place may be different from investments that develop human skills and potential…..
• This is a very tough question facing remote places today
We’re all in this together.
www.iser.uaa.alaska.edu