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Tim Bradner: Studies mine some intriguing data concerning Pebble

Tim Bradner

The fur is flying again over the proposed Pebble copper and gold mine near Iliamna. Sunday is the deadline for comments on the U.S. Environmental Protection Agency's latest version of its "assessment" of the effects of a large mine in the Bristol Bay region.

I just stand back and watch all this, preferring to wait to pass judgment until companies planning the mine propose an actual project. EPA did not wait for that to do its assessment.

However, two recent new studies that touch on Pebble, one indirectly, are worthy of note, although they deal with economic rather than environmental values.

One is an assessment of the economic contribution of Bristol Bay's salmon industry done by the University of Alaska Anchorage's respected Institute of Social and Economic Research.

The work was sponsored by Bristol Bay seafood groups, who are not supporters of the mine. The overall conclusion, that the fishery generates $1.5 billion a year in value, was widely touted by its sponsors, their message being basically that anything threatening the fishery, like a big mine, is not good.

A month later came a study of Pebble's economic contribution, if it were built, by IHS Global Insight, a respected Colorado consulting firm. It estimates taxes paid, people employed and overall economic effects.

We can't really compare these studies but some interesting conclusions can be drawn. I'm not sure the Bristol Bay sponsors intended this but the ISER study also illustrates how much of the fishery's value and employment goes out of state.

We've always known there is a high non-resident participation in this fishery but ISER really spells it out. For example, of the $144 million direct economic impact of the fishery to the U.S. in 2010 (this is the important number, not the $1.5 billion annual sales value), $94 million went to non-residents and $50 million went to Alaskans. Of the value to non-residents, the bulk went to Washington state.

Alaskans did own 53 percent of the Bristol Bay salmon fishing permits in 2010, but most of them were setnet permits. Setnets typically catch fewer fish than drift gillnetters -- boats with permits, a majority of which are owned by non-residents. In 2010, residents caught only 42 percent of the fish overall, according to ISER.

I see nothing wrong with non-residents working in Alaska but we need to be honest in recognizing that this fishery is as much an economic engine for the Pacific Northwest as it is for Alaska.

Let's look at the potential mine: The IHS study estimates that Pebble, in production, based on a hypothetical mine plan, would employ about 2,700 full-time workers over several decades. While that's fewer than the 12,000 harvesting and processing jobs created in the Bristol Bay fishery in 2010, ISER also found only 4,400 of those were held by Alaskans.

Also, those jobs are all seasonal and the wages are far less, for most of those employed, than the $110,000 a year the mining jobs will pay, on average.

One of the IHS study's numbers that jumped out at me was Pebble's estimated tax contribution, which I hadn't seen previously. In its initial years, the mine would pay about $180 million in state and local taxes and royalties, IHS said. As the years go by, this should increase to about $350 million a year as deeper, richer ore is mined. That drives up the tax contribution because taxes and royalties are mostly based on the value of the resource.

These numbers are small compared to the several billion dollars a year in taxes and royalties paid by North Slope oil producers but the numbers aren't insignificant either.

And I don't believe we have to make an either-or choice; we can have the fishery and the mine. Claims that Pebble will wipe out the salmon remind me of environmental groups' predictions in the 1970s that the trans-Alaska oil pipeline would rupture and wipe out the caribou. It didn't happen, and I don't think Pebble will kill all the fish.

What's important also is that the commercial and sports fisheries don't do much for the villages in the Lake and Peninsula Borough, which are economically hard-pressed. Without jobs, those communities will die. Fisheries won't provide the jobs.

These economic studies are useful in framing the discussion over Pebble. We know intuitively that the Bristol Bay salmon fishery is an economic driver with an effect larger than the ISER study could adequately assess. It doesn't factor in the value of subsistence, for example. We also know the mine will become a similar economic engine, if it is built.

The studies were done by competent, respected people. Thanks to the groups that sponsored the work, we now have tools to better judge both the fishery and the possible mine. It will lead to a more informed, rational discussion on Pebble, and we badly need that.

Tim Bradner writes on business and economics topics for Alaska publications. From 1970 to 1984, he worked for BP, a major North Slope oil company. Some of that time was spent as a lobbyist for the company in Juneau.


Tim Bradner
Economy