Star Tribune: Check the Methodology in Analyzing Arguments in Mining Debate
This article originally appeared in the Minneapolis Star Tribune.
Check the methodology in analyzing arguments in mining debate
Harvard economist omitted key jobs numbers in his analysis.
The Star Tribune Editorial Board recently urged voters to learn more about two recent analyses of the impact of nonferrous mining in northern Minnesota (“Competing visions of mining’s impact Sept. 2). One of these analyses was a personal letter to the U.S. Forest Service written by Prof. John Stock, a Harvard economist who was an adviser to the Obama administration. The other is a report titled “Unearthing Prosperity,” released by Center of the American Experiment, where I work.
We appreciate this opportunity to compare and contrast Professor Stock’s letter with our report. It is our belief that once Minnesotans examine these analyses in greater detail, they will find the methods used in “Unearthing Prosperity,” a 43-page report containing 126 footnotes, to be more rigorous and our conclusions more sound than the letter written by Professor Stock.
Minnesota has some of the largest undeveloped deposits of copper, nickel, platinum and titanium in the world. Our study found that developing these resources would add $3.7 billion to Minnesota’s economy every year and create more than 8,500 jobs. These numbers were obtained using the economic modeling software IMPLAN, considered to be the gold standard in the industry.
Among the jobs created are 1,902 high-paying mining jobs — direct jobs, as economists would say, with average wages of around $80,000 per year. Another 3,181 “indirect jobs” would be created by people supplying goods and services to the mining industry.
Because mining and support jobs pay high wages, IMPLAN estimates that 3,385 “induced jobs” would be created as these well-paid workers spend their paychecks in the broader economy on school supplies for their children, visits to the doctor’s office, eating at restaurants, and on tourism-related activities.
It is important for Minnesotans to understand that Professor Stock intentionally omitted induced jobs from his analysis. This is significant because high-paying mining jobs are able to support more induced jobs than tourism jobs paying $16,500 per year. It should come as no surprise that people with higher incomes have more money to spend in the economy.
Induced jobs are a crucially important component for understanding the entire economic potential of mining in our state and they should not have been omitted from Professor Stock’s analysis. By omitting these job numbers, the analysis is depriving Minnesotans of indispensable information needed to weigh the complete costs and benefits of mining copper, nickel, and titanium.
In addition to omitting important jobs numbers, the letter by Professor Stock assumes mining would result in a reversal of the projected growth in tourism in the Boundary Waters Canoe Area Wilderness. The letter assumes tourism would decline at a rate of 1.2 percent to 2.4 percent per year, or approximately 21.5 percent to 38.5 percent over 20 years, but provides exactly zero empirical evidence to support this assumption.
The footnote supposedly supporting this claim is a study published in 1996 examining population growth in two counties in northwestern Montana from 1969 through 1992. It is hard to imagine how a study from 22 years ago examining even older trends from only two counties in Montana would be applicable to mining in modern day Minnesota.
If our study was based on such dubious methodology, no one would take it seriously, and rightfully so.
The Stock letter does not even assume mining will harm the environment. This begs the question, why would anyone not eat in a restaurant, stay overnight in a motel, or go canoeing because an environmentally responsible mine is located 25, 50, or 100 miles away?
Our state has some of the strictest environmental regulations on mining in the world. With these strong environmental protections in place, our state can reap the enormous benefits from mining these copper, nickel, platinum, and titanium resources while enjoying a healthy outdoor economy.
Minnesotans have important decisions to make about our future, and these decisions will affect the livelihoods of 8,500 people for decades to come. It is of the utmost importance that people are not making decisions based on incomplete analyses employing suspect methodology.
Isaac Orr is a policy fellow at Center of the American Experiment ([email protected]).