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The economic hangover of sulfide mining

Too often, the issue copper sulfide mining in northeastern Minnesota is overly simplified as a debate between those who want to see economic development in the area and environmentalist who want to keep northeastern Minnesota in a pristine, natural condition.

It’s not that simple.

There are many reasons to keep sulfide mines from opening in Minnesota. One of the big reasons is that these mines would hurt the economy of the region.

Forget all emotional appeals to why we need wilderness. Throw out your sentimental attachment to birch trees, to granite shoreline and thousands of miles of cold, pristine waters. Based on numbers, on cold analysis and projections, opening sulfide mines in the Superior National Forest would be detrimental to the economy.

The long-term economic impact of mining

This month, a study out of Harvard University analyzed two different cases concerning the proposed 20-year moratorium on mining and mineral leases on 234,328 acres of federal lands within the Superior National Forest. This is commonly known as “the withdrawal.”

In the first case, the proposed withdrawal is put in place. In the second scenario, sulfide mining is allowed in the Superior National Forest.

The conventional story many have been led to believe is that mining would produce more economic growth. It would make the region rich.

It would make some people rich, but not the people who live in the region. Or the state.

By looking at these three factors:

  • Employment and income generated by mining 
  • Employment and income generated in the outdoor recreation industry
  • Income associated with in-migration, that is, people moving to the area because of its natural beauty, etc. (its “amenity value”)

The researchers arrived at three main conclusions:

  1. Mining would bring an initial, but short-term growth in employment and income associated with mining activity. Over time, these initial benefits would be outweighed by the negative impact mining would have on the recreational industry and on in-migration. This would lead to a boom-bust cycle that would leave the region worse off economically than it would be under the withdrawal.
  2. Economists examined 72 different income scenarios, representing a range of growth parameters consistent with historical data, previous studies of the region and the academic literature. All scenarios point to the boom-bust cycle of employment and income. In 69 of the 72 income scenarios they considered, the withdrawal of mining from the area would lead to higher incomes than if mining were permitted, in many cases by a large margin.
  3. Their findings are consistent with the academic literature on boom-bust cycles in extractive industries and the literature on the value of outdoor recreational amenities to regional economies.

The wilderness economy is a strong economy

It can be hard to convince people of the value of wilderness. It can be difficult to convey just how important clean water is. Such appeals usually hit the wall of “jobs, jobs, jobs.”

Protecting northern Minnesota from sulfide mining is about protecting jobs.

As more research comes out and more people take a technical look at the economic value of wilderness, it’s apparent that supporting wilderness is supporting a strong, stable economy. As the authors conclude:

We find that, over the 20-year time horizon of the proposed withdrawal, introducing mining in the Superior National Forest is very likely to have a negative effect on the regional economy. Our calculations omit some factors, notably the negative effect of mining on real estate values, that would strengthen this conclusion. We reviewed the relevant literature and conclude that our findings are consistent with the literature, most notably the history of boom-bust economies associated with resource extraction that leave the local economy worse off. We encourage the U.S. Forest Service to consider carefully the full economic effects of the proposed withdrawal over the entire 20-year period included in the proposal.