The Broome County StudyPosted: August 14, 2011
By Harriet Russell
A study commissioned by Broome County, “Potential Economic and Fiscal Impacts from Natural Gas Production in Broome County, New York”, fails to adequately address a number of factors that must be carefully considered in order to make informed decisions regarding gas drilling in Broome County.
The analysis does not appear to take account of the economic cost of building and repairing infrastructure due to the wear and tear on the roads, public buildings and other structures. This can be a significant expense for rural towns. The “River Reporter” indicated that as a result of the Millennium Pipeline, the small Sullivan County town of Cochecton suffered road damage in excess of $1million, a large sum for such a small town, with population of only 1328 (as of the 2010 Census). While the Millennium Pipeline followed a single path, multiple well sites spread throughout a town could have an even more devastating impact on infrastructure.
The analysis does not address the cost of mitigation as a result of environmental damage, including but not limited to drinking water contamination and fish kill. The Community Science Institute of Ithaca, New York, estimated that anywhere from 1 to 5% of water wells that are in the vicinity of gas wells will become contaminated. The Penn State Cooperative Extension put the figure at 8%.
While the study touts the use of input-output models, and such models are typically used to estimate economic impacts (including direct, indirect and induced impacts), these models do not capture economic impacts that result from environmental damage or natural resource use, so the positive economic impacts estimated in this analysis of Broome County are, at the very least, exaggerated. The actual net economic impact may, in reality, be negative.
Full economic costs to the region, such as the potential for a decline in property values and an increase in health costs, are not reflected. In fact, the assumption in this report seems to be that property values will increase. It is quite possible that the reverse would occur as many well workers are transient and non-permanent, and existing residents may be driven out due to an increasingly industrial landscape. Far fewer retirees will choose to settle and second home- owners would certainly be vastly reduced in number. Another negative impact on property values is the recently publicized fact that mortgages may not be available for leased land or even for land that is nearby leased land. A thorough study would also try to identify how many of the drillers are multinationals who do not pay full income tax rates in the States.
Declines in other industries are not reflected in the net economic impact. The tourism industry would be negatively affected, as well as the sport hunting and sport- fishing industries, due to both the declining natural beauty of the area, increased environmental damage, and the potential declines in fisheries and wild game.
The analysis focuses on a 10-year horizon that seems to be the expectation for gas extraction in the Marcellus Shale, and it ignores the longer term. This is a myopic view. What happens to the regional economy when the gas is gone in 10 years and the land and streams, etc. are polluted?
The analysis uses the IMPLAN input-output model, which by its construct assumes that all of the population (new and old, and low income and high income) would have identical patterns of spending. Such an assumption overestimates the multipliers and the resulting economic impact if the new employees are part-time residents or have their families staying in other areas, which is not uncommon for gas drilling workers. Several important and potentially negative economic impacts are not directly quantifiable, but this makes it even more important to be sure that they have been considered as carefully as possible.
It is important to postpone any decision-making regarding gas drilling in Broome County until all of the potential environmental AND economic impacts are considered.
It is interesting to note that The Broome County Legislature adopted an Agricultural Economic Development Plan in December, 2001. It was prepared by Cornell Cooperative Extension of Broome County and the Broome County Department of Planning and Economic Development with the help of Shepstone Management Company.
Three sections (Sections 13\.3, 1.6. and 1.10) taken directly from the Agricultural Economic Development Plan for Broome County are provided below to show the inconsistencies between encouraging gas drilling for economic development and the economic development plan that Broome County had already adopted in order to preserve the pristine environment while at the same time enhance economic development.
1.3 Income from agriculture goes further than other sectors in helping the economy.
Agriculture produces much higher economic multipliers than any other sector of the Broome County economy. A report entitled “Economic Multipliers and the New York State Economy,” (Policy Issues in Rural Land Use, Cornell Cooperative Extension, December 1996) indicates dairy production, for example, enjoys a 2.29 income multiplier compared to 1.66 for construction, 1.48 for services, 1.41 for manufacturing and 1.40 for retail and wholesale trade. Crops produce a multiplier of 2.28 and nursery and wood products yield 1.78 times sales. Applying these multipliers indicates agriculture represents a total contribution to the economy of approximately $55,000,000, not including forestry enterprises, many of which take place on farms and all of which are part of agriculture.
1.6 Farms create rural character and attract tourism.
Farms contribute to Broome County’s rural character and protect open spaces essential to the quality of life for both permanent and seasonal residents. Any number of surveys of rural residents and second-home dwellers indicate the primary reasons people live in such areas have to do with their appreciation of the natural resources and open spaces offered, but the anecdotal evidence is perhaps even stronger and local tourism brochures provide examples. They include references not only to the County’s recreational opportunities but also its “scenic beauty.” They also speak of the “quiet valleys,” ” enchanting villages” and “quiet country settings” throughout the County as attractive features for visitors.
These facets are directly created by working farm landscapes in many instances. They help support some 217 bed and breakfast rooms offered throughout the County. There is, indeed, a direct relationshipbetween farming and the attractiveness of Broome County as a place to both live and visit.
1.10Farmland is an invaluable resource for future generations.
Farmland is a valuable future resource for the County in providing for a healthy and plentiful local supply of food products and generating new sources of farm income.
Urban residents of the County, as well as visitors, are seeking locally grown fresh fruits, vegetables and flowers, both organic and non-organic. A local organic pork producer also markets products over the Internet. The presence of five operating farmers markets (Binghamton, Deposit, Endicott, Johnson City and Vestal) in the County demonstrates just how important this activity is.
It is clear that gas drilling would have a devastating effect on the agricultural, sporting and tourism industries in Broome County. If Broome County legislators encourage gas drilling, then they will be working counter to their economic development plan.