4 posts from September 2012

Minnesota’s lakes: More impaired, but don't be afraid to jump in

In the land of 10,000 lakes, the Minnesota economy has a unique relationship to water that is widely used for fishing, general recreation and even moving goods to market. So it raised some eyebrows when the state announced that more than 600 bodies of water were added this year to its list of impaired lakes and rivers.

But before the “ick” factor makes you put away that canoe, or pull the kids from their favorite swimming hole, it helps to get the background story. Turns out that the measure is more building block than condemnation—a work-in-progress assessment for preserving one of the state’s most valuable natural resources.

Since the mid-1990s, the federal government has required states to assess their water quality. Since then, the number of impaired bodies of water—those that don’t meet various federal water quality standards—has risen steadily and now stands at more than 3,600 (see chart). A map shows that these impaired water bodies are widespread (see map).

MN impaired lakes CH1 -- 9-28-12  MN impaired lakes map -- 9-28-12

While this might not be “good” news for boaters and anglers, neither is it necessarily cause for great concern, according to officials with the Minnesota Pollution Control Agency, which puts the list together. The state has an incredibly large amount of water—92,000 miles of streams alone—and the growing impairment numbers “are indicative of our growing monitoring efforts,” said David Christopherson, who does environmental reporting and special studies for the agency’s water division.

Water bodies make the list if they exceed any number of water quality standards, like turbidity (excessive sediment), eutrophication (too much nutrient, often phosphorous from farm run-off), presence of fecal coliform or a host of other standards. In putting together its biennial impairment report, the agency “uses all available data” from internal and external sources with information about any of the state’s water bodies. As a result, the data are neither comprehensive nor systematic; given that the list comes from a partial assessment, it’s not even a random sample that could be considered scientifically representative.

The list also is highly sensitive to evolving standards for water quality. For example, a huge spike in listings in 1998 was the result of a first-time federal advisory on mercury and fish consumption, and mercury impairment is by far the biggest source of listings. Christopherson added that the state will be applying additional nutrient standards in the near future, “and I would expect to see a big jump (in impairments) then too.”

As a result, he said, “I don’t think (the impairment list) gives us much indication of overall water quality” in the state. Instead, Christopherson said the impairment list is more like a slow-growing benchmark that will give policymakers and others the data necessary to develop a more comprehensive approach to improving and maintaining water quality. “This is a primary driver in terms of what we’re doing” to improve water quality. “Once they get on the list, we have to deal with them.”

He acknowledged that “there are a lot of water quality issues out there. It’s a big issue and will take a long time to address … (but) I don’t think anyone here is particularly surprised” by the growing list of impaired lakes and rivers. The agency generally believes that about 40 percent of water bodies could stand some improvement, and the list “matches what we’ve been finding for years and kind of expected. A lot of other (states) are worse.”

The biggest trophy: Out-of-state hunters and anglers

A new U.S. Fish and Wildlife survey shows that district states have a unique profile when it comes to wildlife recreation, particularly when it comes to economic activity resulting from the great outdoors.

The survey, conducted every five years, measures participation in and expenditures for hunting, fishing and wildlife watching (observing, photographing and feeding wildlife; includes those who do it from home or nearby). Almost across the board, Ninth District states have higher than average rates than the nation as a whole—maybe not surprising given the natural assets and wide-open spaces in each state (see Chart 1).

Those activities bring with them considerable revenue, and the more who come for the outdoors, the higher the returns. Spending per participant in most district states is very consistent with the national average of about $1,500. But South Dakota and (especially) Montana are exceptions, seeing significantly higher spending by participants (see Chart 2, right bars). With high participation and high average spending by those participants, those states see almost quadruple the in-state spending on a per capita basis (see Chart 2, left bars).

  Hunting Ch1-2 -- 9-19-12

The large majority of those revenues are generated by hunters and anglers, despite the fact that there are considerably more wildlife watchers in most states (Minnesota and South Dakota are exceptions). Across district states, the average hunter/angler spends two to five times more than the average wildlife watcher (see Chart 3, at bottom).

But more fundamentally, high participation rates and expenditures are driven by nonresidents, who tend to spend more money than residents on travel, accommodations, food, equipment and other needs. For example, Montana has high rates of nonresident hunters (31 percent) and anglers (30 percent) who come to find big game and to fish world-famous trout streams in the Rocky Mountains. Montana also sees much higher spending from nature watchers—double the average of most other district states—again, often attracted from other states to the natural splendor of the Rockies.

South Dakota has exceptionally high rates of nonresident hunters (53 percent) and anglers (42 percent) as well, many of whom come to hunt pheasants throughout the state and to fish walleyes and other species in the cavernous Missouri River reservoir system, among the largest freshwater bodies in the world. Though the state has the highest rates of nonresident participation in the district, the relative accessibility of good hunting and fishing spots in South Dakota likely helps keep a lid on nonresident spending, at least compared with a trip to Montana’s Rockies.

The survey is done to benefit natural resource and conservation agencies, academic researchers and wildlife related recreation industries, which use the information to estimate demand and identify recreation trends. The methodology used for this survey changed from previous versions, according to the agency, making current results incomparable with previous surveys.

Hunting Ch3 -- 9-19-12

The efficiency of energy efficiency programs

Everyone knows a penny saved is a penny earned. The environmental adaptation: A penny not spent on power is a penny earned and a carbon unit saved. More utilities (and their government regulators) are using that mantra to encourage investments in energy efficiency so that households and businesses will be convinced to sip rather than guzzle power to save money on monthly bills and lessen their carbon footprint.

A recent report on Minnesota’s utility-based Conservation Improvement Program shows that much more is being spent on energy efficiency projects. The amount of electricity saved by CIP more than doubled to 900,000 megawatt hours (MWh) between 2006 and 2010. But efficiency expenditures—paid for by all ratepayers—went up in roughly equal proportion (see Chart 1), which suggests that there have not been any returns to scale in terms of efficiency gains. In fact, on a per MWh basis, electricity savings have come at slightly higher cost in 2010 ($207) compared with 2006 ($200). (Carbon emission reductions mirror energy savings over time because they are estimated by formula. One MWh of electricity savings equals 0.9 tons of CO2 savings on average.)

  EE in CIP CH1 -- 9-13-12

The increase in CIP costs stems from a change in state policy, which shifted from an expenditure requirement to an energy-savings requirement that is equivalent to 1.5 percent of a utility’s annual retail sales, according to the Minnesota Department of Commerce, in response to questions from the fedgazette. This change also offers one explanation why efficiency programs, in aggregate, have not become more cost effective over time in a nominal sense.

To meet higher levels of energy savings, the agency pointed out, utilities have had to create new programs and eliminate others that were not cost effective. They’ve also had to increase some incentives and invest in outreach activities and program measurement, all of which costs money. New efficiency programs are typically less cost effective than legacy programs (like residential lighting), but the agency expects these to become more cost effective over time.

Also notable, individual utilities vary widely on the average cost of their efficiency investments in a given year (see Chart 2). Size has little to with the variation, with the exception that small utilities had both the highest and lowest average CIP costs on a per MWh basis.

EE in CIP CH2 -- 9-13-12

The Commerce Department said there were several likely reasons for the disparity. For example, utilities have different customer and consumption bases (what the industry calls “load profile”). Efficiency projects at commercial and industrial users—who typically consume much more energy—are usually more cost effective than residential projects (whose users are small and dispersed). “So utilities with high residential loads may have to spend more to achieve the same savings,” the agency said.

Utilities also charge different power rates, and those with low electricity costs might have to offer higher incentives to convince users to pursue efficiency projects. Utilities can similarly vary in their experience and ability to promote and execute efficiency programs. Those with a “high level of engagement with its CIP programs” are typically more cost effective, according to Commerce.

But back to those pennies: While costs for energy efficiency projects are borne on an annual basis, energy savings accrue over a number of years. Agency guidelines suggest a weighted average payback period of 15 years or less for individual efficiency projects to be worthwhile. With average electricity costs at roughly $85 per MWh, none of the 2010 projects (in aggregate, at the utility level) faces more than a 10-year payback, and most have payback schedules of about one to five years.

District manufacturing sees solid job uptick in 2011

In an otherwise lackluster year for employment, job growth in manufacturing last year was generally robust and widespread across the Ninth District.

Among the district’s 303 counties, total manufacturing employment grew a shade over 3 percent in 2011. The strongest growth was in North and South Dakota (4.7 and 5.6 percent, respectively). But there aren’t many obvious localized patterns, save for generally positive employment growth.

For example, just over 70 percent of district counties—with valid counts—registered manufacturing job gains (see Chart 1). But that ignores a significant geographic hole in the manufacturing data; small populations in rural counties meant that job figures for more than 40 percent of all counties in Montana and the Dakotas were too low to be released for privacy reasons.

But small size was not an inhibitor for manufacturing growth. Broken down by county size, aggregate job trends have been pretty consistent across the district both during the recession and in 2011. Job losses from 2007 to 2010 averaged between 10 percent and 20 percent among counties of all sizes, while job gains last year ranged from 2 percent to 4 percent, with medium-sized counties generally faring the best (see Chart 2).

Manufacturing Ch. 1 -- 9-7-12

Job gains among large counties in each state were also “positively mixed.” Minnehaha County in South Dakota, home to Sioux Falls—saw modest manufacturing growth of 2.2 percent last year. In contrast, Cass County, N.D. (home to Fargo) grew by almost 10 percent. Hennepin County—home to Minneapolis and more manufacturing jobs than North and South Dakota combined—saw 2 percent growth.

This year, most indicators suggest that manufacturing has continued to grow, though recent national and district-based surveys indicate that there has been some slowdown this summer. For much more data and analysis on manufacturing trends in the Ninth District, watch for the upcoming October issue of the fedgazette.

 

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