17 posts categorized "Natural Resources"

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

Minnesota lodging: Now I lay me down to sleep

Irrespective of the record heat, summer is a time for vacations, especially to places like the northwoods of Minnesota, where camping and old-time resorts with individual cabins are a time-tested tradition for many families. But as in any industry, things change, and the lodging industry in Minnesota has undergone some subtle shifts in the places people lay their heads during vacation or while on a work trip.

Explore Minnesota Tourism, the state’s tourism office, keeps a running (though unofficial) tally of lodging facilities of varying type, including indoor and outdoor. From 2002 to 2011, the total number shrank by 4 percent (see Chart 1). Resorts saw a 26 percent decline and had the largest loss in absolute numbers, losing about 290 operators. Private campgrounds saw a smaller loss in number (about 190) but a higher percentage loss (28 percent). That loss was somewhat offset by growth in state and other public campgrounds, which are fewer in number. Hotels and motels grew slightly, and vacation homes for rent (not listed in the chart) grew strongly from a percentage standpoint, but its listings are still small, at just 90 in 2011.

MN tourism Ch 1 -- 8-8-12

Despite the loss of facilities, the total number of lodging units has remained mostly unchanged over this period (see Chart 2). First, a little context: Riding the coattails of a hot economy in the 1990s, a tourism and lodging boom added thousands of hotel and other lodging units to the state. The echo of that boom started to die out in 2003, and the number of indoor lodging units in the state actually dropped by 1,500 by 2007. But by 2011, the number of indoor lodging units had bounced back by almost 1,900 units (about 2.5 percent).

At the campsite, it’s a fairly similar story (see Chart 2). Despite an erosion of campground operators, the number of individual campsites in 2011 is mostly unchanged from 2002, though there was some volatility in the middle. From 2006 to 2008, the number of tracked campsites fell by about 3,500 (10 percent), but then quickly rebounded by 2011.

Shifts in consumer demand underly these short- and long-term lodging patterns, as consumers demand new and different accommodations and amenities over time, and recessions tend to force out less competitive facilities from the market, leaving new opportunities when demand rebounds. Explore Minnesota reports that the state lodging industry saw “moderate improvement” through the first half of 2012, including a 1 percent increase in occupancy.

MN Tourism Ch 2 - 8-8-12

Frac sand mining spurs rural rail

On average, railroads are four times more fuel efficient than trucks. In west-central Wisconsin, which is in the midst of a frac sand boom, that fact has increased business for railroads and spurred reinvestment in long-disused rural lines.

The region is a rich source of fine quartz sand, a vital ingredient in the hydraulic fracturing process that has opened up fresh reserves of shale oil and natural gas in North Dakota, eastern Montana, Texas and other parts of the country. Over the past five years, more than 40 frac sand mines have either opened or expanded their operations in west-central Wisconsin and in neighboring southeastern Minnesota.

In Wisconsin, many sand mining companies have built facilities adjacent to rail lines—a cost-effective way to ship raw or processed sand, often in “unit trains” of over 100 cars. In response to increased demand, railroads have ramped up their operations and rehabilitated little-used or dormant lines, at a cost of roughly $1 million to $2 million per mile.

Lakeville, Minn.-based Progressive Rail operates a 62-mile line running north from Chippewa Falls to Rice Lake and Almena, in Barron County (see accompanying map). Freight volume has increased fivefold to about 1,800 cars a month since EOG Resources completed a new sand processing plant in Chippewa Falls last December, said company President Dave Fellon. Over 90 percent of that volume consists of frac sand from the EOG plant and other mining facilities along the route.

Rising revenue has allowed Progressive to invest in human capital (payroll has increased from 65 to 100 workers over the past year) and critical line improvements. Fellon said the firm will spend $30 million to $50 million over the next five years on new railroad ties, bridges, loading facilities and other infrastructure.

Canadian National and Union Pacific have also refurbished long-neglected rail lines linking Wisconsin frac sand operations to distant markets. This summer, CN began clearing brush and laying new ties on a 45-mile section of rail between Cameron and Ladysmith to connect existing and proposed sand mines with a main CN line running north into Canada and south to Texas. The railroad backed out of a pending sale to the state that would have let Progressive operate the line, opting to retain ownership of a potentially profitable sand route.

Colorrail-final500

For more on the economic impact of frac sand mining in the district, see the recent article in the July fedgazette.

Welders have struck gold in the oil patch

In North Dakota and Montana, wages and employment for welders have grown very quickly near the Bakken shale-oil formation in recent years.

The Bureau of Labor Statistics gathers employment data in urban and rural areas of every state and further delineates rural (or nonmetropolitan) areas from each other so that regional patterns can be investigated. Both North Dakota and Montana have four nonmetropolitan areas (in brown in Figure 1) and three metropolitan areas (in white). While the Bakken shale-oil formation covers a significant portion of western North Dakota and eastern Montana, the heart of the Bakken is in red.

 Bakken map -- 2-6-12

Much has been written about the economic activity occurring in the district’s oil patch (including in the fedgazette). That growth has led to strong demand for workers in occupations directly tied to oil extraction. That’s particularly the case for welders, which include cutters, solderers and brazers, who are vital in maintaining drilling rigs, pipelines and other oil-related infrastructure.

Not surprisingly, wages and employment for welders in the oil patch are rising, and BLS data offer a snapshot of how they compare to other regions. Chart 1 below plots average annualized employment and wage growth from 2006 to 2010 among nonmetropolitan regions of North Dakota and Montana. Welders generally had much plumper checks and were on more payrolls in the nonmetropolitan regions in or near the Bakken than their coworkers in other nonmetropolitan areas.

 Welders in Bakken -- 2-6-12

The growth of employment and wages near the Bakken is impressive, but it’s also a function of how few welders there are in these nonmetropolitan areas. For example, welders’ employment in eastern Montana almost tripled, from 60 to 170. In fact, in 2010 none of North Dakota’s nonmetropolitan areas had more than 400 welders, and none of Montana’s rural regions had more than 200.

The Minneapolis Fed is currently investigating the employment effects of the oil boom in the Bakken formation. Watch for a cover article on this topic in the April fedgazette.

A deer stuck in your headlights

It’s that time of year again when attention for a significant portion of the population turns to whitetail deer. Most often it’s toward hunting season and dreams of hat racks. But a not-so-small number get an unfortunately close encounter with deer this time of year—with their vehicle.

With high deer populations and significant rural roadway—both a factor in collisions—every Ninth District state ranks in the top 10 in likelihood of hitting a deer over the course of a year, according to estimates from State Farm Mutual Insurance. South Dakota ranks highest in the district at number three (see table below).

Deer crashes -- Table 1 - 11-14-11

Few states closely track the number of vehicle-deer collisions. Wisconsin appears to keep better records than most. The good news is that deer collisions, at least in that state, are trending lower over the past decade in absolute numbers (see Chart 1), and the rate of collisions per vehicle mile has fallen considerably, from about 50 per 100 million miles in 1994 to fewer than 30 in 2010, according to a study by the state’s Department of Transportation. The number of persons killed or injured has also been cut in half, to about 400, over the past decade.

Still, the costs of deer collisions are considerable. In Wisconsin, collisions cost a total of almost $27 million in 2008, according to the Deer-Vehicle Crash Information Clearinghouse at the University of Minnesota. These figures are likely conservative, because the DVCIC included only investigated crashes involving at least $1,000 in property damage (about 15,000 in 2008 for Wisconsin), which are considerably below estimates in that state of both the number of deer killed by vehicles (the blunt force of which is likely to cause considerable damage to a vehicle) as well as insurance estimates of annual deer crashes.

And while you’re out driving, it might pay to know that the majority of deer-vehicle collisions occur during the months of October and November (see Chart 2) when deer are most active during the breeding phase, according to the Wisconsin DOT.

Deer -- chart 1&2 11-14-11

The price of flame

The Pagami Creek fire in northeastern Minnesota is one of the biggest forest fires in state history. Spawned by a lightning strike in the Boundary Waters Canoe Area Wilderness (BWCA) near Ely, the fire has burned for almost two months, scorching about 150 square miles. The U.S. Forest Service mobilized a small army of nearly 900 firefighters to battle the blaze, which was still not fully contained as of mid-October.

The cost of fighting the fire, borne by U.S. taxpayers, was considerable, according to Forest Service figures. As of early October, federal and state agencies had racked up about $21 million in firefighting expenses.

Based on a Forest Service breakdown of costs as of late September (see chart, below), labor accounted for the biggest chunk of total spending so far: roughly $12 million to pay fire crews (including elite “hotshot” units brought in from western states) and other personnel, such as fire commanders and contractors. Aviation was the next biggest expense—over $4 million to dispatch airplanes and helicopters on water bombing and reconnaissance missions. Other expenses included equipment and camp support—buses, mobile showers, portable toilets and other items needed to maintain crews in the field.

Pagami Creek redo -- 10-13-11

But these firefighting expenses are only a small portion of the full costs of the Pagami Creek fire, which will keep rising long after the last ember is extinguished. Estimates by wildfire experts of the total cost of large, out-of-control forest fires range from five to 50 times the cost of suppressing them. Short- and long-term costs not tallied by the Forest Service include burned timber, damage to roads and private property, lost business revenues, degraded recreational value, destruction of wildlife habitat, and ongoing repair and rehabilitation expenses. The “all-in” cost of a big wildfire can run into hundreds of millions of dollars.

However, the Pagami Creek fire probably won’t exact as high a toll as the Ham Lake fire, a 2007 blaze in northern Minnesota that destroyed nearly 150 buildings. The Pagami fire mostly burned within the BWCA, only briefly threatening structures near the southern edge of the wilderness. Homes and businesses in the path of a wildfire are expensive to protect and even more costly to replace if firefighting efforts fail.

For more discussion on the costs of wildfire in the Ninth District, see “Money to burn,” in the July 2010 fedgazette.

District shipping ports are (mostly) busier

With sluggish economic news of late, it’s hard to know what to hang your hat on in terms of the direction of the regional and national economy. Trends in commodities can offer some clues, and recent iron ore shipments from Ninth District ports offer both hope and a bit of angst regarding the near-term economy.

There are six major shipping ports in the district—five on Lake Superior and one on Lake Michigan. Taconite mines on the Iron Range of Minnesota and the Upper Peninsula of Michigan produce the vast majority of the country’s iron ore, which means these six ports handle virtually all of the country’s iron ore shipments. The port at Superior, Wis., also ships large amounts of coal to ports elsewhere. (There are eight other, small ports in the district, most of which only receive coal.)

Through July of this year, the six ports saw total iron ore tonnage increase by about 10 percent—a nice continuation of the rebound seen last year (see Chart 1). Among the six ports, four saw increases over last year, with big jumps at ports in Duluth, Minn., and Presque Isle, in the U.P. (see Chart 2).

Iron ore trends -- 9-6-11 

Signs look a little more mixed among other raw materials and the broader shipping industry. The Lake Carriers’ Association (LCA) represents 17 American companies and their 55 U.S.-flag vessels carrying raw materials on the Great Lakes. Through July of this summer, U.S.-flag cargos stood at almost 45 million tons, an increase of 3 percent compared with the same point last year. However, coal and limestone—indicators of power production and construction—are down by 5.1 percent and 4.6 percent, respectively, through July of this year.

By tonnage, the twin ports at Duluth and Superior comprise the largest port on the Great Lakes and one of the top 20 ports in the United States, handling an average of 46 million short tons of cargo each year. The port at Superior is the lone major coal exporter in the district, and it handles close to 60 percent of coal shipments throughout the Great Lakes. Shipments there through July were down almost 20 percent over last year, while coal shipments from ports on lakes Michigan and Eerie saw a considerable increase during the same period, according to LCA data.

The Duluth port also handles a significant amount of grain, mostly wheat, and this year's shipments are up almost 50 percent through July. Though total grain tonnage to date—780,000 tons—is a fraction of iron ore and coal shipments, grains have considerably higher value by weight.