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Alaska Coastal Community Youth and the Future
Marie E. Lowe, Meghan Wilson, Miller Robyn, and Kate Sanders
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Energizing Alaska: Electricity Around the State
Alejandra Villalobos Meléndez and Ginny Fay
This publication is mostly about electricity in Alaska: how it’s generated, how much fuel is used to produce it, how fuel sources have shifted over time, and how prices vary. An inside foldout map shows how individual communities throughout the state generate electricity. But besides looking in detail at electricity, it also reports more broadly on energy in Alaska. It includes our estimates of all the types of energy produced and consumed in Alaska, and summarizes changes over time in the prices and amounts of energy Alaskans use.
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Toward Universal Broadband in Rural Alaska
Khristy Parker, Suzanne Sharp, Heather Hudson, Kent Spiers, Kyle Wark, Alexandra Hill, and Virgene Hanna
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Cordova Psychrophiles Bio-Digester Benefit-Cost and Sensitivity Analysis
Sohrab Pathan, Alejandra Villalobos Meléndez, and Ginny Fay
Cordova is located in southcentral part of Alaska, 150 miles southeast of Anchorage, and can be accessed only by boat or plane. The average winter temperature1 varies from 17⁰ F to 28⁰ F (-8⁰ C to -2⁰ C) and the average summer temperature varies from 49⁰ F to 63⁰ F (9⁰ C to 17⁰ C).2 To support Cordova’s ongoing energy independence efforts , the Denali Commission approved a science project for the Science Club students at Cordova High School using Emerging Energy Technology Funds to develop a bio-digester that uses psychrophiles, a cold climate bacteria, that can reproduce in very cold temperatures, as low as 19⁰ F (-7.5⁰ C).3 Use of psychrophiles in a bio-digester in Cordova is a new technology that aims to produce low cost biogas for Alaskans who live in extreme cold temperatures. The production of biogas varies significantly depending on ambient temperatures. The cold climate application of this technology is in its research and development (R&D) phase, which makes in-depth economic analysis challenging as there is little cost information and many parts for the application of the technology have to be custom build. This paper describes a preliminary economic analysis of the Cordova project. In order to provide a study at this early stage in technology development, the analysis was prepared using a combined benefit-cost and sensitivity analysis to show the impacts of variations in methane output, and diesel fuel and propane prices. For this preliminary analysis we compared the bio-digester technology against diesel and propane fuel alternatives.
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Managing Invasive Species: How Much Do We Spend?
Tobias Schwörer, Rebekka Federer, Howard Ferren, and N/A Alaska SeaLife Center
Invasive species: they’re along roadways and up mountain trails; they’re in lakes and along the coast; chances are they’re in your yard. You might not recognize them for what they are—plants or animals not native to Alaska, brought here accidentally or intentionally, crowding out local species. This problem is in the early stages here, compared with what has happened in other parts of the country. But a number of invasive species are already here, and scientists think more are on the way. These species can damage ecosystems and economies—so it’s important to understand their potential economic and other effects now, when it’s more feasible to remove or contain them. Here we summarize our analysis of what public and private groups spent to manage invasive species in Alaska from 2007 through 2011. This publication is a joint product of ISER and the Alaska SeaLife Center, and it provides the first look at economic effects of invasive species here. Our findings are based on a broad survey of agencies and organizations that deal with invasive species.1 The idea for the research came out of a working group formed to help minimize the effects of invasive species in Alaska.2 Several federal and state agencies and organizations funded the work (see back page).
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Next Steps Toward an Arctic Human Dimensions Observing System
Matthew Berman
The goal of The Arctic Observing Network Social Indicators Project (AON-SIP) was to develop a system of social observations that can answer the question, ‘Is the arctic system moving to a new state?’ Much of the project effort focused on compiling data on human activities in the arctic that might interact with climate change and social indicators of arctic well-being. This paper reviews the adequacy of the data analyzed in the project for three objectives: observing changes in well-being of arctic residents, observing arctic changes relevant to global society, and understanding ongoing social change in the arctic. The review highlights issues of comparability of data across different scales in different nations, as well as key observation gaps. Understanding change in well-being of arctic residents also requires observing additional less-climate-related drivers of change that the AON-SIP did not address, many of which also suffer from the same issues of comparability and data gaps. Two types of recommendations are offered for developing the arctic social observation system: (1) recommendations through the Arctic Council to national statistical agencies to achieve internationally comparable data, and (2) recommendations for essential new primary data collection.
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Social Indicators for Arctic Tourism: Observing Trends and Assessing Data
Ginny Fay and Anna Karlsdottir
The authors of this paper attempted to develop a database that would serve to track social changes brought about by the expansion of arctic tourism resulting from climate change. In this paper we review and assess the state of data used to describe and monitor tourism trends in the pan-arctic and their potential social effects. We selected 12 potential indicators for long-term assessment and monitoring changes in arctic tourism. We attempted to collect consistent data from 1980 to 2008 for Alaska, Canada, Norway, Greenland, Lapland and Iceland. In addition to visitor counts of various types, the database includes tourism-related employment and earnings at the place and regional levels, though the data are not consistent or complete for all the countries. The World Tourism Organization provides relatively standardized tourism data definitions. However, data collection by national agencies varies across the arctic countries and data are not available for all selected indicators. A significant problem is that most jurisdictions use sampling and reporting protocols that result in statistically unreliable estimates for remote rural areas. These same areas may also be most vulnerable to potential impacts and changes brought about by expanding tourism development. We discuss the critical need for an arctic tourism observation system. Standardization or comparability of time series data sets will be important for the future monitoring and modeling of changes in the arctic environment and associated impacts of expanding tourism, especially as diminishing sea ice cover increases visitor access.
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Alaska Energy Statistics 1960‐2009
Ginny Fay, Alejandra Villalobos Meléndez, and Amber Converse
This report has had various publishers. Before 1985, the federal Alaska Power Administration published Alaska Electric Power Statistics. Then, the Alaska Energy Authority (formerly the Alaska Power Authority) began gathering statistical data and publishing this annual report. In 1988, the Alaska Electric Power Statistics report became a combined effort of the Alaska Systems Coordinating Council and the Alaska Energy Authority. Beginning in 1993, the report became a joint effort of the Alaska Systems Coordinating Council and the Alaska Department of Community and Regional Affairs, Division of Energy. After the 1995 report, no reports were issued until 2003, when the Institute of Social and Economic Research (ISER) at the University of Alaska Anchorage (UAA), published a report, with funding from the Alaska Energy Authority (AEA), the Regulatory Commission of Alaska (RCA), and the Denali Commission. ISER prepared this twenty‐fourth edition of the Alaska Electric Energy Statistics in collaboration with the Alaska Energy Authority. Unlike previous reports, data tables are presented solely in digital form in an MS Excel file. The workbook containing the data tables is available on the ISER website at http://iser.uaa.alaska.edu/Publications/AlaskaEnergyStatisticsCY2009Tables.xlsx) and the AEA website (http://www.akenergyauthority.org/).The data tables are presented in a dataset format for convenient use and manipulation. All data presented are identified by the geographic regions used in previous Alaska Electric Energy Statistics,1 as well as AEA energy regions, Alaska Native corporation regions, and census areas.
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Alaska Fuel Price Projections 2011-2035
Ginny Fay, Alejandra Villalobos Meléndez, and Sohrab Pathan
This and previous Alaska fuel price projections were developed for the Alaska Energy Authority (AEA) for the purpose of estimating the potential benefits and costs of developing renewable energy projects applied for through the Alaska Renewable Energy Fund program process. The projections are not price forecasts but a statistical estimation of potential future utility avoided fuel costs based on the relationships between historic utility fuel prices and crude oil and refinery prices reported by the Energy Information Administration (EIA). These statistically estimated relationships are used to project potential future fuel prices based on EIA’s Energy Outlook oil price forecasts. In addition to developing these low, medium and high fuel price projections, estimates of the social cost of carbon (previously included as estimates of potential carbon taxes), a premium for low sulfur fuels, and a price differential for home heating fuel are provided and are incorporated into the Renewable Energy Fund benefit-cost model for evaluating potential projects. The settings of these parameters are public policy considerations selected for project reviews by the AEA. The fuel price projections are limited in their applicability to the modeling of project benefits and costs and should not be considered fuel price forecasts.
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Alaska Energy Statistics 1960-2008
Ginny Fay, Alejandra Villalobos Meléndez, Ben Saylor, and Sarah Christine Gerd
Prior to 1985, the federal Alaska Power Administration published the Alaska Electric Power Statistics. Then, the Alaska Energy Authority (formerly the Alaska Power Authority) began gathering statistical data and publishing this annual report. In 1988, the Alaska Electric Power Statistics report became a combined effort between the Alaska Systems Coordinating Council and the Alaska Energy Authority. Beginning in 1993, the report became a joint effort between the Alaska Systems Coordinating Council and the Alaska Department of Community and Regional Affairs, Division of Energy. After the 1995 report, no further reports were published until 2003 when a report was prepared by the Institute of Social and Economic Research (ISER), University of Alaska Anchorage (UAA), with funding provided by the Alaska Energy Authority (AEA), the Regulatory Commission of Alaska (RCA), and the Denali Commission. This twenty-third edition of the Alaska Electric Energy Statistics was prepared by the Institute of Social and Economic Research. Information on utility, industry, and military electricity capacity, generation, and other characteristics was gathered primarily from reports filed with the U.S. Department of Energy (DOE), Energy Information Administration (EIA) and made available on their website. This was supplemented by data collected by the Alaska Energy Authority through the Power Cost Equalization (PCE) program and a limited number of direct contacts with electric power producers in the state. This is a similar methodology used to develop information for the 2003 report.
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Factors Influencing Success of Wind-Diesel Hybrid Systems in Remote Alaska Communities: Results of an Informal Survey
Ginny Fay and Nataliya Udovyk
In 2008 the Alaska State Legislature created and funded the Renewable Energy Fund. As a result of this available funding, the number of wind-diesel hybrid power systems is increasing dramatically in rural Alaska. Development, integration, and operation of complex wind technologies in remote, rural communities are challenging. With multiple communities in Alaska installing and operating these systems, it is important to understand the factors that influence successful completion, operation and long-term maintenance of projects (Fay, Schwoerer and Keith 2010; Colt, Goldsmith and Wiita 2003). As of fall 2011, over $107 million has been spent constructing wind projects in 27 communities (Alaska Energy Authority 2011). The majority of these systems were built since 2008 and utilized $50.8 million in appropriations from the REF by the Alaska legislature (Fay, Crimp and Villalobos-Melendez 2011) This report summarizes the findings of an informal survey conducted on the most important characteristics of a successful wind-diesel hybrid power project in small remote rural communities. The survey was done to help guide socioeconomic research in Alaska on community capacity under a U.S. Department of Energy project entitled “Making Wind Work for Alaska: Supporting the Development of Sustainable, Resilient, Cost-Effective Wind-Diesel Systems for Isolated Communities”.
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Alaska’s Health-Care Bill: $7.5 Billion and Climbing
Mark A. Foster and Oliver Scott Goldsmith
Health-care spending for Alaskans reached about $7.5 billion in 2010. For comparison, that’s close to half the wellhead value of all the oil produced in Alaska that year. It’s also roughly equal to half the wages Alaskans collected in 2010. The state’s health-care spending has been rising fast, tripling since 1990 and jumping 40% just between 2005 and 2010—and at current trends it could double by 2020, reaching more than $14 billion. Here we report on who’s paying the bills, what we’re buying, what’s contributing to the growth, and other aspects of health-care spending. We conclude with a discussion of how Alaska could get better value for its health-care dollars.
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Alaska after Prudhoe Bay: Sustainability of an Island Economy
Oliver Scott Goldsmith
The typical sovereign island economy is small and remote. For example the remote island nations of Nauru, Niue, and Saint Helena have populations in the range of 10 thousand each. Of course not all island nations are small or remote and neither are small or remote economies necessarily islands. However it is useful to think about the economies of small and remote islands because they can help us to understand the economic structure and prospects of larger and less remote places. Island economies generally lack a comparative advantage in the production of goods or services for export to the rest of the world. This is due to distance from markets and suppliers as well as an absence of economies of scale and specialization, both of which drive up the cost of exporting goods and services. And although the economic theory of comparative advantage tells us that trade among countries can occur even if one has an advantage in the production of all goods and services, that theory can break down if costs in the small and remote economy are too high. The mechanism by which the island economy gains access to export markets in the presence of high costs is through downward adjustment in the wage. But in some cases the wage would need to become negative to overcome the cost disadvantages created by distance and size. In such a case the island would have a subsistence economy with neither exports to the rest of the world or imports. The most important private economic activities one observes in these economies are agriculture and fishing. Occasionally an island economy will be able to take advantage of a market niche to generate exports. Tourism is the most common, and mining has provided an export base in some other places. However these market activities will not necessarily be large enough to employ a large share of the population. Furthermore dependence on a single activity leaves these economies vulnerable or “precarious”.As a consequence many of these economies are dependent on foreign aid and remittances from emigrants. These funds allow these economies to purchase a basic level of imports that would not otherwise be possible
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Four Scenarios for Alaska's Future
Oliver Scott Goldsmith
The Alaska economy is growing as high commodity prices (for oil and gold in particular) drive the private sector and oil revenue surpluses fuel the state budget. But as oil production continues to decline; the prospect for commercialization of North Slope gas in the near term fades; access to petroleum resources on federal lands remains stalled; and non-petroleum resource development moves forward only slowly, many Alaskans are concerned with what path the Alaska economy will take in the next decades. We could go in four possible directions. Here we offer a short description of each scenario— general enough to let each person fill in the blanks. Our objective is not to predict but rather to stimulate thought and discussion about what Alaskans can and should do to move the economy along the preferred path. Here’s a summary of the four potential paths. A more detailed description follows.
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High Oil Prices Give Alaskans a Second Chance: How Will We Use this Opportunity?
Oliver Scott Goldsmith
Think about this: 10 years ago, it looked as if Alaska was on the brink of a tough transition to a post-Prudhoe Bay economy. Oil production was half of what it had once been, the state’s oil revenues were about $2 billion, financial reserves were falling, and employment in the oil industry was down. The price of Alaska oil, adjusted to today’s buying power, was $27 a barrel—and that was high by historical standards. Things have changed dramatically since then: a combination of much higher oil prices—about $115 a barrel as this paper is being written—and revisions in the way the state calculates production taxes have caused state oil revenues to skyrocket, even though oil production is down 40% since 2002. We now find ourselves in a second huge oil-revenue boom, comparable to the one in the early 1980s (Figure 1 ).
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How Much Should Alaska Save?
Oliver Scott Goldsmith
Alaska today is in the lucky position of having an estimated $126 billion in petroleum wealth— $45 billion in savings accounts derived from oil revenues, and $81 billion in future state revenues from oil and gas still in the ground--if current official state projections prove accurate. Almost all state revenues come from oil, as they have for 30 years. But oil production is now only a third of what it once was, and analysts think that even with new discoveries and enhanced recovery, production from state lands will keep dropping. So Alaskans face a dilemma: how can we preserve this petroleum wealth for future generations, while still benefitting from it ourselves? The answer is to limit how much we spend today from our petroleum wealth, and invest the savings in income generating assets. The income from those assets would grow over time and gradually replace declining petroleum revenues. We’ve already taken a major step, by depositing 24% of past oil revenues into savings accounts. Is that enough?
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Managing Extractive Resource Wealth for Sustainability: Alaska in the Time of Falling Oil Production
Oliver Scott Goldsmith
Cash economies in many parts of the Arctic North have long been dominated by resource extraction industries such as petroleum and metal mining. These developments are often short lived, generating cycles of economic booms followed by busts. And the wealth created by these activities tends to flow South, as profits to large firms and wages to temporary residents. But in Alaska the Permanent Fund (and a number of smaller financial accounts), has captured a significant share of the wealth generated by the production of petroleum over the last 30 years. Alaska residents now have the opportunity to use this wealth (currently estimated at $45 billion in financial assets and $81 billion in the state share of oil still in the ground) to build a strong economy, not only for the current generation but for future generations of Alaskans as well. This will be a unique challenge, balancing the needs of current and future generations, the preferences of urban and rural residents, permanent and temporary citizens, and others. This paper will examine the challenges facing Alaska as it begins the task of wealth management in an era of declining petroleum production. This should provide lessons for other regions impacted by cycles of resource extractive industries.
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Oil Pumps Alaska's Economy to Twice the Size - But What's Ahead?
Oliver Scott Goldsmith
Oil money has driven most of the growth and paid for state government operations in Alaska for 40 years. We’ve all gotten used to that money, so it’s easy to underestimate how much of the state’s prosperity is built on oil. Think about this: without oil, the economy today would be only half the size. But now times are changing. The North Slope is producing just a third the oil it once did—and there’s a danger Alaskans will assume the state can keep going the way it is, without future oil development. Not true.
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Revising the State Fiscal Plan to Account for Petroleum Wealth
Oliver Scott Goldsmith
In 2008 the Alaska Legislature passed and the governor signed into law a bill requiring the Office of Management and Budget (OMB) to prepare an annual state fiscal plan projecting state spending for 10 years and identifying the revenue sources to pay for that spending. One objective of the law was to get government and the general public thinking, discussing, and planning for the long-term fiscal health of the state in light of declining oil production. These plans have not attracted the attention they deserve. In this Web Note we review the most recent fiscal year 2012 10-year plan and offer suggestions for improvement.
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The Alaska Permanent Fund Dividend: A Case Study in the Direct Distribution of Resource Rent
Oliver Scott Goldsmith
The Alaska Permanent Fund is a sovereign wealth fund of the state of Alaska established in 1976 by a vote of the people to preserve part of the revenues from current oil production for future generations. Twenty percent of direct petroleum revenues have been deposited into the fund which now has a balance of $32 billion. Over its life it has generated nominal earnings of $35 billion. The successes of the fun in saving a share of the Alaska petroleum windfall and generating income are due to several factors. The boom-bust economic history of the state has been a reminder of the need to actively manage public resources. Fund management is independent of general government finances and extremely transparent. It invests to maximize long run income. In addition, the modest share of petroleum revenues set aside in the fund has left enough available for the state to expand public spending, including the establishment of a number of programs designed to strengthen the economy in recognition of the non sustainability of the petroleum sector. Since these public programs benefit particular segments of the population, the Alaska Permanent Fund dividend program was created in 1982 to provide an annual unconditional direct cash distribution to all Alaska residents. The dividend was felt to be the most equitable way to distribute a share of the public wealth of the state to the entire population. Since the inception of the program, the dividend has been paid each year. About half of Permanent Fund earnings have been allocated to the dividend program and the rest to increasing the balance in the fund. The size of the dividend has increased as the fund has grown, but it fluctuates considerably because fund earnings change from year to year. In 2010 the dividend payment was $1,281 which augmented per capita income by 3 percent. The dividend program has become extremely popular since most Alaskans feel that individuals can benefit more from deciding themselves how to spend at least a portion of the public wealth rather than allowing the government to decide on their behalf. However a minority of the population feels the dividend fosters an attitude of consumerism and leads to underinvestment. And although the dividend has created a strong constituency defending the Alaska Permanent Fund, which many feel is the main reason for the success of the fund, there is concern that the dividend will prevent the fund from being used for its ultimate purpose which is to help support the economy after petroleum production ends. Beyond its obvious positive impact on aggregate income, employment and population, little analysis has been done of other economic, social, and political effects of the dividend program. Because the dividend is not viewed as a policy to improve social welfare, but rather as a means to share public wealth equitably, interest in these other potential effects has been limited.
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2011 Alaska's Construction Spending Forecast
Oliver Scott Goldsmith and Mary Killorin
The total value of construction spending “on the street” in Alaska in 2011 will be $7.1 billion, up 4% from 2010.1,2,3 Wage and salary employment in the construction industry will continue the slow decline that began in 2006, but the level remains above the long-term average for the industry. Excluding the oil and gas sector—which accounts for 41% of the total—construction spending will be $4.2 billion—up 5% from 2010. Private-sector construction spending will be up 6% from 2010, to $4.5 billion, in spite of the expected slow growth in the overall Alaska economy. Oil and gas sector spending will be about $2.9 billion, up 3%. Spending will increase in the utility and hospitals4 categories, but will decline in residential and other commercial categories. Public construction spending will be up 1%, to $2.7 billion, due to the large FY 2011 state capital budget. The main infusion of cash from the American Recovery and Reinvestment Act (ARRA) has worked its way through the system, and federal spending overall has declined. Uncertainty is particularly significant in the forecast this year, especially in the oil and gas sector—in spite of high oil prices. In January 2011, uncertainty surrounds most of the large-scale petroleum projects on the North Slope and in Cook Inlet. Environmental reviews are slowing development drilling at Point Thomson east of Prudhoe Bay and Alpine West in the National Petroleum Reserve Alaska. Exploration drilling offshore in the Chukchi and Beaufort seas continues to face legal challenges. The offshore Liberty project is under internal environmental review. In Cook Inlet, a major offshore exploration effort awaits the uncertain arrival of a jack-up rig. In this forecast we assume most of these projects will move forward this year, but their pace is hard to predict. If several are delayed in 2011, oil and gas spending will be significantly lower.
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Strengthening Institutions for Stakeholder Involvement and Ecosystem-Based Management in the US Arctic Offshore
Sharman Haley, Laura Chartier, Glenn Gray, Chanda Meek, Jim Powell, Andrew A. Rosenberg, and Jonathan Rosenberg
Due to their unique characteristics, the Chukchi and Beaufort Seas have escaped many, though not all, of the problems encountered in more temperate seas. For most of the 20th century, multi-year sea ice provided a barrier to significant industrial activity in the Arctic Ocean. Even though the Chukchi and Beaufort Seas have not been managed seas, per se, the area has been governed under a patchwork of policy regimes relating to regional Outer Continental Shelf land claims, marine mammal conservation, environmental pollution, coastal development and eventually pan-Arctic governance through the Arctic Council. As the open water period available to industrial use increases, new users are expected to follow. As in other parts of the United States, many human uses of the Alaskan marine environment are governed by a patchwork of rules stemming from various sectors of the federal, state, and local governments. Significant and emerging challenges include: climate change and the restructuring of seasonal sea ice habitats, ocean acidification, growing marine traffic and the prevention of oil spills in a challenging operating environment. Here we explore how innovations in ocean governance incorporating principles of ecosystem-based management, participatory democracy and complex systems can protect ocean resources and mitigate conflict.
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Observing Trends and Assessing Data For Arctic Mining
Sharman Haley, Matthew Klick, Nick Szymoniak, and Andrew Crow
This paper reviews and assesses the state of data to describe and monitor mining trends in the pan-Arctic and their social effects, and discusses drivers of change in Arctic mining. Trends in mining activity can be characterized as stasis or decline in mature regions of the Arctic, with strong growth in the frontier regions. World prices and the availability of large, undiscovered and untapped resources with favorable access and low political risk are the biggest drivers for Arctic mining, while climate change is a minor and locally variable factor. The widely available measures of mineral production and value are poor proxies for social and economic effects on Arctic communities. Historical data on mineral production and value are unavailable in electronic format for much of the Arctic, specifically Scandinavia and Russia; completing the historical record back to 1980 will require work with paper archives. The most critically needed improvement in data collection and reporting is to develop comparable measures of employment. The eight Arctic countries each use different definitions of employment and different methodologies to collect the data. Furthermore, many countries do not report employment by county and industry, so the Arctic share of mining employment cannot be identified.
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