University of Oregon Ecosystem Workforce Program
- 1. Ecosystem Workforce Program B R I E F I N G P a per # 13 A Preliminary Estimate of Economic Impact and Job Creation from the Oregon Watershed Enhancement Board’s Restoration Investments Max Nielsen-Pincus and Cassandra Moseley Winter 2009 T he Oregon Watershed Enhancement Board (OWEB) has proposed nearly $40 million in watershed res- toration projects for state and federal stimulus funding.1 OWEB’s investments in ecological restoration play a large role in public and private natural resource management with projects ranging from stream habitat enhancements and fish passage to irrigation canal improvements, riparian reforestation, road decommission- ing, forest thinning, and wildlife habitat enhancement. As with other capital improvements, watershed resto- ration activities such as those that OWEB is proposing have considerable economic impact and job creation potential. Unlike other sectors of the economy, such as transportation infrastructure, there has been little research to quantify the economic potential of these activities. In this briefing paper, we provide a prelimi- nary assessment of the potential economic and employment impacts for watershed restoration activities.2 Approach that OWEB’s proposed $40 million investment in watershed restoration projects would: To calculate the economic impact and job-cre- . reate or retain nearly 600 jobs and generate 1 C ation potential of OWEB’s proposed investments in over $72 million in total economic activity in watershed restoration, we used published research Oregon. and the U.S. Bureau of Economic Analysis Regional 2. trategically leverage between $38 and $59 S Input-Output Modeling System (RIMS) in a four-step million in additional funding from other public analysis. First, we categorized all proposed projects and private sources that would create or retain in OWEB’s proposal for state and federal stimulus an additional 570 to 885 jobs and $71 to $110 by the dominant economic activity involved in the million in additional total economic activity. project. Second, we used OWEB match funding data to estimate a range of additional public and private funds that will be leveraged with OWEB’s investment. Third, we used published research The Economic Impacts of Watershed on OWEB’s grantee expenditures to estimate the Restoration Activities economic capture of these funds within Oregon. OWEB investments fund labor-intensive riparian Fourth, we use RIMS economic and employment and upland restoration projects, equipment inten- multipliers for Oregon as a whole to estimate eco- sive aquatic restoration projects, mechanical forest nomic and employment impacts. restoration projects, and a variety of water conser- vation projects (Table 1). These activities create long-term improvements in the state’s ecosystems Findings and create economic activity in several sectors of the economy. We find that the projects OWEB is proposing to implement with state and federal stimulus funds are Every dollar invested in watershed restoration likely to create considerable economic activity and projects travels through the economy of Oregon in jobs across the state. Specifically, our data suggest several ways. Restoration project managers hire consultants, contractors, and employees to design, implement, and maintain projects. Consultants and Institute for a Sustainable Environment 5247 University of Oregon Eugene, OR 97403-5247 T (541) 346-4545 F (541) 346-2040 ewp@uoregon.edu http://ewp.uoregon.edu 1
- 2. Table 1. Restoration Activities by Category Restoration Category Restoration Activities Labor-Intensive Riparian Upland Native planting and seeding, noxious weed treatments, fencing, rangeland restoration, Restoration manual fire hazard reduction, juniper management Equipment-Intensive Aquatic Road Log and boulder placements, instream structure construction, streambank stabilization, Restoration floodplain connectivity and channel reconfiguration, fish passage and screening improve- ments, wetland mitigation and restoration, tide gate and small dam removal, upland erosion control, road decommissioning and maintenance, culvert/bridge replacement and removal Forest Restoration Mechanized riparian and upland vegetation management, voluntary tree retention, mecha- nized fire hazard reduction Water Conservation Canal piping and lining, irrigation efficiency, delivery system improvements contractors hire field crews, rent or purchase equip- The Economic and Employment Impacts of ment, and buy goods and services needed to imple- OWEB’s Proposed Investment ment projects. Employees spend wages on goods and services to support their livelihoods. Economic OWEB’s investments in watershed restoration and employment multipliers represent this voyage are made through its capital grants program, most of through the economy. A multiplier measures the which is awarded to local watershed councils and degree to which economic activity in one economic soil and water conservation districts.6 Previous sector creates additional economic activity in other research on grantee expenditures reported that ap- sectors of an economy. We obtained US Bureau of proximately 80% of OWEB’s investments are spent Economic Analysis RIMS multipliers for Oregon locally in the county in which the grantee is located, and linked the above restoration categories to the and over 90% is spent within Oregon, supporting economic industries represented in the RIMS data local jobs and local economies often in rural and (Table 2).3 economically distressed areas of the state.7 The RIMS data show that labor-intensive work We calculated the estimated economic and em- has the highest job creation potential (nearly 50 to ployment impacts of OWEB’s proposed investments 100% greater than other restoration categories) at in watershed restoration by multiplying the invest- nearly 29 jobs per million dollars investment in ment proposed in each restoration category by the that type of work compared to only 13 to 20 jobs for 90% rate of state economic capture, and by the RIMS other sorts of restoration activities.4 Labor-inten- economic output multiplier and RIMS employment sive jobs, however, tend to be lower pay and lower ratio per million dollar investment, respectively. quality, but can be an important source of quick job On average, every $1 million invested in OWEB’s creation. In contrast, equipment-intensive activities capital watershed restoration program will create tend to create greater total economic activity due approximately 15 jobs and $1.86 million in total to higher wages and greater integration with other economic activity (Table 3). The economic engines economic industries. For example, using a helicop- of OWEB’s proposed watershed restoration projects ter crew to place large logs in inaccessible streams are water conservation and equipment intensive has job creation potential similar to forest restora- work, which will generate over 80% of the economic tion and water conservation, but the total economic impact from OWEB’s proposed investment. activity generated by utilizing helicopters is nearly double that of other restoration activities due to the amount of support infrastructure needed to maintain and operate a helicopter operation. Table 2. Economic and Employment Multipliers by Restoration Categories RIMS Economic RIMS Employment/ Restoration Category Economic Industry Output Multiplier $1 M Investment Labor-Intensive Riparian Upland Restoration Forestry Agricultural Support Services 2.11 28.8 Equipment-Intensive Aquatic Road Restoration Construction, Air Transportation5 2.32, 3.93 20.0, 12.5 Forest Restoration Logging 2.17 13.4 Water Conservation Water, Sewage and Other Systems 1.85 12.59 2
- 3. Leveraging OWEB Investments through sometimes include a variety of activities lumped Match into one proposal. We make the assumption that lumping is not biased towards any one category Between 1995 and 2008 total public and private and that as such the lumping of economic activi- investments in watershed restoration in Oregon ties is likely balanced across activities. Second, was nearly $500 million and OWEB was the larg- we assume RIMS multipliers accurately depict the est source of non-federal watershed restoration economic impacts of restoration activities. This as- funds. The Oregon Watershed Restoration Inventory sumption is untested and it is unclear what the im- (OWRI) tracks the accomplishments and matching pact of this assumption might be. Over the course funding sources of all completed OWEB-sponsored of the next year, the Ecosystem Workforce Program projects.8 Between 2004 and 2007, total matching will continue an empirical investigation to test this funds reported in OWRI varied between 0.97 in 2006 assumption. Until that project is completed, the to 1.52 in 2004. This range is a conservative esti- conclusions presented in this briefing paper should mate of actual matching funds because match report- be viewed as a preliminary estimate of the economic ing to the database is voluntary above the minimum impacts of watershed restoration. requirement of 0.25. OWEB’s capacity to leverage its investment will further increase its economic and employment im- Next Steps pacts by contributing from 570 to 885 additional jobs Over the next year the Ecosystem Workforce and $71 to $110 million in total additional economic Program will embark on an empirical investigation activity.8 Leveraging funding will raise OWEB’s of the economics of forest and watershed restoration overall impact in total job creation to between 1,150 activities in Oregon. We will work with the Oregon and 1,460 jobs and in economic activity to between Watershed Enhancement Board and the Pacific $145 and $182 million. With its capacity to leverage Northwest Research Station of the United States funding for capital watershed restoration projects, Forest Service to quantify and profile the economic OWEB is poised to make a substantial contribution impacts of watershed restoration on the state and lo- to the economy of the state of Oregon at a time of cal economies. We will develop new robust models critical need for jobs and economic activity. of the relationship between a variety of restora- tion activities and economic activity in a four stage analysis. First, we will conduct semi-structured Limitations and Assumptions interviews of watershed council and soil and water This analysis is based on several assumptions. conservation district representatives focused on First, we assume that each project in OWEB’s pro- staffing and labor costs. Second, we will use these posal for state and federal stimulus is dominated by interviews (and federal procurement databases) to one economic activity (e.g., excavator work or tree build a database of restoration contractors that work planting). From experience we know this assump- in Oregon. Third, we will undertake a survey of tion does not always hold true. Restoration projects restoration contractors working in Oregon focused Table 3. Potential Economic Employment Impacts of OWEB’s Proposed Watershed Restoration Investment OWEB Proposed Potential Job Creation Total Economic Restoration Category Economic Industry Investment in Oregon Activity in Oregon Labor-Intensive Riparian and Upland Forestry and Agricultural $3,929,524 101.8 $7,475,604 Restoration Support Services Equipment-Intensive Aquatic and Road Construction, Air $10,972,715 203.2 $24,809,860 Restoration Transportation Forest Restoration Logging $939,007 11.3 $1,833,205 Water Conservation Water, Sewage and Other $23,077,027 261.5 $38,371,327 Systems Total $38,918,272 577.8 $72,489,995 Average Impact per $1.00 Million Invested 14.9 Jobs $1.86 Million Note: This table does not include matching funds. 3
- 4. on (1) general information about contractors work- ing in watershed restoration, (2) average wage and salary rates for watershed restoration workers, (3) spending patterns for each restoration activity in the typology. Fourth, we will develop statistical models quantifying estimated economic impacts and jobs creation by restoration activity. Working with both agencies simultaneously, we will develop a com- mon tool for understanding the economic impacts of forest and watershed restoration that is scalable and transferable. Endnotes 1 Personal Communication, Tom Byler, Executive Director, Oregon Watershed Enhancement Board, January 20, 2009. 2 O ver the coming year, the Ecosystem Workforce Program will be building more robust models of economic impacts models of a range of forest and watershed restoration activities, funded by the Oregon Watershed Enhancement Board and USDA Forest Service. 3 T he US Bureau of Economic Analysis Regional Input-Output Modeling System allows users to construct a region based on an aggregation of US counties. The Oregon model is built upon 1997 national account data from the US Economic Census and updated with 2006 regional economic data. RIMS economic industries are based on the North American Industry Classification System at the 4-digit level for the industries referenced in Table 2. For more information on RIMS, please go to URL: http://www.bea.gov/regional/rims/. 4 T he RIMS data is confirmed by research from other economies that demonstrate job creation potential between 11 and 21 jobs per million dollars of restoration investment depending on the type of activity. See Baker, M. 2004. Socioeconomic Characteristics of the Natural Resources Restoration System in Humboldt County, California. Forest Community Research. Taylorsville, CA. (finding that a aproximately 300 jobs were created in Humboldt County, CA in 2002 as a result of a $14.5 million investment in aquatic, riparian, and road restoration). See also Hjerpe, E.E., and Y.-S. Kim. 2008. Economic Impacts of Southwestern National Forests Fuels Reductions. Journal of Forestry. 106:311-316 (finding that a near $41 million invest- ment fuels reduction in New Mexico created nearly 500 jobs). 5 Air Transportation reflects large woody debris placement projects where logs are transported and placed in a stream by a helicopter crew. 6 Oregon Watershed Enhancement Board. 2006. The Oregon Plan for Salmon and Watersheds: 2005-2007 Biennial Re- port. Salem, Oregon. 7 H ibbard, M. and S. Lurie. 2006. Some community socio-economic benefits of watershed councils: A case study from Oregon. Journal of Environmental Planning and Management 49:891-908. 8 See OWEB 2006 supra note 5; Oregon Watershed Restoration Inventory Database, 2009. 9 This finding is based on the assumption the match funds are directed to the same basic economic activity as the original investment and that match funding is uniformly distributed across the proposed restoration categories in Table 1. For more information: This study is a preliminary effort in a larger program of research at the Ecosystem Workforce Program on the economic impacts of forest and watershed restoration on local communities in Oregon. Please contact the Ecosystem Workforce Program at ewp@uoregon.edu for more information. This study was made possible by funding from the Oregon Watershed Enhancement Board, the USDA Forest Service, and the University of Oregon. 4