Posted Wednesday, September 12, 2018 4:46 pm

The ongoing debate about the pros and cons of copper-nickel mining near Ely has been cast by many as the stereotypical clash between jobs and the environment. It’s a familiar means of framing the issue, but I believe it overlooks a critical component— namely that the fundamental argument against copper-nickel mining near Ely is economic, not environmental.

By saying so, I don’t mean to give short shrift to the environmental concerns, which are significant. Anyone who believes that the environmental impacts of a copper-nickel mine will bear any relationship to the effects of Ely’s Pioneer Mine, or even modern-day taconite mining, is badly misinformed. Due to the geological differences, sulfide-based ore mining is inherently far riskier, and those risks are heightened dramatically in a water-rich environment. Given the incalculable value of the wilderness resource that a copper-nickel mine in the Rainy River watershed puts at risk, it can credibly be argued that this is the worst place on the planet for such a mine.

Supporters argue that the risks are worth it for the economic boost they believe such a mine would bring.

Yet there is a remarkable amount of economic data and research, as we reported on our front page last week, that suggests that a new mine will not bring the economic benefits that its supporters believe. Ely, over the past few decades, has made considerable progress pursuing amenity-based economic development, which is a well-established and widely-pursued model for economic growth in the U.S. Far from boosting the economy, there is considerable economic research, including the study recently produced by a pair of Harvard economists, that predicts a new mine will simply disrupt the progress Ely has made and leave the local economy weaker overall within just a few years.

The evidence for Ely’s recent success is overwhelming, and it isn’t just limited to Ely. In communities along the edge of the Boundary Waters and the Superior National Forest, we have seen significantly higher rates of in-migration of residents from other areas than most other non-metro counties in Minnesota. High percentages of those migrants are professional and well-educated, and bring relatively high incomes, either through ongoing earnings or investments, that are spent in the regional economy. Because many of these new residents, who we can call “lifestyle residents” are not tied to a location for their employment, they are highly mobile. If the qualities that draw lifestyle residents to Ely are threatened, some will choose to relocate. Many more will simply look elsewhere without ever considering our area.

Keep in mind, we’re not talking about relatively low-paying tourism jobs versus mining employment. Tourism jobs are a nice bonus, but I’ve never viewed them as the basis for a vibrant, year-round economy. The jobs lost from short-circuiting Ely’s amenity-based economic activity include the often high-paying professions that these new residents bring with them, along with jobs that provide support services for these new residents, including sectors like construction, real estate, finance, insurance, building supplies, home furnishings, and some kinds of light manufacturing.

These are solidly middle-class jobs we’re talking about here. This isn’t a question of mining jobs versus tourism jobs. That’s a false argument made by people who should know better.

The recent Harvard study used a standard economic model to examine 72 different economic scenarios with mining, and without. In all but three, the Ely area economy did better without mining than with it.

And the Harvard study overlooked one very important factor. In its analysis, the economists looked at a 20-year time horizon assuming that a mine is opened this year. And it found that in the first few years the added income from mine construction and initial mining would lead to more jobs and local income in the area economy. But it also found that over five-to-ten years, the disappearance of some existing lifestyle residents, who would choose to relocate, along with a modest reduction in the in-migration of new lifestyle residents, was significant enough to leave the Ely area economy worse off in terms of jobs and local income.

I believe the negative economic impacts of mining would actually be much worse, because we all know a new Twin Metals mine won’t be built this year. The earliest such a mine could open is a decade from now, and that’s wildly optimistic.

That means that the negative effects from a slowing of in-migration of new lifestyle residents and the gradual departure of some who already live here, will begin now, while the temporary (and still highly speculative) economic benefits of a possible new mine won’t be achieved for 10-20 years.

That means the economic costs to Ely’s economy will have 10-20 years to accumulate before the short-term boost a mine might bring even occurs. Under this more realistic scenario, Ely’s economy begins to see the downsides of mining whether or not a mine is ever built. And that means that Ely, in the end, never sees an economic upside (not even a temporary one) from a new mine.

Those who doubt the impact of lifestyle residents on the Ely economy should take a look at the report we issued last August, “Ely’s golden goose: how the townships drive Ely’s economy,” which clearly demonstrated that the townships (where most lifestyle residents reside) provide the lion’s share of local spending that maintains the Ely area economy.

The divide within the community over this issue further hampers Ely’s economic progress. While some people don’t mind conflict, many do, and the conflict within the community over this issue, which will now carry on for decades, is guaranteed to cost the area economy. Under the amenity-based model of economic development, economic progress is made through the individual decisions of thousands of people who choose to relocate to a community that offers them the lifestyle they desire. If Ely is seen as a community that’s hostile to new residents, or as a place where the amenities these potential new residents seek are under threat from industrial development and pollution, most will simply choose to go elsewhere.

There are dozens of economic studies to back up these arguments, and I cited several last week. This week, I’m including a bibliography below in case readers want to check out some of the research themselves.

I recognize those who support the Twin Metals project may have a different view. But where are the economic studies to show that copper-nickel mining will actually benefit Ely’s economy? The Skurla study, produced by UMD’s Labovitz School in 2012, which is touted all the time by copper-nickel mining boosters, is highly outdated. Besides, 90-percent of the economic impact it projected came from anticipated development in the taconite industry. It attributed barely 600 direct jobs to non-ferrous forms of mining, and none of those new jobs have arrived. Nor have the 5,000 new taconite jobs that the study predicted. There are no more workers in the taconite industry today than there were when the study was produced. If anything, the Skurla study was just another example of how frequently hopes are dashed on the Mesabi Iron Range because its mining dependent economy relies on hugely expensive and risky investments in production capacity for commodities that fluctuate wildly in price.

The bottom line is this. If there were economic data to suggest that a new copper-nickel mine near Ely would create long-term economic prosperity above and beyond the current economic model, one could at least argue about whether the environmental and related economic risks associated with the project were justifiable. But when the economic data points to just the opposite, there is no longer an argument, just stubborn refusal to face the facts. For Ely political leaders to continue to push for a mine in the face of such evidence is questionable. While the community spends the next decades fighting over it, potential economic progress will be lost. And a new mine risks killing Ely’s sustainable golden goose for short-term benefit at most, while leaving the community worse off economically than it is today. Smart political leaders would recognize there’s little to gain, and far too much to lose in the pursuit of copper-nickel mining at the end of the road.

But don’t take my word for it. Read some of the studies for yourself.

Cited studies

Stock, James, Hitchings, Harold. 2018.Harvard study prepared for USFS re: economic effects of copper-nickel mining in Ely area.

https://scholar.harvard.edu/files/stock/files/snf_withdrawal_ea_stock_and_bradt_aug6_2018.pdf

McGranahan, David A., Timothy R. Wojan, and Dayton M. Labert. 2011. “The rural growth trifecta: outdoor amenities, creative class and entrepreneurial context.” Journal of Economic Geography 11:529-557

Winchester, Benjamin. 2014 “Rewriting the Rural Narrative” http://www.iira.org/wp-content/uploads/2015/03/Rewriting_the_Rural_Narrative_Ben_Winchester.pdf

Poudayal, Neelam C., Donald G. Hodges, and H. Ken Cordell. 2008. “The role of natural resource amenities in attracting retirees: Implications for economic growth policy.” Ecological Economics 68, no. 1-2: 240-248

Winkler, Richelle, Field, Donald, Luloff, A.E., Krannich, Richard. 2007. Social Landscapes of the Inter-Mountain West: A Comparison of ‘Old West’ and ‘New West.’ 91c24a9bc640613844288.pdf91c24a9bc640613844288.pdf91c24a9bc640613844288.pdf 91c24a9bc640613844288.pdf