Frac sand mining’s impact on job creation in Wisconsin’s sandy areas will be minimal, and communities must account for its potential economic drawbacks, according to a new report.
Economic impact studies “almost always quantify only what are labeled benefits: additional jobs, payrolls, and tax revenues to governments,” says the report, released Wednesday by Power Consulting, Inc, a Montana-based consulting firm that specializes in natural resources analysis.
Citing examples like an economic impact report from Wood County last year, the report says “costs associated with frac-sand production are rarely discussed in these studies.”
The report was commissioned by the Wisconsin Farmers Union, a family farming advocacy group; Wisconsin Towns Association, a nonpartisan association representing town and village governments; and the Institute for Agriculture and Trade Policy, a Minnesota-based sustainable food, farm and trade research and advocacy organization.
Frac sand mining has surged in Wisconsin since 2010, from a handful of sites to more than 100 permitted facilities, driven by a spike in demand from oil and gas drillers in other states who use the sand in the process of hydraulic fracturing.
The mining has divided residents across western Wisconsin — those excited about new jobs and tax revenue against those concerned about potential health, environmental and other impacts.
Frac sand job creation will have “little impact” on the overall employment picture in sand-rich western Wisconsin, the Power report says.
The report recommends that communities ask companies proposing projects how many of the mining jobs will be filled locally, how market volatility for oil and gas could affect the long term economic prospects, and if mining might discourage or displace other economic activities.
But Rich Budinger, the president of the Wisconsin Industrial Sand Association, attacked the report’s conclusions.
“The report released today is the product of a paid consultant who is routinely critical of mining and whose clients frequently have an anti-mining bias. Its conclusions must be considered with that in mind,” Budinger said in a news release.
Nearly all of the jobs created by the industry in Wisconsin are filled locally, he said. Outside contractors may come in for specialized construction, but after that, most of the employees at WISA’s five member companies live within a 45-mile radius of the facilities.
Budinger said that many of the mines being developed in Wisconsin are long-term investments.
“There is a constant need for industrial minerals,” Budinger said. “As long as we are managing our resources sustainably, this can continue for decades.”
Tom Quinn, executive director of the Wisconsin Farmers Union, said that the groups sponsoring the study wanted an “independent analysis” to help communities sort through the complex economic impacts of frac sand mining.
“If this industry is going to be a positive part of this community, we need to ask these questions,” Quinn said.
The report says that mining companies often promise local governments significant economic benefits, but historically, mining “has rarely laid the basis for sustained prosperity.”
Job benefits in context
The report provides context to previous job estimates from an oil and gas industry-sponsored report and the Wisconsin Center for Investigative Journalism, which put the direct impact of the frac sand industry in Wisconsin between 2,300 and 2,800 jobs. The total job creation is comparable to the average number of jobs Wisconsin has added each month for the past 20 years, according to the report.
Budinger said he believes any job creation is a positive. Report author Tom Power doesn’t buy that argument.
“If there are costs involved, you can’t just say that one job is a positive,” Power said. “In terms of measuring the benefits and costs, quantity matters. … It’s a weighing of the two.”
Calculating the costs of frac sand mining remains easier said than done. Increased road maintenance costs and changes to property values near mine sites can be quantified, but Power said officials don’t yet have a good handle on what the environmental costs might be.
“Is this going to fundamentally change the character of the landscape that is in conflict with what western Wisconsin has always represented?” Power said. “Will we be able to stop this if we are headed to a scale that is unacceptable?”
Frac sand mining could jeopardize western Wisconsin’s existing “economic vitality,” the report says, if other businesses and homeowners decide to relocate because mining reduces the region’s appeal.
“It’s hard to measure quality of life impacts,” Quinn said. “But we need to recognize that the economy we have here is significantly based on our quality of life.”
Budinger said that mining doesn’t have to be at odds with quality of life, if the community and mine work together to address concerns.
“As long as it’s done responsibly, it’s going to have tremendous economic benefits,” Budinger said.