ECONOMIC AND ENVIRONMENTAL IMPACTS OF THE GOGEBIC TACONITE MINE Aleksei Bogdanov and Zamira Simkins, PhD 2013 Wisconsin Economic Association Annual Meeting

Introduction GTAC iron ore mine proposal: Open pit mining: est. 8 mill tons/year for 35 years Taconite plant: less than 30% iron in ore → enrichment Waste disposal: est. 3 tons of ore = 1 ton of taconite pellets

Public controversy Economic benefits (NorthStar Economics, 2011): Economic impact study: 12 counties, IMPLAN model 700 mining jobs, average labor income of $82,984 per year Est. total payroll: $59.5 mill per year $17 mill in total state & local tax revenue per year Total impact (direct, indirect, induced): $604 mill per year Environmental and other concerns: Water quality (acid mine drainage) Air quality (asbestos-like fibers) Flora & fauna (e.g., wild rice) Livable communities Infrastructure, tourism, etc

Undergraduate research project Objective: Assess the potential economic and environmental impacts of the GTAC mine on Ashland and Iron counties Methodology: Literature review (Murdoch, 2007; Carter, 2012; etc) Mining is a boom and bust industry Economic impact study Comparative analysis of similar mines supports NorthStar Economics economic impact study results Interviews: local businesses; no response from GTAC Environmental impact study Public survey

Public survey: Methodology 20 questions: 5 mandatory target questions, 15 supplemental Institutional Review Board approval Survey launched July 16, 2013; closed August 19, 2013 Survey samples: (1) Self-reported: Ashland Daily Press disseminated a link to online survey anyone could complete (2) Random: Ashland and Iron county households were randomly selected based on infofree.com database records and contacted by phone Qualtrics – survey administration & data management website

Public survey: Data issues Self-reported survey: N = 862 Self-selection error → biased results Random survey: N = 102 Sample-frame error - only households with phones surveyed Non-response error: 51% response rate → 49% no response Small sample-size error: 9.65% margin of error at 95% confidence level If N > 370, 5% margin of error at 95% confidence level Results are a good proxy of the public’s view on the mine but may not fully represent the entire population

Public survey: Random sample results Respondents reported good knowledge and understanding of the mine: mean 7/10 Most respondents opposed the mine: 44.12% “absolutely opposed” and 17.65% “generally opposed” it Most respondents believe the mine would have a “mostly negative” impact on local transportation infrastructure, “only negative” impacts on the environment, and a “somewhat positive” impact on the local economy, businesses, and employment opportunities When asked if they would be interested in working at the mine, 66.34% answered “absolutely not” and 19.80% “most likely not” Ashland and Iron counties do not have the necessary supply of mining workers to meet the mine’s potential demand for labor

Public survey: Key results

Conclusion GTAC mine promises significant economic benefits Local area does not have a sufficient supply of mining workers to meet the mine’s labor demand Low concentration of iron in ore makes the mine vulnerable to commodity price fluctuations Public strongly opposes the mine Public’s environmental concerns to be addressed in environmental study