4
Analysis of the Program

This chapter outlines the socioeconomics component of the Outer Continental Shelf (OCS) Environmental Studies Program, which is a component of the Minerals Management Service (MMS) of the Department of the Interior. The presentation in this chapter will be divided by region because the environmental studies are largely products of the MMS regional offices. The discussion is somewhat uneven because of wide variations both in the number of socioeconomic studies and in the documentation of systematic socioeconomics programs in the different regions. Particular focus is placed on the program in Alaska, because most of the socioeconomic studies have been performed there and because the structure and history of the Alaska program are well documented.

Atlantic Region

The Socioeconomics Panel was unable to identify documentation of a systematic MMS program for identifying and analyzing important socioeconomic issues for study in the Atlantic region. Table 4-1 is a list of studies identified by MMS as socioeconomic.

The Atlantic region socioeconomic studies include collection of baseline information from secondary sources (Research Institute of the Gulf of Maine, 1974); determination of onshore environmental effects of offshore-related facilities (International Research and Technology Corporation, 1976); identification of historically important potential shipwreck sites (Harvard College Institute of Conservation Archaeology, 1979; Science Applications, Inc., 1981); evaluation of the effects of oil spills on commercial fisheries (University of Rhode Island/Applied Science Associates, 1980-1982); quantification of traveler spending and associated state, federal, and local revenues (U.S. Travel Data Center, 1975); an assessment of potential conflicts between the fishing and oil industries (Centaur Associates, Inc., 1981); an evaluation of the technical feasibility of alternative modes of oil and gas transportation (Policy Planning and Evaluation, Inc., 1983); an assessment of effects associated with pipeline construction and operation (Rutgers University, 1983); and conversion of estimates of local expenditures of oil and gas operators to estimates of changes in regional employment and personal income (Kearney, 1991).

Many of these studies address important issues, but they primarily concern natural science or engineering. For example, the Research Institute of the Gulf of Maine (1974) reports what appears to be primarily an inventory of physical and biological resources, but it also includes some secondary data on selected socioeconomic issues. International Research and Technology Corporation (1976) determined the physical and environmental effects of OCS-associated onshore development, but not their socioeconomic implications. The University of Rhode Island/Applied Science Associates model



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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies 4 Analysis of the Program This chapter outlines the socioeconomics component of the Outer Continental Shelf (OCS) Environmental Studies Program, which is a component of the Minerals Management Service (MMS) of the Department of the Interior. The presentation in this chapter will be divided by region because the environmental studies are largely products of the MMS regional offices. The discussion is somewhat uneven because of wide variations both in the number of socioeconomic studies and in the documentation of systematic socioeconomics programs in the different regions. Particular focus is placed on the program in Alaska, because most of the socioeconomic studies have been performed there and because the structure and history of the Alaska program are well documented. Atlantic Region The Socioeconomics Panel was unable to identify documentation of a systematic MMS program for identifying and analyzing important socioeconomic issues for study in the Atlantic region. Table 4-1 is a list of studies identified by MMS as socioeconomic. The Atlantic region socioeconomic studies include collection of baseline information from secondary sources (Research Institute of the Gulf of Maine, 1974); determination of onshore environmental effects of offshore-related facilities (International Research and Technology Corporation, 1976); identification of historically important potential shipwreck sites (Harvard College Institute of Conservation Archaeology, 1979; Science Applications, Inc., 1981); evaluation of the effects of oil spills on commercial fisheries (University of Rhode Island/Applied Science Associates, 1980-1982); quantification of traveler spending and associated state, federal, and local revenues (U.S. Travel Data Center, 1975); an assessment of potential conflicts between the fishing and oil industries (Centaur Associates, Inc., 1981); an evaluation of the technical feasibility of alternative modes of oil and gas transportation (Policy Planning and Evaluation, Inc., 1983); an assessment of effects associated with pipeline construction and operation (Rutgers University, 1983); and conversion of estimates of local expenditures of oil and gas operators to estimates of changes in regional employment and personal income (Kearney, 1991). Many of these studies address important issues, but they primarily concern natural science or engineering. For example, the Research Institute of the Gulf of Maine (1974) reports what appears to be primarily an inventory of physical and biological resources, but it also includes some secondary data on selected socioeconomic issues. International Research and Technology Corporation (1976) determined the physical and environmental effects of OCS-associated onshore development, but not their socioeconomic implications. The University of Rhode Island/Applied Science Associates model

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TABLE 4-1 Socioeconomic Studies in the Atlantic Region The Research Institute of the Gulf of Maine 1973-74. A Socio-Economic and Environmental Inventory of the North Atlantic Region Including the Outer Continental Shelf and Adjacent Waters from Sandy Hook, to the Bay of Fundy. International Research and Technology Corporation, 1975. Environmental Consequences of Onshore Activity in Four New Jersey Coastal Counties Resulting from Offshore Oil Development. Virginia Institute of Marine Science (VIMS), 1974. A Socioeconomic Environmental Baseline Summary for the South Atlantic Region Between Cape Hatteras, North Carolina, and Cape Canaveral, Florida. U.S. Travel Data Center, 1975. Travel Economic Impact Model: Final Economic Analyses Methodology; Final Demonstration Project. International Research and Technology Corporation, 1976. Environmental Consequences of Onshore Economic Activity Resulting from Offshore Oil and Gas Development in New England. International Research and Technology Corporation, 1978. Environmental Consequences of Onshore Activity Resulting from Offshore Oil and Gas Development in the Mid-Atlantic. Harvard College Institute of Conservation Archaeology, 1979. Summary and Analysis of Cultural Resource Information on the Continental Shelf from the Bay of Fundy to Cape Hatteras. Science Applications, Inc., 1981. A Cultural Resource Survey of the Continental Shelf from Cape Hatteras to Key West, 4 Vols. University of Rhode Island and Applied Science Associates, 1980-82. North Atlantic OCS Area Study of the Economic Cost from Oil Spills to Commercial Fishing. Centaur Associates, Inc., 1981. Assessment of Space and Use Conflicts Between the Fishing and Oil Industries. Policy Planning and Evaluation, Inc., 1983. Study of Alternative Modes of Transporting OCS-Produced Oil and Natural Gas. Rutgers University, 1983. Identification and Assessment of Impacts Associated with the Construction and Operation of Submarine Pipelines on the Mid-Atlantic Outer Continental Shelf. Walcoff & Associates. 1989. Proceedings of the Third Atlantic Outer Continental Shelf Region Information Transfer Meeting (ITM). Continental Shelf Associates, Inc., 1990, 1991. Synthesis of Available Biological, Geological, Chemical, Socioeconomic, and Cultural Resource Information for the South Florida Area. A.T. Kearney, Inc., 1991a. Impacts of Oil and Gas Development on Recreation and Tourism off the Florida Straits. A.T. Kearney, Inc., 1991b. Impacts of Oil and Gas Development on Recreation and Tourism on the Atlantic Continental Shelf.   Source: Compiled by Socioeconomics Panel from information provided by MMS.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies is primarily an analysis of physical fates and biological effects of oil spills that includes the weight and value of lost catch. This is clearly an important study with serious socioeconomic implications, but it is primarily an analysis of physical oceanography and biology, and contains little or no socioeconomic analysis. No social scientists were involved in the effort. The Policy Planning and Evaluation, Inc., report (1983) is basically a technical analysis that includes a cost analysis of alternative transportation modes, but ignores the effects of the alternatives on society. Rutgers University (1983) compiled secondary data on physical, biological and socioeconomic systems in the Mid-Atlantic. Few of the studies carried out socioeconomic analysis or focused solely or even primarily on socioeconomics. Most of the socioeconomic content of these studies is in the form of secondary data. Although important, this does not itself constitute a socioeconomics program, and very little of the effort in the Atlantic region is placed on socioeconomic analysis. Notable exceptions are the studies by Centaur Associates, Inc. (1981), and the U.S. Travel Data Center (1975). The Centaur Associates study identifies and characterizes potential areas of conflict between the fishing and oil industries. It examines the history of various conflicts and uses primary data to examine potential for conflict in 30 ports on the Atlantic coast, the Gulf of Mexico, and in California. The study used a sound approach and carried out a thorough analysis of this important issue. Of course, the information requires frequent revision because conditions in many ports change rapidly. The U.S. Travel Data Center (1975) used a model to estimate various economic effects on recreational travel, including traveler expenditures, associated tax receipts, secondary employment, and personal income. These are potentially valuable data for putting potential tourist revenues into perspective. However, a thorough economic impact assessment of this issue would go beyond the collection of data to an analysis that relates OCS production to changes in those revenues. Some attempts were made at validating the model, and it was found to be successful in providing data that were in agreement with data from similar studies, but it was not useful for comparison with statewide or countrywide studies, which are the significant areas of analysis for OCS-related issues. GULF OF MEXICO REGION The panel found no documentation of a systematic program for identifying and analyzing important socioeconomic issues for study in the Gulf of Mexico region. Table 4-2 is a list of studies identified by MMS as socioeconomic. Early studies in the Gulf of Mexico were primarily baseline studies (Environmental Consultants, Inc., 1974; Larson et al., 1980; Liebow et al., 1982; Friend et al., 1982; French and Parsons, 1983). These broad characterizations of entire regions were previously criticized by the National Research Council (NRC, 1978) for their lack of focus on scientific issues and for their lack of relevance in determining the effects of OCS activities. Although the baseline studies contain interesting information, their encyclopedic approach virtually ensures that their coverage will be too superficial for meaningful analysis beyond a general characterization of the region. For example, in less than one page, the Friend et al. report (1982) discusses the economic effects of OCS activities on the Port of Mobile. Mobile is a major port with connections to the Intracoastal Waterway and the Tenn-Tom waterway. Notable exceptions to the baseline study approach during the Bureau of Land Management (BLM) era were two Coastal Environments, Inc. (1977, 1986) underwater surveys of potential archaeological sites in the northern Gulf of Mexico; and an analysis by Restrepo et al. (1982) of the economic effects of the Ixtoc I well blowout in the Bay of Campeche, Mexico, in 1979, and the Burma Agate tanker spill, which resulted from a collision with the freighter Mimosa near Galveston, Texas, in 1979.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TABLE 4-2 Socioeconomic Studies in the Gulf of Mexico Region Environmental Consultants, Inc., 1974. Socioeconomic Inventory and Analysis of the Gulf of Mexico Region. Coastal Environments, Inc., 1977. Cultural Resources Evaluation of the Northern Gulf of Mexico Continental Shelf. Larson et al., 1980. Mississippi Deltaic Plain Region Ecological Characterization: A Socioeconomic Study. Liebow et al., 1982. Texas Barrier Islands Region Ecological Characterization: A Socioeconomic Study. Restrepo et al., 1982. IXTOC I Oil Spill Economic Impact Study. Friend et al., 1982. Alabama Coastal Region Ecologic Characterization: A Socioeconomic Study. French and Parsons, 1983. Florida Coastal Ecological Characterization: A Socioeconomic Study of the Northwestern Region. Resource Economics & Management Analysis, Inc., 1987. Analysis of Indicators for Socioeconomic Impacts Due to OCS Oil and Gas Activities in the Gulf of Mexico, Year II. Centaur Associates, Inc., 1986. Indicators of the Direct Economic Impacts Due to Oil and Gas Development in the Gulf of Mexico. Coastal Environments, Inc., 1986. Archeological Investigations on the Outer Continental Shelf: A Study Within the Sabine River Valley Offshore Lousiana and Texas. Texas A&M Research Foundation, 1989. Historic Shipwrecks and Magnetic Anomalies of the Northern Gulf of Mexico: Reevaluation of the Archeological Resource Management Zone 1.   Source: Compiled by the Socioeconomics Panel from information provided by MMS. Since the creation of MMS in 1981, there have been two primary studies completed in the Gulf Region (Centaur Associates, Inc., 1986; Texas A&M Research Foundation, 1989). The Centaur Associates study was an extensive effort conducted in cooperation with the Offshore Operators Committee to collect data about offshore workers in the Gulf of Mexico in 1984. The data were used to create an input-output model for the coastal northern Gulf. It is unclear how this model has been used, if at all. Socioeconomic analyses outside of MMS have been performed, with the data used to compile the input-output model. For example, Gramling (1989) uses the data to demonstrate that about $77 million flowed out of the state of Louisiana in 1984 in the form of wages and salaries paid to offshore workers. The Texas A&M Research Foundation study (1989) is an archaeological evaluation concentrating on historic shipwrecks. PACIFIC REGION The panel was unable to identify documentation of a systematic program for identifying and

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies analyzing important socioeconomic issues for study in the Pacific region. Table 4-3 is a list of studies in the Pacific region identified by MMS as socioeconomic. The earliest MMS socioeconomic study in the Pacific Region is an archaeological survey and collection of maps (Science Applications, Inc., 1978). Two other studies include modeling targeted toward particular lease sales (Blayney-Dyett, 1981; BLM, 1981) and an effort to inventory coastal recreation sites (Granville Corporation, 1981). Other studies focus on the issues of mitigation of sea-floor conflicts between pipelines and trawl fisheries in California (Centaur Associates, Inc., 1984a); the cumulative effects of oil and gas development in the Santa Barbara Channel (Centaur Associates, Inc., 1984b); information about OCS oil activities and their direct effects (Centaur Associates, Inc./ECOS Management Criteria, Inc., 1985); and the effects of OCS development on recreation (Dornbusch and Co., 1987a, b). Later efforts gathered socioeconomic baseline data from secondary sources (Kearney/Centaur, 1987a,b). Several of the socioeconomics studies in the Pacific Region have attempted to go beyond secondary data collection and to apply socioeconomic analysis. However, the modeling efforts are based on critical assumptions that are not easily justified, nor are they supported by data. Many of these studies are small-scale computer analyses, rather than in-depth studies based on primary data collection and actual experience. As discussed in an earlier review (NRC, 1989a), the modeling efforts have not been adequately integrated with field observations, or adequately calibrated and verified. In addition, some of these analyses have methodological difficulties, as noted previously (NRC, 1989a). The Dornbusch (1987) study contains an inventory of California's aesthetic resources, but no research questionnaire was used. Landscape architects developed aesthetic ratings to evaluate effects, but did not survey recreational users. The study also used a travel-cost procedure for California. Unfortunately, the contractor combined it with another procedure, a gravity model, whose underlying foundation contradicts the travel-cost procedure. The results are therefore logically inconsistent. The use of the gravity model driving the tourism analyses also is flawed. Gravity models (described on pp. IV-67-69 in the draft environmental impact statement for Lease Sale 91; MMS, 1987d) have a long history in the social sciences, but their basic limitations (although understood) are not usually appreciated (Stewart, 1948). Among other limitations, one direct application to the draft environmental impact statement for northern California (MMS, 1987d) is that ''the gravity model is designed to account for the behavior of large groups of people'' (Huff, 1965). This means that only large spatial units (100 km2), trafficked by large numbers of people (100,000 or more), are amenable to a gravity treatment. Also, in common use, spatial units are treated contiguously, not in isolation or as being disconnected. None of these conditions holds for tourism in northern California. The results regarding offshore platforms and beach use were reported to be "conflicting and erratic" (Dornbusch & Co., 1987). The presence of oil rigs was found to be associated with increases in beach use in some cases and with decreases in others. The contractor rejected the results in the detailed discussion in the third volume and concluded in the executive summary that there would be no effect from oil rigs. The environmental impact statement for Sale 91 drew on the contractor's conclusion in the executive summary to conclude that oil platforms have no effect on tourism. This is inconsistent with the detailed findings of the Dornbusch & Co. study. There have been several attempts to apply socioeconomic analysis to OCS activity in the Pacific region. As such, the program in the Pacific has gone beyond those in the Atlantic and the Gulf of Mexico. However, modeling efforts in the Pacific Region are small-scale computer analyses, rather than in-depth studies with primary data. Insufficient efforts have been made to incorporate actual primary data to calibrate or verify the models. In addition, many of the studies have serious methodological difficulties.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TABLE 4-3 Socioeconomics Studies in the Pacific Region Southern California Ocean Studies Consortium of the California State University of Colleges, 1974. A Summary of Knowledge of the Southern California Coastal Zone and Offshore Areas: Social and Economic Areas. Science Applications, Inc., 1978. Archaeological Literature Survey and Sensitivity Zone Mapping of the California Bight Area. Wambem and Osborn, 1980. Potential Onshore Impacts in the San Francisco Bay Area on the Future Distribution of Population, Housing, and Jobs. Wambem and Osborn, 1980. Land Use and Economic Impacts in the San Francisco Bay Area Region. Blayney-Dyett, 1981. The Impacts of Proposed OCS Lease Sale No. 68 on Public Services in Santa Barbara and Ventura Counties. Granville Corporation, 1981. Inventory and Evaluation of California Coastal Recreation and Aesthetic Resources. Department of the Interior (DOI), 1981. Economic Impacts of Proposed OCS Sale No. 68 Offshore Southern California. Centaur Associates, Inc., 1984a. Mitigation of Sea Floor Conflicts Between Oil and Gas Pipelines and Commercial Trawl Fisheries on the California Outer Continental Shelf. Centaur Associates, Inc., 1984b. Cumulative Socioeconomic Impacts of Oil and Gas Development in the Santa Barbara Channel Region: A Case Study. Fernandez, J.M., 1984a. Economic Impacts of Proposed Southern California Lease Offering. Fernandez, J.M., 1984b. Economic Impacts of Proposed OCS Lease Sale No. 73. Yamasaki, R.M., 1984. Oil and Gas Transportation Scenario for the Proposed Southern California Lease Offerings. Centaur Associates, Inc./Ecos Management Criteria, Inc., 1985. Facilities Related to Outer Continental Shelf Oil and Gas Development Offshore California: A Factbook. ECOS Management Criteria, Inc., 1985. Economic and Demographic Profile of San Luis Obispo County, California. Dornbusch & Co., 1987a. Comments on OCS Impacts of California Coastal Recreation. Dornbusch & Co., 1987b. Impacts of Outer Continental Shelf Development on Recreation and Tourism. Kearney/Centaur, 1987a. Baseline Socioeconomic Profiles of Coastal Counties in the Southern California Planning Area.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Kearney/Centaur, 1987b. Socioeconomic Profiles of Coastal Counties in the Northern California Planning Area. PS Associates, 1987. Archaeological Resource Study: Morro Bay to the Mexican Border. Central Washington University, 1990. Potential Effects of OCS Oil and Gas Activities on Oregon and Washington Indian Tribes: Description of Overall Legal Environment and Legal Status of 16 Specified Tribes. MBC Applied Environmental Sciences, 1991. Proceedings of the Sixth Pacific Outer Continental Shelf Region Information Transfer Meeting (ITM). Wooley and Molotch, 1991. Southern California Educational Initiative Socioeconomics Workshop.   Source: Compiled by the Socioeconomics Panel from information provided by MMS. ALASKA REGION The Alaska Socioeconomics Study Program (SESP) is an extensive, substantive program of more than 159 individual studies (Appendix D). Rather than providing a discussion of individual studies, this section provides a brief summary of the structure of the program, discusses broad coverage of studies, and discusses some individual studies as examples. The Alaska North Slope region, primarily the Beaufort Sea area, is used for purposes of illustration. The impetus for the Alaskan SESP was a request by the state of Alaska to the Department of the Interior to develop a special program for socioeconomics, in recognition of the uniqueness of Alaskan cultures. This resulted in a request by Bureau of Land Management to the University of Alaska Sea Grant Program for an integrated, comprehensive planning document for Alaska socioeconomics research. The planning document was developed through a three-day workshop with participants from federal and state agencies, universities, and industry (University of Alaska Sea Grant Program, 1975) and was modified following a public review and presentation at a public conference. The Sea Grant Program document suggests a structure for a research program and describes its 13 tasks (Table 4-4). These proposed tasks include setting alternative development scenarios; assessing technology to determine facilities likely to be associated with each level of development; examining and learning from the experience of OCS-related socioeconomic effects elsewhere; assessing a variety of socioeconomic effects associated with the various levels of development; and assessing the potential for current or emerging institutions to control and mitigate effects. The Alaska SESP grew out of this early proposal. Its structure is based on three general components—baseline studies, development scenarios, and impact assessments (Banks, 1986)—which include many of the proposed research tasks. Baseline studies elucidate the nature and status of the human environment and predict changes in that environment in the absence of OCS activity. This provides a basis against which effects can be measured and evaluated. The available baseline studies appear to be carefully conceived and administered descriptions of a broad range of social, economic, and cultural facets of native communities in rural Alaska. The studies' observations of the

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TABLE 4-4 Research Tasks Identified in the Alaska Sea Grant Planning Document Adoption of technology models. Purpose: To determine the facilities that are likely to be associated with OCS development. Physical environmental analysis. Purpose: To provide an inventory of physical environments, both natural and anthropogenic, that are likely to be affected by OCS activity and to identify resulting changes. Social and cultural impact analysis. Purpose: To assess existing cultural, social, economic, religious, and political aspects of Alaskan communities and to identify and assess potential effects of OCS development. Education and community service delivery systems in OCS development regions, local impact areas, and communities. Purpose: To assess the ability of existing community services to meet new or increased demands associated with OCS development. Social stress and mental health in communities potentially affected by OCS development. Purpose: To identify conditions associated with OCS development that contribute to mental health problems in the communities and to determine the relationship between the two. Regional economic growth models. Purpose: To review, modify and update existing statewide and regional economic models to identify financial consequences of alternative OCS development scenarios. Local economy—the economics of the mixed economy. Purpose: To project economic evolution of the mixed market and subsistence economies in areas affected by OCS development. External economic effects of OCS development. Purpose: To identify and measure the external costs and benefits not directly accounted for in other research tasks. Demographic models. Purpose: To review, modify, and update existing demographic models to provide regional and community demographic profiles. Lease sale area development scenarios. Purpose: To develop four alternative scenarios for OCS development for each of the proposed OCS areas. OCS development social-economic impact and consequences identification. Purpose: Use lease sale area development scenarios and the analytical models developed in other research tasks to identify social and economic effects resulting from OCS development. Political and management institutions—ability to assess and alter effects. Purpose: To analyze existing political and managerial institutions, to indicate emerging institutions, and to evaluate the institutions' abilities to mitigate harm from OCS development. Comparative case studies. Purpose: To compile information on social and economic consequences of past petroleum development and to relate these experiences to Alaskan OCS development.   Source: University of Alaska Sea Grant Program, 1975.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies consequences of contact between native communities and modern industrial society provide an idea of the alterations in culture that could result from OCS activity. Table 4-5 is a list of some baseline studies of Alaska's North Slope, focusing mainly on the Beaufort Sea planning area. The studies describe general demographic, social, economic, and cultural facets of native Alaskan communities; the current condition of transportation systems; subsistence resource uses; and the availability of water and other natural resources. TABLE 4-5 Examples of Baseline Studies for Alaska's North Slope Report Number Author(s), Date, Title SR 1 LGL Ecological Research Associates, August 1984. The Barrow Arch Environment and Possible Consequences of Planned Offshore Oil and Gas Development. TR 2 Peat, Marwick, Mitchell & Co., URSA, Crittenden, Cassetta, Cannon/Hellmuth, Obata & Kassabaum, Inc. and Dames and Moore, April 1977. Alaska OCS Socioeconomic Studies Program Task Report: Literature Review. TR 5 Crittenden, Cassetta, Cannon/Hellmuth, Obata and Kassabaum, Inc., December 1977. Baseline Studies of the Physical and Manmade Environment: The Beaufort Sea Region. TR 9 Worl Associates, June, 1978. Beaufort Sea Region Sociocultural Systems. TR 22 Worl Associates, April 1978. Assessment of Change in the North Slope Beaufort Sea Region Sociocultural Systems. TR 64 Worl Associates, November 1981. Beaufort Sea Sociocultural Systems Update Analyses. TR 65 Peter Eakland and Associates, December, 1981. Transportation Baseline Update and Forecast of Conditions Without the Planned Lease Sale, Beaufort Sea. TR 85 University of Alaska Institute of Social and Economic Research, September 1983. A Description of the Socioeconomics of the North Slope Borough. TR 96 Research Foundation of State University of New York, January 1984. Nuiqsut Case Study. Final Report. TR 101 Alaska Consultants, Inc. and Clyde S. Courtnage and Stephen Braund & Associates, January 1984. Barrow Arch Socioeconomic and Sociocultural Description. TR 117 Chilkat Institute, September 1985. Monitoring Methodology and Analysis of North Slope Institutional Response and Change, 1979-1983. TR 120 University of Alaska Institute of Social and Economic Research, June 1986. Economic and Demographic Systems of the North Slope Borough: Beaufort Sea Lease Sale 97 and Chukchi Sea Lease Sale 109. Vol I. Description and Projections; Vol. II, Data Appendices. TR 125 Chilkat Institute, November, 1986. Barrow: A Decade of Modernization (The Barrow Case Study). TR 129 LGL Ecological Research Associates, July 1987. Subsistence Fisheries at Coastal Villages in the Alaskan Arctic, 1970-1986. TR 133 Stephen R. Braund & Associates, December 1988. North Slope Subsistence Study: Barrow, 1987. TR 137 Kevin Waring and Associates, September 1988. A Demographic and Employment Analysis of Selected Alaska Rural Communities, Vol. I. TR 139 Impact Assessment, Inc., November 1989. Point Lay Case Study. TR 140 Impact Assessment, Inc., November 1989. Point Lay Biographies. [TR, technical report; SR, special report.] Source: Compiled by the Socioeconomics Panel from information provided by MMS.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Development scenarios describe alternative levels of various OCS-related activities, onshore and offshore, to provide a range of expected activities, including the location, timing, and amount of OCS exploration, development, and production. Technology-based studies are used to predict the location, size, and timing of associated onshore and offshore activities. Development scenarios are meant to be based on a reasonable range of technological, economic, and geographic options so that a wide range of development effects can be considered. Technological options include alternative means for transporting oil. Alternative economic conditions would include various assumptions concerning oil prices, investment costs, tax status, and transportation costs. Geographic options would include the possible locations of resources and alternative locations for facilities. Table 4-6 is a list of sample development scenarios for the North Slope. TABLE 4-6 Examples of Development Scenario Studies for Alaska's North Slope Report Number Author(s), Date, Title TR 6 Dames and Moore, April 1978. Beaufort Sea Petroleum Development Scenarios for the State-Federal and Federal Outer Continental Shelf. TR 65 Peter Eakland and Associates, November 1981. Transportation Baseline Update and Forecast of Conditions Without the Planned Lease Sale, Beaufort Sea (71). TR 112 Han-Padron Associates, 1985. Beaufort Sea Petroleum Technology Assessment. [TR, technical report.] Source: Compiled by the Socioeconomics Panel from information provided by MMS. Impact assessment studies project the positive and negative consequences of OCS development for the human environment and review various scenarios, including a "no-development" scenario. This information is used to identify the effects of OCS development, to determine the desirability of OCS development given these effects, and to provide information that can be used to help plan for and manage socioeconomic effects. The impact assessment studies are conducted for communities, regions within the state, and for the state as a whole. Within the Alaska SESP, effects on the human environment are broadly defined to include socioeconomic, sociocultural, and natural-resource effects. The first category includes changes in population, demographics, and employment; fiscal effects; effects on infrastructure; and effects on regional transportation systems. Sociocultural effects include those on subsistence, cultural values, politics, interethnic relationships, public health, and family relationships. Natural-resource effects include changes in water resources, mineral resources, fish and wildlife, and waste discharges. Table 4-7 is a list of impact assessment studies, classified in several nonexclusive categories. Methodological studies develop methods or models for monitoring and assessing the effects that can accompany development. As an example, Technical Report 77 (TR 77), "Social Indicators of OCS Impact Monitoring," develops techniques to provide quantitative measures of social change and welfare. Descriptive or case studies examine effects that have occurred in some other context than OCS activity. These studies are particularly important. TR 7, "A Case Study of Copper Center, Alaska," is an in-depth description of the native Alaskan community of Copper Center during construction of the Trans-Alaska Pipeline. The author, an anthropologist who lived in the community

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TABLE 4-7 Examples of Impact Analysis Studies for Alaska's North Slope Report Number Author(s), Date, Title Methodological SR 4 University of Alaska Institute of Social and Economic Research, 1980. OCS Studies Program: Small Community Population Impact Model. TR 15 Cultural Dynamics, August 1978. Historical Indicators of Native Alaskan Culture Change. TR 24 University of Alaska Institute of Social and Economic Research, June 1979. Design of a Population Distribution Model. TR 26 University of Alaska Institute of Social and Economic Research, April 1979. Developing Predictive Indicators of Community and Population Change. TR 27 Harman, O'Donnell & Henninger Associates, Inc. and Merlyn J. Paulson, Inc., March 1979. OCS Visual Resource Management Methodology Study. TR 76 Louis Berger and Associates, Inc., December 1982. Forecasting Enclave Development Alternatives and Their Related Impacts on Alaskan Coastal Communities as a Result of OCS Development. TR 77 Louis Berger and Associates, Inc., May 1983. Social Indicators for OCS Impact Monitoring. TR 113 University of Alaska Institute of Social and Economic Research, October 1984. Sensitivity of Rural Alaska Model (RAM) Projections to Key Assumptions. TR 116 Stephen R. Braund & Associates, December 1985. A Social Indicators System for OCS Impact Monitoring. TR 117 Chilkat Institute, September 1985. Monitoring Methodology and Analysis of North Slope Institutional Response and Change, 1979-1983. Case Studies/Descriptive TR 4 Crittenden, Cassetta, Cannon/Hellmuth, Obata & Kassabaum, Inc., February 1978. Prudhoe Bay Case Study. TR 7 Peat, Marwick, Mitchell & Co., January 1979. A Case Study of Copper Center, Alaska. TR 16 University of Alaska Institute of Social and Economic Research, August 1978. Governance Study in the Beaufort Sea Region: Petroleum Development and the North Slope Borough. SNPTR 28 Habitat North, Inc., April 1979. Socioeconomic Impact of Selected Foreign OCS Development. TR 64 Worl Associates, November 1981. Beaufort Sea Sociocultural Systems Update Analyses. TR 96 Research Foundation of State University of New York, January 1984. Nuiqsut Case Study. Final Report. TR 107 Kevin Waring Associates, Glenn Lundell and Associates, and Fison and Associates, January 1985. Monitoring Oil Exploration Activities in the Beaufort Sea. TR 119 University of Alaska Institute of Social and Economic Research, March 1986. Cultural Resource Compendium. TR 125 Chilkat Institute, November 1986. Barrow: A Decade of Modernization (The Barrow Case Study). Impact Forecast SR 1 University of Alaska Institute of Social and Economic Research, July 1979. Statewide Impacts of OCS Petroleum Development in Alaska. SR 5 Maynard and Partch, Dames & Moore, and Stephen Braund and Associates, February 1985. Review of Cumulative Impact Assessment and North Slope Borough Development Projects. SR 7 Kevin Waring Associates. 1988. Regional and Village Corporation Employment Profiles.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies TR 18 University of Alaska Institute of Social and Economic Research, June 1978. Beaufort Sea Petroleum Development Scenarios: Economic and Demographic Impacts. TR 19 Alaska Consultants, Inc., August 1978. Beaufort Sea Petroleum Development Scenarios: Man- Made Environmental Impacts. TR 20 Dennis Dooley and Associates, August 1978. Beaufort Sea Petroleum Development Scenarios: Transportation Impacts. TR 21 Dames and Moore, June 1978. Beaufort Sea Development Scenarios: Natural Physical Environment Impacts. TR 22 Worl Associates, April 1978. Assessment of Change in the North Slope, Beaufort Sea Region Sociocultural Systems. TR 23 James Lindsay & Associates, December 1978. Beaufort Sea Petroleum Development Scenarios: Summary of Socioeconomic Impacts. TR 51 Alaska Sea Grant Program, University of Alaska. 1980. Western Alaska and Bering-Norton Petroleum Development Scenarios: Commercial Fishing Industry Analysis TR 62 University of Alaska Institute of Social and Economic Research, August 1981. Statewide and Regional Economic and Demographic Systems, Beaufort Sea (71) Impact Analysis. TR 71 Earl R. Combs, Inc. 1982. Alaska Peninsula Socioeconomic and Sociocultural Systems and Analysis. TR 73 University of Alaska Institute of Social and Economic Research, June 1982. Economic and Demographic Structural Change in Alaska. TR 100 University of Alaska Institute of Social and Economic Research, October 1983. Economic and Demographic Systems Analysis, North Slope Borough. TR 104 ERE Systems, Ltd., December 1984. Barrow Arch Transportation Systems Impact Analysis. TR 106 University of Alaska Institute of Social and Economic Research, April 1984. Alaska Statewide and Regional Economic and Demographic Systems: Effects of OCS Exploration and Development. TR 115 University of Alaska Institute of Social and Economic Research, June 1985. Alaska Statewide and Regional Economic and Demographic Systems: Effects of OCS Exploration and Development. TR 120 University of Alaska Institute of Social and Economic Research, June 1986. Economic and Demographic Systems of the North Slope Borough: Beaufort Sea Lease Sale 97 and Chukchi Sea Lease Sale 109. Vol I. Description and Projections; Vol. II, Data Appendices. TR 124 University of Alaska Institute of Social and Economic Research, July 1986. Alaska Statewide and Regional Economic and Demographic Systems: Effects of OCS Exploration and Development. Other SR 6 Lawrence Johnson & Associates, March 1985. Review of Outer Continental Shelf Economic and Demographic Impact Modeling for Rural Alaska: Proceedings of a Workshop. TR 25 Peat, Marwick, Mitchell & Company, November 1979. Second Program Summary Report.   Source: Compiled by the Socioeconomics Panel from information provided by MMS.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies during the construction, provides a comprehensive description of the ways Copper Center's society and institutions change and dealt with the associated pressures placed on the community. This study of the community's response to rapid industrialization is useful to show the kinds of changes one might expect in other native Alaskan communities and could suggest steps to be taken or avoided in development elsewhere. Prediction is a major goal of the Alaska SESP: to forecast the effects of OCS activities in an effort to evaluate the desirability of proposed development and to identify means to plan for and mitigate damage to the human environment. Predictive studies are based on work developed in the other categories. Baseline conditions and development scenarios are used to project effects with and without OCS development. Potential effects are identified and measured using case studies and methodological studies. The final category contains workshop proceedings and program summaries, the primary purpose of which is public dissemination of results. Although this form of publication does not contribute new information, it does provide brief and accessible summaries of the studies. These sources also can provide an overview of the program, which can be difficult to obtain from reading individual project reports. Sociocultural Studies The Alaska SESP has systematically constructed a substantive and scientific socioeconomics program that is based on a broad definition of the human environment. This framework identifies research needs and ensures that individual studies are combined into an integrated whole. Some of the studies show a broad concept of the human environment, and explicitly consider perceptions of risk and the symbolic value of people's activities (e.g., TR 85). The Alaska SESP is a reasonable model that can be favorably compared to the socioeconomics studies programs of virtually any federal or state agency. However, the existing program has several shortcomings. First, the noneconomic studies focus almost exclusively on native Alaskans. Such a focus is understandable, because these communities are least understood and because they are likely to feel the greatest effect of OCS production: Industrial development in Alaska could threaten entire cultures. However, nonnative communities should not be excluded from sociocultural analyses. For example, many of those who choose to live in Alaska have done so to escape industrialized society. Yet industrial development in Alaska could threaten this last frontier. The nonnative components of Alaskan society should receive more attention from sociocultural studies. Economic Analyses: Description and Evaluation The estimated economic effects of OCS exploration and development are the focus of several interdependent subtasks, some of which include technical and social analyses. A useful overview of the structure is provided in the proceedings of a workshop (SR 6), summarized here. First, a development scenario and associated technical analysis are prepared, in which the number of exploration rigs, platforms, and pipelines and the amount of production are estimated. Next, MMS staff specify the probable location of the onshore facilities and likely transportation routes. MMS then translates the development scenario into employment estimates, which appear to be fixed-coefficient, engineering-type estimates. Although one could question whether there is enough flexibility in the technical relationships to permit appropriate adjustments in labor inputs, for

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies example, if wages are sufficiently high, this likely constitutes an acceptably small error. These data form the starting point for the economic analysis, which is captured in part by the Rural Alaska Model (RAM), summarized and evaluated independently in SR 5, "Review of Cumulative Impact Assessment and North Slope Borough Development Projects." RAM is an econometric model used to project socioeconomic conditions under various scenarios. It is made up of statewide and regional submodels with three integrated components: economic, fiscal, and demographic. The economic component divides the Alaskan economy into external forces, those from outside the state and the OCS development process (including such sectors as the mining industry and the federal government), and internal forces, which include the portions of the economy determined from within the state and affected by OCS-related activity. For example, demand for labor and the overall level of employment are defined as those needed to produce the required level of output, and thus are affected by industrial production, including that associated with OCS activity. Alaskan wage rates are jointly determined by mainland wages and by the rate of growth of employment in Alaska. The rate of employment and wage rates determine total wages and salaries. Real disposable income is determined by deflating disposable personal income by a relative price index. The major determinants of Alaska prices are overall prices for the United States and the size and growth rate of the economy. Income determines the demand for local production; thus, income and output are simultaneously determined by the model. The model's fiscal component provides a framework for analyzing the effects of alternative policies. It calculates tax payments to derive disposable personal income. It assumes a state spending rule and it calculates personnel expenditures, state government employment, and the amount spent on capital improvements, all of which affect the amount of construction activity and therefore the demand for labor. The demographic component of RAM projects each component of population change—births, deaths, and migration. It uses specific survival rates for various ages, sexes, and races, and age- and race-specific fertility rates to project birth and death rates for the civilian population. Population change is determined by net migration and natural increase. Net migration is determined for relative economic opportunities in Alaska by comparing employment changes and real per capita income in the state relative to the real per capita income in the rest of the country. RAM predicts changes in regional and statewide population, employment, and wages, as well changes in tax revenues and government spending. The members of the panel concur with independent reviewers, who concluded that the model meets the following criteria in a reasonable fashion (SR 6). It is sufficiently detailed. It is scientifically and legally defensible. It is well documented and can be replicated, although MMS doesn't have access to the Massachusetts Institute of Technology computer on which it runs (MMS obtained access to the model in 1990). It makes clear and well-documented assumptions. The model is sufficiently detailed to estimate employment in Anchorage or Bethel for a given year for the basic economic sectors and to predict annual, real, per capita expenditures by the state government from its general fund (TR 106). An interesting result of using the model is the prediction that the cumulative effect of OCS Sales 97 and 109 would reduce the migration of the native population from the North Slope over the duration of production (TR 120). Therefore, one cumulative effect of OCS activity is expected to be the stabilization of the native population for more than a generation (TR 100 contains further documentation).

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies In our judgment, the model is sophisticated, carefully designed, and accurate. It is reviewed at least once each year, to integrate new findings about the Alaskan economy, as shown, for example, by comparing TR 115 with TR 106. It is unlikely that many natural-resource-development agencies in the United States or in the world can match it. It is unlikely that many states have a better model of fiscal, income, and population growth. MMS and its consultants have an overall structured view of how to estimate the economic effects of OCS development. Armed with this, MMS commissions studies that produce results useful for and consistent with the overall studies that estimate economic effects. Some of these studies, such as the three-volume TR 137, ''A Demographic and Employment Analysis of Selected Rural Alaskan Communities,'' simply gather basic data—on population, wages, and employment for communities. TR 51, "Western Alaska and Bering-Norton Petroleum Development Scenarios: Commercial Fishing Industry Analysis," identifies three areas of potential effects: labor, the components of the communities' infrastructures, and use of ocean space. The study is forthright about the need for more data to make empirical estimates. Nevertheless, the authors used econometric analysis for another region in Alaska to demonstrate that the petroleum industry does not harm manufacturing employment, including fish processing. The results were corroborated by interviews with workers in the fish-processing industry. Competition for ocean space can occur, particularly because of gear loss caused by debris on the ocean floor and marine traffic. The size of OCS vessels makes them basically noncompetitive with fishing vessels, which moor in small harbors. Specialized services (such as electronic repair) to the petroleum industry could aid the fishing industry, and oil-related structures in the ocean can be used as navigational aids (TR 51). There are exceptions to the interdependent nature of some studies. It is not apparent how the subject matter of SR 7, detailing the distribution of employment in village corporations, will fit into a study on the effects of oil development, however important the study might be from other perspectives. TR 71, "Alaska Peninsula Socioeconomic and Sociocultural Systems Analysis," is an exceptionally detailed report about economic activity in six communities—it discusses trends in dogfish prices, types of gear used, and the size of fishing vessels—with no apparent purpose or relationship to oil development. Despite its shortcomings, the process that produced the structure of the Alaska program could be regarded, with minor revision, as a national model for research on the effects of OCS development. Missing from the research program is any serious attempt to estimate the more broadly social costs associated with oil spills. Outside of indirect studies, such as those on the effects of disrupting subsistence activities, the panel was unable to identify a single research document devoted to this important subject. MMS is currently studying the effects of the Exxon Valdez oil spill on native communities, however, and such studies are important and should receive high priority for funding. Furthermore, the economic analyses are defined quite narrowly by SESP to include macroeconomic effects on employment, income, and population changes. Broader economic analyses, such as analysis of social costs and nonmarket effects, are nonexistent. However, extensive work in the noneconomic disciplines could diminish the importance of economic analyses of nonmarket effects. Furthermore, nonmarket economic methods might not be appropriate for evaluating many of the most important issues related to development of rural Alaska. For example, appraisal of cultural change is beyond the scope of economic analysis. Similarly, social ills potentially associated with OCS development, such as alcoholism, the breakup of the family structure, or the loss of subsistence harvest, involve values that are beyond the current abilities of economic analysis. With the exceptions of the shortcomings noted above, the Alaska SESP is a well-conceived and carefully constructed program. Of the four MMS regions, only Alaska has a true socioeconomics program, a carefully considered scientific approach that has systematic underlying conceptual structure, that gives a broad definition of the human environment, that has identified study

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies needs, and that integrates studies to fulfill program requirements. There is no scientific reason that Alaska's program should be so much better than those in other regions, although there are certain features of Alaska (among them is relatively small population) that make it easier to study than other regions. Nonnative communities should receive attention from sociocultural studies, and economics studies should focus on nonmarket effects, through social cost analyses of oil spills and the potential effects on recreation. Analyses should specifically address the distribution of economic benefits to be obtained from oil development and the implications of various distribution schemes.