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UNITED STATESBUREAU OF MINES DRAJ'l'

JAMES BOYDMEMORIAL LIBRARY

ECONOMIC IMPACT ANALYSIS OF THE COAL MINING INDUSTRY

IN BOONE COUNTY, WEST VIRGINIA

Rena I. Geroyan, and Dale D. Teeters.

June 1995United States Department of the Interior

Bureau of MinesIntermountain Field Operations Center

Denver Federal CenterDenver Colorado 80225

62: : s~ 8002:-v0-N~I

UNITED. STATESDEjjARTMENT OF THE iNTERIOR

BU~EALJOF MINES

o~fl-

11'3/15

APPROV AL AND DISTRIBUTION OF CONTRACT AN

Economic Impact Analysis of the Coal Mininq Industrv in Scone ~oun1-v.

West Virginia

en: Rena ~. Gerovan1 and Dale D. Teeters

ea18: January 199 T~ of Repcrt (Fll1IIl/lntedm):

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. I ATTACHMENT CHECKUST0 Sdmmary of results -

I:J Sun:-marv and 8'laluatl~n of final re~ort

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4.81

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UNITED S1 A TESDEP ARTMEN1 OF THE INTERIOR

BUREAU OF MINES

REQUEST FOR MANUSCRIPT REVIEW

Chuck oddeni:no. B~ancn. of Minerals Ava..ilaJ:d:'li

Galen Knutsen, Chief, rntermountain Field operations Center

Tec:hnic81 1!9 PrMdltorlai

:~CA.lII"8 reque8t8(I to 01' arrange (0 have revIew8d the man~ Economic(" Coal Mining Industry in Boone County, West Virginia

""" "- . ~~,

Impact Analysis of the

~(-

ReQa I. Gerov.an and Dale D. Teeters

PubHcatlon (Ot In) pen File Re ort ..vFOR ... It ~ /fIItmfI

PROPOSED present.non lit/NIIII.

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~ Your I'8YIM should be kMwarded fa 1hI8 offIc8 within 20 wortdng daye fram Ih8 date you I8CItv8 IhIII requ...\!f,

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Information tor Reviewers and Au.thOI'8TECHNICAL REVIEW. Teehnb1 review11lt!1 required by U. B1InI8D of IIIDII8 -1111; they Ire requeated trom perIOlII known to beeompetllnt to appni8e the 8clenWic and tedmIc8I quality of. DI8m1ICript. II then... UI1II1I of W, \ID81IJ..t..,tI.....J. claita8, eYidence8 of CU'ele8&

wOrk, ar indusioa of too 1IIUCb information I1rab' III tile Iit.eraan, theIe eborteoainp ehoQ! be pointed oat. Statemen~ that areVJfUe or ambipoue should be noted. 'naa revfe1nIr'l opiD1Im8 ob theM matten .m be aed to determlae ~bether . M*' _haWd be publiahed. Areviewer may aIIo lugelt eondeNadon or call8tteDtJan to P*' writiDa'. Hcnm'et, Uae prIDwy .PUJ'POM oftbe tedUIiCaI revie1J Ie to c:opftnn theappmprlate- uad teehn1ea1 vlUdlty of the Intormadon. MItten of .8tJle IIIId u.u.p will be addnIIIWId 1ft the 8Ub8equent editorialreviA'. TeduIbJ review.. 3houId mnsider .n quatIoDI UatecI at the top of the reverte aide of tbIi form.PREEDrroRIAL REVlBW& AU p8pn for publbtloa II Buruu nportl ahouId be submitted tor preeditorlll review, but papi!I1I for outsidepubllc:atlon Dr praentatJon generally lihould not be IQbmitted for Nvlmr. PRtIditGri81 mviewlare done by the Branehot EditorWs-tcM and eover primarily t8bJM, WUltratlonl, and blbUOJI'IPbic ret~. With. respect to i11ust:nticms, thll objllCtive iB to point out alleomctilml that ehoWd be ID8de. After nviaion III ftB(IDIDe to the preedltorlal rme., lI1uatnti0n81n moat eueelhou1d not have to be I'tlviIedfurtber. PreedltoNJ J'eYtewenI mq indicat.l lID. CGInIetioM needed for tablet, ur they may pomt out onI1 the ~or prob1eQIII. In revillwingr-efeh!bI!eI, pretditorial revIe1ven only look for IMJCR' prob!em8, 81dJ.1I itema that abouJd not bt Included II refereneM. FI.W ed1tJI\g oftablee andrefmlPCa ia done when the JlLllllIIIcript II submitted for 8naI ediUq.

NOTE_The II'I&ftUlCript lhould be conatdered to be privilepd iDtomW:km IDd Ihauld hOt be nproduced or ref'enmced In the open HteratlU'e unUlit has beIIn ppbliBhed or p1Eed on open We by tH B1U'eIIL

Copy 10:

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170.

REVIEW

TECHNICAL REVIEWER

Does the abstract Include the sPGClflc objedJ\te or the work; Iechnlqu8l, equipment,8nd matert8ls employed; and Ehe aJgnWICanHesuItt? ...,....~...........

,'............,

" the abstract concIG8 and rreo from unessential delds?

..,...,..,..".,.....,......

Does the Introduction e~in the problem. IIIlmpoltance, and the aulhot'sobJechesand general approach, and does It refer to eartler or concurrent

WOrk? ..,.............,Is 8~1II or lntteotIgatlve WOfk adequately described? ,...,....."...,..."

...,.

Are the foflowlng It8ml ~ear. (a) DesctlptIon of methods?

:........,..,.

(b) Tabula,."...".,? """"""

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(e) G/'IphJc mltet1aJ?

..........."..,....

AretheconcfustonaJU8IHIed? ....,..."

..,...,...................,...............,.

In general, 18 organization of the manuscrtpt

118.t18f.xory?

...,.....,.....,.........

Do you thI8 n'lalluacr1pt for PUbkatlon and/or

..

anlhe1'8V8f8881deofthlsforrn? .....,...,..,......,....,.....,.........."

........

PREEDfTORIAL REVIEWERT.tb1e8 ....,..."

....

......................,....... 0 S88CO11'1CtiGn8rnark8don8.lbrn1tted tables.nu..dIunI

........ ............... ,.........." ....

See~ l'n8I'ktdonIUbrnltted nluatr~R8f8rences

.,..........,....................,...... 0 No rneJorproblern8 not8d.

VESNO

(""In beto.)

See GDnNnent8 (below orlociuded Jo attachment).

See COInInent$.

See Comments.DETAILED COMMENTS: PIeue c:heek 0 if an 8It.IC:hmem 18 uaed.

REVIeweR

(,."., ... ..,

SIgn-.Dete

For Use of Author OnlyCh8ck het8 0 If f8VI8ed

rnItUQtp!: cont8In8 .., ch8naeI IbIMj d8ch "'PlY ~ review. gMng reuons Yfhy 8p8Cfflc ch8nge8 W8r8not 1I'I8d8, 81d ... COpr to 11Mew8r.

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0~ :s~ 8002:-v0-N~I

UNITED STATESDEPARTMENT OF mE INTERIOR

BUREAU OF MINES

REQUEST FOR MANUSCRIPT REVIEW

Date

Larry v. Ladato. Director. Boone County Development Authority

Galen Knutsen. Chief, Intermountain Field Operations Center

08/25/94

, .

I;~"

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rou 11'8 I'8qU8St8d to or IUT'8fIge to tie" r8YIewed the Economic

;..

Coal Mining Industry in Boone County, West Virginia

.'

rr.

11Iq)3.ct Anal sis of the

! :I.

: R8queat for reWM of manuscript KI T echI*aI PreedItoriaI

Rpna T 0 ~prnYAn and nal~ Do Teeters

FORPROPOSED

PubDcatIon 81 (or WI)

PI888nIdon 8t

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~p~,.i):l1 :e.,bltcat.ion

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'Ywr review 8houtd be forwarded to ItU office within 20 WOI1dng day8 fmm the .-- you r8WIv8 thII requnt.-;f

Stgnature

Information for Reviewen 8nd Authol'lTECHNICAL 1lEVlBWS; Teclmbl J'e\Iiew8 an by tile BUIa8I ~ 11m. Kanua1; they In mqucrsted from penmI8 kQown to be

to appniMI the 8deDtiftc IIDd ta.hm...J qadtJ at It thenllIl1I tn'ort of tac:t. UllUb8tuiiated daIma. ev1dence8 of ~Iessuperimieata! WOrk, or tndusicm of too awth IInsdJ ba the

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tbeIe IboWd be pointed out. StateD1eII.ta that Il'enaue or ambfcuoul. shauJd be noted. 11Ie ~\'Ieftr'. epmJou em tbe8e IIIItt.Ih wtII be UI8d to d8t8n:aiDI whether . paper .abou1d b8 publiahed.

"'~

may uo 8ug81t comen.doA or call Itteadoa to poor wrltiq. 1mrmIr, the PrimIr7 purpoee of the teWaICaI review II to conann theappnprIateneu Ind teduda.I \'lIIdIty of the iD1'arm8tiGn. Mau8n at ,ItyIe 811d

....

will PD8I'IUY be IIQdraeed ill the SQbeequent editorialn:new. Tmc!mbl rm.-n IIhwJd amsid8r aU qutllltiaae lilted at the top oItbe mene side ofUdi form.PREBDrI'ORlAL REVIEWS: All papen tor publlcatioD 18 BIHUII npaIU ahouId be submitted fIIr preedl.torlI1l'e\'iew. but p8pelB tor ouuidepublica&n or ~n pnenUy ehaukt DOt bI!! IIIbmitted. tGl' preedicorilJPtYIew. Preedttorial revlew1 are done by the Branda of Editorial&!rvteeI wt toVef primarily tabIe8. II!II biblfoanpbJc ftfereaceI. With respeet to WUICntIonI. the objective 18 to poInt out .n

that IhoWd be 1Mde. After reYi8ion In reapome CO die pneditorllJ rme.. m~ u. IDO8t eua ahou1d not have to be RviledftJrt1\er. PreedltMal remwen mq indicate aD c:orreetIoIII needed for tablet, or they may pohle: GIlt only the ~GI' problems. In reviewingrelereneet, preediCorial m'ie1rerI only loot for mtJor probIemI, sueh u iteml tJIat Iboald riot I)e included 18 ntfenlDal8, FInal editiDa' of tablet! mdreferencea Ia chme when the ftI8I\dIa'Ipt fa submitted for IIn8I editln&'.NOT&- The I8IIIlIKript ahou1d be ccmeid8Nd to be priYilepd intormadoa and Mould not be reproduc:ed or refenmced ill the opeD IiteratI!R wrtJlit ilia beeft pubIIahed ar placed on open ale by the Bveau.

Copy to:

, .:

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' .

90' 0~ : s~ 8002:-v0-N~I

REVIEW

TECHNICAL REVIEWER

Do8s !he abstract Include Che epecIfic objecllve of the ~rk; techniques, equipment,and mal.er1afs employed; and 1h.lJgn~ results? ....

;............,...............

Is the 8b8tract condse and free fram unessenlfal details?

......,...................,.

Does the Introduc:tion explafn the problem. Ita Imporblnce, and the C!Uthofs objedMtsand general

~.

and does It refer to earlier or concurrent work?

.........,.......

II 8JCP8rimenIaI or investigative wurtt adequately descrIbed? """

Are the following It8mI cfear; fa) Oescrtpdon of me1hode?

..............

(b) T8bu1ar mIterIaJ? ....,..........,....

(c) G~ material? """"""""M1heCOl1l;lusloneJU8tified? ...,...................................,..............

In ~raI, 18 the OfganluUon of the mat1U1Crfpt 18t18f8doty?

,........................

Do ygu r'eoo.'fll"lfal-d rnanuecrlpt for pubIcatIon Mdlor pntMntatlon 18 prvposedon !he r8V*88 side of 11111 form? "

""" """

""'.......o.........,..............

PRaOITOAIAL REVIEWER

TIbIeI ............. :....,...,..................... 0 Seclc:DIT'ICUonsnllll'kedon8UbmItted Iabfes.

1Iusti-"'1I .......,.....................,.......... 0 See CIDI1'8CtIon. rnaftttd an

~1CI8 .......................,................ ~:=DETAJLEO COMMENTS: PIeae dI8Ck 0 It In ~....4 18 U88d.

vel(ellpllln

.....

0 See comments (below orIncluded In BItadvnent).

0 See comments.

0 See comments.

LARRY V LODATO Director Boone Co Developmen~ Auth.,. Madison,

' _

II/IZ/'"Ch8ck here 0 If f.-.:t c:ontan ..

8bove i ohQ".. 8It8:h rtpIy aJ rtM8w. ,..... why Ip8dftc chIInge8 werenee mMe. M2 I8Id CDpy ~ ,.......

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l.eo 108M 4.61

UNITED STATESDEPARTMENT OF THE INTERIOR

BUREAU OF MINES

REQUEST FOR MANUSCRIPT REVIEW

Date 08/25/94

To:

From:

William B. Raney, President. West Virginia Coal Association

Galen Knutsen, Chief, Intermountain Field Operations C~nter

Subject: Request tor review of rmmuscript (J Technical Preedltorial

You are requested 10 nwiew Of' arrange to have reviewed the manuscript, Ecnnnmic ImpR~~ Analysis of th~

('."",1 M'h,ing TnAu"".....y -.i" Rt',""n.. ('.n"n"Y, TJ..~t- ~i 'l'"gini SII

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R~nA 1- ~PTnYAn ~n~ nSll'~ D- Te~t~r~(.....w

FORPROPOSED

PublIcation 88 (Of' In)

Pmentatlon at

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Vour r8Ytew should be tcxwarded to INs oftIce within 20 wortdng days from the date)Q.I rec:eIw this request.

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Information Cor Reviewel'8 and AuthonTECHNICAL REVlEW8! Ted1n1t8l revieWII an! required by the Burau of Mince lIbnual; they are requested from penona known tA:I be

competent CO appnile the ecienti4c and tedIDica1 quality or. manuscript. If'thet!I an: envtI of fact. WIIUbetantiaUd cla1ntI. evidences of carelele

experimental work. or inclusion of too much inf'~ 8Ira4y ill the Iitenture. th- ahort.eoDtinp Ihould be pointed oUt. Statements rhlt are

vape III' ambJgu0u8 should be natecl, The Mviewer'1 opiDialUl on these IDIItten wW be to detenniM .thet. paper should be pubUshed. A~er PI&1 aIBo 1I188e8t condellB8tion or call attention CO poor writiq. Howevv. the prb'nIIry pu:&"POIe oHM technIa1 review is to eonflnn the

appruprlat.efteM and technl51 validity of the lnf'ormaaOlL MaueT'llof .tyte and lIMp wiD ~er.ll,y be IddreuMI in the lubsequent editorial

reYiew. Techn1ca1revie~en ehouId CClllllidet aU quMtioDli listed ~ the tA:lp of'the revene side at t.hiI fonn.

PREEDrroRIAL REVIEWs.. AU papen tor publication u Burel'" reporta abould be lubmitted for preeditorial review, but papenl for outside

publication or preaentlUon ~eral1y lIhoWd Dot be BUbMiCted. for pftedltA:lrial review. Preeditorial revieW8 In! done by the Bl1II1ch of EclitorW

and cover primarily tables, illuaCtaUoll8, and bibliognph!c refem1Cel. With reapeet to iU.U8trationll, the objective is to point oUt all

~Onl that Ittould be JMde. After reYision in rupIIft!Ie to the ~toria1 review, illuatratlona in mo8t. euea should not have to be revised

furdIer. PneditoriaJ reviewen may indicate .n comctIOIUI needed for tabla, or theY' may poblt out 0D1y the ~or problema; In reviewingreferences, preeditorial reViewen only look tor nwjor probleml, luck u Items tba18hould not be included .. reftn!nee8. Final editing ot tablea and

m8renee5 ill done when t)1e ~pt illlubmicted for &W edltin(.

NO'J'E-tbe III.UIlIKript Ihould be cona1dered to ~ privilepd information and ehould lIot be reproduced or referenced in the open literature until

it hili been publiehecl or plaeed on open IIle by the Bureau.

CoP)' 10:

80' 0~:S~ 800C:-v0-N~I

REVIEW

T1iCHNICAL REVIEWER

Does the absttaQt InclUde Ihe spedfic objective

at !he wolt; techniques, eqUipment.BI'Id materials employecl; and the slgl1ltlcant reoolts? ..".....,.",.".."

,.,. - . , . . . . .

/s the abstract COOdse and tree from unessential details? """"

"" - , , . , , , . . , . . . . , ,

Does the Irtlroducdon explaIn the pmbf8m. its Importance. and /he aulhor's objectlvellBnd gertera/ ilpproach, and does It refer to earfter or concurrent

wor1c?

..,."."" . . , . , ,

Is experimental or InvestigaUve work adequ81e1y descr1bec:f? ,........,."

.,. ..."

ArB !he to/lowing Items clear: (.) Oescrfpt/on of tnethoda? "(lI) Tabular rnaI,tfal? ,. - .

, . .. , , . . , .. . .. , .

(c) Graphic mat8lfal? ""

"""

kelhoconcfuslonsJU8tifled? ......."

.,........"." ...,..." ,..." ..,.... ........

In generar, 18 the OIVMIzaUon of the tnanu8a'lpt satisfactory? ........"

,.,..,.,.,..."

Do you I8COmmend IhIa manu8Qrfpt for publJcation and/or Pl'8Mnfarbt 18 Pf'OPosedon1herevetseakfeotlhls form? ......,......,.............."

."....,.." ,...,...,

PRE~O~AL REW~RT8bIes .,.,.,........

..,......,..........,.,....... 0 Seecort8C:llonernartcedoneutlmllted tables.IHU8tr8tIona .......

... ............"...,..".. ...

... 0 SeecorrectlonsrnaricedooaubmlCted UlustrarJoos.FIefer~ ......"

............,.....,."....."

." 0 Nomalorproblen1tnoted.DETAILED COMMENTS: PIeaae check

0 If IIn 8ttachmen11s uaed.

REVIEWER

YeS(..-plal" be_)

See comments (below orIncluded In attact1ment).

See comrnenfs.

0 See COI11~.

..,.."., ... .", ........,

SIgneau.

Olte

For Use of Author Only0I0ct - Q

-- ........... ........ .. ........ ..--; - -

....v OJ -

...... ........ .... ........

not

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8I'Id send I:1Dpy ~ rNewer.

SIgnataq

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Date

0~ :s~ 800C:-v0-N~I

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Abstract

. Introduction

Acknowledgements

Impact Analysis

Study Area

population

Labor Force

. , .

InfrastructureGovernment

IndustryIndus t ry and the Economy

Coal Industry

Resul ts

.' .

Scenarios

Scenarios 5: B

Scenarios C & D

ConcluBions

References

~ .

Study area location

Total industry output,

Total .employment, 1991,

DRAPT

CONTENTS

ILLUSTRATIONS

1991, Boone County

Boone County

Income and employee compensation, 1991, Boone County

0rd ~~:s~ 800G-v0-N~I

10.

11.

12.

I;'I:,

DRAFT

ILLUSTRATIONS - cont.

Economic flow diagrams, Boone county . 10

Coal production history 1991, Boone County . 11

Coal industry costs, 1991 , Boone County . ~2

F' ,

Coal industry economic flow diagrams, Boone County. 17

Direct effects, Boone County. 18

Indirec~ effects, Boone County. 19

~, :

Total effectB, Boone County. 20

Economic effects in Boone County. 21

TABLES

Input market comparison, 1991, Boone County0 ~3

Coal industry TIO comparison, Boone County o. . . 13

Input expenditures for coal industry. 15

Market comparison, Boone coun~y

TIO comparisons

. .

Scenarios Comparison. .

. .

~~ : s~ 800G-v0-N~I

DRAFT

UNIT OF MEASURE ABBREVIAT~ONS USED IN THIS REPORT

dollars million

foot MBtu million Sri tishthennal units

hourmetric ton

kilogram percentkilometer

short tonpound yearmiles

DISCLAIMER OF LIABILITY

km.

Reference to specific products or computer programs does not'imply endorsement by the U. S. Bureau of Mines.

G~ " ~~ : s~ 800G-v0-N~I

BCONOMIC IMPACT ANALYSIS OF THE COAL MINING :INDUSTRY

IN ~OONB COUNT!', WEST VIRGINIA

~~tJ,a I. Geroyan, , and Dale D. Teeters

~STRAcr

, ~e u. a . Bu~eau of !Uri~fJ (USBMl ~~atea the ' c;:oal mining1nd'i.1I~try ' a ~ct on the econ~ o~ Soone COUnty'~ wv-, usi:o:g ' a

liIott~r.

. ,

pe,c1c&ge c"lled IMPtAN; ~av:~~ope4 the U.

porest Se~ic..~.. ~~X",

~.

,,1).OWB ~p.a.t C9al miniJIg, was th~ primaryinc~"pr~c~~ :l.nd:U,s~~' iu Boone ~oUnty, ,acco~ting

' '

~orabou~ ~9~ of ~1\e co\U'1ty' III, ' Tot:a.1 In&1fh:ry OUtput, . and' ' 41t'

the, ~ot:iU

' ~"'

~~t; in the b",e y~.r 1991' Coa,l pr~Ct:ion'' that Sr,-x

" ,

~te4, ~~ ~2 ~,~, M ~t (2S'. i K st.) '.Po~, dif.1:~~t' 'e6Q~~,c 8ceI14rlo8 ~er. developed' to

copJJid., ' Cb~ , p~ten~i,~ ~ ~~te ~:! 9~ '" p~~i~~, . coa:l-nuil.r~etj

C:~~!PJ18 Qp. t;J;UIj c~tf

~ ~ "

s~~~rio,,~ i\~,

'~.'

ma27~et ch~n1.e" 'r~II~~~~~: '~n: J; ~

~ ',,~~,

ct~~ in'cre.'., oVer t'he 1991 fe;rel,of 4. 5 H

~/y,

J~. ~ M .tJ~). an4 .~e~ri9 B a decr~~se of 4.Dj1t.,/~, J~, P M :.tM). :'~I"" ,

" ,

I' _".

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Sce~iQ A. v~14,;e"ul~, 1p ~

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ine~e~I!IQ 1~ the value'of ~qq~

~~~y. .,

,,~~~' ;na~,'J:t'J ~tput. , -rh~ , 5 ~ mt/yr (5,. 0 'M ~""yr), i~~~~", w.9Ul~ \ .~4:, a ,tC?~a~ t?~ 1,042

j~..

i'n allS8QJ;.Pr8. ,i-q ,t1\. ~o~p.t;v, , .t~c~a.~ ~f 13 . It. Scenario'"s wouldhave t. , olW~s

~~ ,

.~t.~t! : 4"C~~~J1g ~ot;al Industry OUtput andemploymen~ 'W. ~e ~4"~J.,c'J' ~~.

Sqenar;J..o, , C' 04' ret~ec~,4 the ~donomic effects ofdiminish:!,!),; 1i\iRi~ a,~tj.vitJ:' iA ~b. dQunty.

:' '

Scenario C would

result in

.: ~,~. '

dec:;t~~~e :tn

' ,

the.' , B.qQ~e ' cOunty' Ii Total IndUstryOUtput. 'l'11e 9 ~ 1 )(, r,Jt;./yr (~61' 9- M 8t;./yr) coal sales willsustain o~y ,ot o~ 1991 18V~. , of $DPloy'Jnant

" '

Scenario D

aS8~~g Qo.~ 8"~.. pf ,abC)\~~ 18 , 000 fl!~!yr (2 0, ()OO I!J~/~) .ouldS~Bt..!D O. , ~95tllevel. pf employment. Bmpl~nt in all'sGPtQrs 'in tn. ~O1.li1.t;y wou14 , Qt, re~uce~ t~oIa' 6"" to 3 , '446

jobll" ",h1crh. inc;Lude8 job.. r$1",t$4 , to coal zniningactiviti~,. 'Physical Sci~tis~, Xnte~tain Field Operations Center

~~ : s~ 800G-v0-N~I

" ', "

.Ii

~ '

I)RAFT

:INTR.ODUCT:I ON

Coal has been an important element in mankind' s progress

since antiquity. Today its use in generating electricity hasmade coal a vital part of the economy. Roughly 53' of theelectricity in the United States in 1990 was generated by

, coal fired po~er plants (1) zThe maj ori ty of the coal consumed by the electric

utilities east of the Mississippi River comes from the CentralAppalachian coalfield, which is located in eastern Kentucky,southwestern Virginia, southern West Virginia, andnortheastern Tennessee. The region' s importance is heightenedbecause of the current environmental restrictions on sulfuremissions. More than 9S' of the coal mined in this region canmeet Phase :I sulfur emissions (2. 35 to 2. 50 lb S02 per MBtu)as mandated by the 1990 Clean Air Act amendments, and nearly

25% will meet phase ~:I (1. 2 lb S0 /MBtU) compliance coal (2).Studies recently conducted by the U. S . Bureau of Mines

(USBM) suggest coal resourceS in the Central Appalachianregion are signific::antly less than previous estimates ofavailable coal resources (3, 5). Due to the importance ofcoal in the National economy, and particularly in certainlocal and regional economies, an economic-impact analysis wascompleted on a selected regional economy in order to providea base upon which to examine the economic structure of miningcommunities, and the efrects of the presence or absence ofmining on these communities.

Boone County, WV was chosen to provide economicinformation and , to promote a broader understanding of theinfluence of coal mining in a region' s econOmy. Boone Countycontains the greatest amount of coal resources in the

region,and was the second largest coal producing county in

theCentral Appalachian region in 1991.

The obj ecti ves of this study are to:' Identify and describe the Boone County economy.2. :Identify the coal-mining industry' economiccontribution to tbe county as measured by employment,income, output, and exports.3. Identify impacts on the economy resu~ting fromproj ected fluctuations in coal production.

An input/output software package called IMPLAN (IXpactAnalysis for PLAJIIling) was used to study Boone County'economy. The IMPLAN model describes the structuralinterdependence of producing and consuming sectors as well asnon-market transfers between institutioIls. At the countylevel, IMPLAN' s database describes the size of the presentindustries, income earned, number of jobs, and amounts spentto purchase goods and services by hous~olds, businesses, and

Italic numbers in parentheses refer to items in the list of

references at the end of this report.

v~ ~~ : s~ 800G-v0-N~I

DRAFT

government.All monetary values are in constant 1991 dollars.

ACKNOWLEDGEMENTS

The able direction and guidance in IMPLAN analysis of gr. i c:

Siverts and Susan Winter, U. A., Forest Service, LandManagement Planning, and especially Deborah Shields, U. A.,Forest Service Research, Fort Collins, CO, made the writing ofthis report possible. Special thanks to: B. F. MerrifieldPh. D., Bureau Of Employment programs, State of West Virginia;S. Paxton and A. McLaughlin, WV Industrial Development Office:w. Rainey, and Chris Hamilton , WV Coal Association; LarryLodato, Boone County Development Authority, and L. D. Emerson,Hobet Mining, Inc. for .their support and interest.

IMPACT ANAL YS I S

One method of studying any developed economy, whethernational or regional, is the use of an input/output model.Necessary data are gathered through surveying all sectorspresent in that particular economy. The relationships betweendifferent sectors of an economy, such as industries, arequantified in an inpu~-output matrix Of transactions for aspecific time period. The output of each sector ia specifiedalong with the necessary labor, materials, services, and otherinputs to production needed to produce that output. After theeconomy is so described, production changes in any sector canbe traced through the matrix and the impact of such changes onall other economic sectors can be determined. These input-output models assume linearity and do not explicitly allow forfactor substitution or economies of scale. Assuming thatchanges in production technology are not rapid, thesetechniques provide acceptable resul ts (6).

IMPLAN, the input/output model used to prepare thisreport, is a PC-based system for constructing regionaleconomic accounts, social accounting matrices, input-outputtables, and regional predictive models. IMPLAN was developedand refined over the last fifteen years by the U. S. ForestService, and supported by the University of Minnesota, toprovide a completely integrated analysis tool for planningefforts. With the IMPLAN system software and databaseusers can construct non-survey input/output models of anycounty, or combination of counties, in the u. S. suitable forconducting economic tmpact assessments.

IMPLAN uses data from 21 items collected by the U.Department of Conunerce at the national , state, and countylevels for 528 industries. Data for each item is available:at the national level; for most, but not all, at the statelevel; and for some at the county level. Data missing at thestate or county level are added through proration processes.These items are grouped, as shown below, into five main

s~ ' ~~ :s~ 800G-v0-N~I

9~ "

, ~'

1";

:,' (:~

" : "k~" J:

, " ::~

~f'

nItAft'

components in IMPLAN' s database (7, 8):

1. Employment2. Value Added3 . Total Industry OUtput:4 . p:l.::mal Demand5. Stru~'t.ura1: Matrices

Bmpl..1oyment includes boih full- time and pa,rtLtin'te jobs the region. In other' words, employmen~ represents all wage,salaried and self-employed jobs, rather than full-timeequivalent.

The Value Added (VA) category has four sub- components:

a. Employee Compensation (wage/salary and beneficsincluding Social Security and pen8idn con~ributions)

b;' Proprietary Income (includes income. from self~ employedwork).

c. , Other Properey Type I:ncome (rents, royalties,dividendS, corporate profits)d. Indirect BualnB88 Taxes (excise and sales taJ(sa)

Total Industry OUtput (TIO) is the dollar value of totaloutput or gross sale's f;om production of each industry. Thesum of all input and laboJT costs, plus VA, equals TIO, as doespinal Demand plus Inte~iate Demand (outputs utilized byother industries as inputs,

Final Demands (FD) are goads and services purchased by anend user. The final demand category has 12 sub-components:

a . Personal Consumption Expend! tures (PC~) -- threeincome levels (purchas..~s by individuals/households formaximizing the~ ~~l being, not to be used forfurther product~ ~r to ~, income)b. Federal Government Military Purchases, (nationald.feose)

c. Federal Government ~o~-Milita:ry Pur.chaEle~d. State and Local Government Non-Edu~a~ion Purchasese. State and Local Government Educational ~rchasesf. Commodit;y Credit Corporation (purchases from producers

of agricultural commodities)

g.

Inventory Purchases (goods not sold are stored ininventory for sale in the next. period)h. Capital Formation (expenditures to buy capitalequipment to add to or replace part of the existingcapital structure) i. Foreign Experts (exports to foreign countries)

j. State and Local GovernmeI:.t Sales (to private sector)k. Federal Government Sales (to private sector)I . Inventory SalesEssen~ially, TIO is characteristic of the input supply

G~ : s~ 800G-v0-N~I

.!...~ '

DRAFT

market, which generates demand for natural resources, labor,and capital by businesses or institutions. TIO represents thetotal amount supplied by all sectors of the economy in a givenyear. The various outputs are uti1ized by other indus tries inmanufacturing (Inte~ediate Demand) or are consumed directly(Final Demand). Final and Intermediate Demand are components

' of the demand side of the product market, that is, the demandOf products and services by individuals or institutions.

Data used in rMPLAN are classified according to the typeof products or services produced (sectors) in a scheme basedon the SIC (Standard Industrial Classification) code systemand the Bureau of Economic Analysis I/O sectoring.

STUDY AREA

Boone County is located at the southeastern part of Westvirginia in the Appalachian Mountains coal field (fig. 1).The county covers 1, 303 kmz (503 mil) of land. Madison, thecounty seat, with a 1990 population of 3, 100, is located 32 km(30 mi) southwest of Charleston, WV, 373 kIn (232 nrl) southeastof cincinnati, OH, and 600 km (373 mi) southwest of Washington

C (9, ~O).

t.

,'I".

Ohio

Kentucky ~

. "

'Ir

, !" """ _

,"I ,,

' "

-""1"

" -""""

1 .

.. .

Mil....I "

' 1 Kllomlttl8

WilliVIrginia

VIrginia

Figure 1. - Boone County, WV study area.

Boone County' s economy depends wholly on the health of itscoal mining industry. Data in figure 2, generated by IMPLAN,

G~ : s~ 800G-v0-N~I

\ '" '" '

8~ '

DStAft"1 .

, ,, ,, "~, )\

show the income from the gross sale of production or totalindustry output for the different sectors of the economy. Thechart illustrates that the county has a non-diversifiedeconomy and that its basic industry is coal Jni.n1ng.

ColI Mlnln

$894..3 M

7'8. 8'10

GOvernment

$32.7 M

Othel'8894.2 M

anufacturtng"2.7" (1.1%)

ervk;a$32.8 ..

I8I8Ie . retail

$45.8 M

8port&tlon

$15.7 M

Figure 2. ~ Total industry output, 1991, Boone County, WV.

, '

7'0 better understand the county economy, the mainfactors that shape and influence it are examined below:

" ,

POPULATION

Population is an important factor in the economy becauseit determines the quantity and availability of the potentialworkforce. In 1991, there were 26, 200 people in Boone county;about ' ~8t, lived in rUral areas. According to 1990 census,37" were between the ages of 20 and 44, with another 20\'between the ages of 45 and 64. Women comprised Sit of thepopulation (9). The county has experienced a :1.5' decrease the population since 1980 (~O). No further populationreduction is expected in coming years due to the efforts ofthe county officials to attract new businesses (Boone Co.Development Authority).

LABOR FORCE

The q1.l~tity and quality of a county' e available laborforce is fundamental for the well.being of the county and itsfuture economic growth. Boone County' B available Civilian

G~ : s~ 800G-v0-N~f

DIlAP'l

Labor Forcel was 9, 010 people, in 1991. About 1, 140 peoplewere unemployed, which translates into a 12 - 7' unemploymentrate for the county (9). Total employment (including full,part time and a combination of both) in the county was 8, 664people. This nwnber includes employees from Boone andsurrounding counties.

As can be seen in figure 3, the labor force is not welldiversified, with the mining industry being a maj or source ofemployment.

Coal Mining

3S81

TranlSpottation18C2.1~)

Othe1'8638

Manufacturing143

(1.7")

Government1560

Services920

Figure 3. - Total employment 1991, Boone County, WV.

INFRAS TR. U CTURE

An important factor of the economy and its potentialgrowth, is the soundness of the associated infrastructure. Toinsure good market interactions, the infrastructure should

The sum of both employed and unemployed persons 16 years age and older, excluding a~d forces personnel and persons inpenal and mental institutions, sanitariums, and homes for the aged,infirmed and needy (9).

6~ " ~~ : s~ 800G-v0-N~I

. I

,I:"

)",

J;",

D8.Iift "

, ,

fac:i.11t"te the -.oot)1 movement. of prodUct. and 'labor., T~Z'. "" nthi8, .end" , :eooJl& County has ,coIWen~rat.4:" igDif:i~ant reeo\ttcel

' ' ,': ~

to develop the sewer and water needs ot various ccmmunities in the county; although sewer needs require furtherconsideration.

The completion of U. S. Highway 119, that connects thecounty with Charleston and the stat6" of "PelDlJily.1vada to thenortheast, and with Logan and williamson, W, and the state OfKentucky to the south, has greatly imprave6 :/:tr~sportationneeds of tpe county' s wel1'tern sect'.:Lon:., TranstY~~~~:m in therest of tb~ cb~ty requi~a:s:igJ)ificent improv~nt" to enhancematerials' fl~w. , The CS~' ':a;;tJl line, and s~' ;' carriercompanies proVicfl!' iDt~;"t;ate

..

apd/or iQ,tras~~~ ' s_iVn:e to thecounty. The Yeager! Airport, providiAg the ri.~Bt;. r;!cmmercialairline service i8 ~~pe~,

~' ,

~wba C~unt:y, ~~~ 39" m1nutesfrom Madison. The aiXM";t." ~~t:8r. acc::es8 tp" zta.~tbnal andinte:rnatiomu", .w., ,linea' and, freight se~t::e.' oI! ahcl"!as a wellequipped p~i~t~, ~eneral aviation service "center (, I 10).

GOVBRNMBNT

The state government includes the traditio~l executive,legislative, and judicial branches. All judge." are elected bypopular vote. The smallest local government unit is themunicipality, "ith the county being next in size. BooneCOUl,It)"'" is gCY.e.meQ ,

,~ ':~ ,

--8'

. '

1, lQ..~, ~lIilron

,~

-themunlcipalittu, by""'. Ma.yor,,(counciir.\:: , A::l;L ' ICO1.1.Dty, ofticers areelected to f~ur~year terms.

one main function of the government is to provide adequateeducation to its labor force. In Boone County education isprovided' , by' . i t8 JCindergarten Aca4~.. a mode! i' prea eat for tbt!.tate.' of ,west ~ wdrgd.a.ia. 17 ,el~tlUiY. ' amt." .ix: 8econda~8ohool.Jl' 6 : Vo~:lzona1' tra:bning..;j;.. obtail;\ed" a:t t- Booae, ~areerand, Tecb:l1~cal: :qentet and t~, lB90n8;~Co1int11', Cen~er of SouthernWest"Vd%V'.iaia: C~m!W ' .coB.lege" !QUeJ:'1I'. a' :twa.-yeu ,associatedegree in several. ,cliff~~ ,Ue1:d:8 fi.9-h..

, ' ' ', ': '..

r,

' '" ' '

, " i :

' , " .,:

, J

"" - "~,

. 'IJIDUS~Y

, ' , ', ' , ,.' ,

.. A' ,factor' ~ital to ' the.. CEeatioD ~f inccme ' in- tbe:eeonomyr :Lsthe' type of industry or 'industries present in the region. shown in figure 2, Boone County' s only significant industry isthe coal mining industry. Electric power is provided by theAppalachian power Company. Southern Public ServiceConsolidated, and Hope Natural Gas Company provide natural gasaervices to the county (9).

Industry and the BcQQQIIIX

, "

Figure 4 depicts the levels of other income and employeec:ompen.at:1~n . ('described , in. , the Impact Analysis sect1cm~ inBoone; County: for 1991. Other iDCome includes propriet&:ty and

0c' G~ : s~ 800c-v0-N~I

~G'

property type income. It can be seen that Boonemining industry is its main and dominant source

ot re

Employee CompensationOther Income

$10 0 .. (3.15")Whoa..."a. Retd

$22.0 III

IU.2 M(4-")

82.1 .. (1.1")

Figure 4. - Inccme and employee cgmpemna.t;ion, 1991, Boone county, WV.

(Other incane includes praprietaxy and property typeincome) .

The flowcharts presented in figure 5 demonstrate that for

the economy to produce sufficient outputs to cover its demandsfor local con$umption and exports, it must utilize variousinputs same imported and some produced

locally.The overall economy of the county, betwe,

en 1985 and 1.991'shows an increased activity in most sectors,

with theexception of foreign exports where a. maj or

reduction was

experienced. Local. purchases by households and governmentdecreased during that time, and purchases by

businessesincreased. Imports ana domestic exports also increased. Most

output is consumed locally.

. ,

Implicit Price Deflator (GDP) was used to adjust moneta~values of 1985 to 1991 dollars.

~~ : s~ 800G-v0-N~f

DRAFT

overrrnen+ InventJry

SalesS7.Dt.A

TIO

Tom IGrossSales

128.3"'"

S1.!11 H ...S1.556.9""

oca~11111HiII8e~1IB$3&5.9 hi!

GofItImInL

1166.6 M

omesocExport;;

m est.ic

Exports

1626.S'" S84'), 9t.C

1985 1991

. " Figure 5. - Economic flow diagrams, Boone Co~ty, WV.

Coal InduBt~Coal mining is ~he primary and dominant income producing

indus try in Boone County. The county is located in theSouthern Coalfield, which contains many high-quality (low-sulfur, low-ash, high-BTU) coals. The sulfur content of thecoal averages between 0. 7 to 1. 0%. Coal was first discoveredin Boone County by explorer John Peter Salley in 1742. Coalproduction fluctuated over the years, following market demand(11) . Figure 6 shows the coal production from 1982 to 1991.Coa~ production declined in recent years due to a UMKA strikeand unfavorable weather conditions. Production in 1993declined to 13 5 M mt ( 14. 9 M at) but is expected to reachabout 17. 0 M rot (19. 0 M at) in 1994. How soon production willreach the 1991 level of 22. 8 M mt (25. 1 M at) will depend onthe industry' s ability to reestablish sales contracts, orconsumers confidence that they are a stable source of supply-

GG' ~~ : s~ 800G-v0-N~I

, 25

: ~Q

MUUom mt

--------- ----- ---- -- -- -----

2tiJ

'" '\

' 1-6

,5,

1,""

:\ ' "'," " ,': ' , ' ' !, .

;: i

, )

8Surfa6e .tM~rGlind.Tt:tt81' ,," 1:"

:/ '

~'.~;3'

.' ,,

\(1"

, )"/\ ,"

, '" ,i ,'/1

, " ' :' ' , '~' ' . , ! ~ ': ' ' \ ' ,: ' \ \,

Figure 6. - Coal production history, Boone County, WV.

The West Vir~~n~a Coal ASsociation re99r~~he estimated

recoverable reE!l#~," for Boone County in , 1~~9j;' ~~, 3 8,,891. 3 M mt(4, 289. 4 M I!Jt),

..,

(j2). '; ACcording to ~~~es,

~,

cOnCNq~ed in

sylveete~,'?4r/2 "DU.Du.te quadungle by the qSBM '~5, 'If')' and theWest :virginia Ge~lcig1c:a1f" surver~" '(13)', about 4~." of thereserves are "a~1:iable tor min~ng af~er t:~~rderinsf' t~ctmicaland. el1viromnenta~., :z;:.st!7iction. ;: b~t only ~,t;. 10' to 20t ofthese available te.~rve. ar~ e~~~c~ly mi~le in today'market.

Ai'Plyi11g " the results of tb~, ~ylVt!lster quadr8;11gle to therepor~8d reserves for the county, ~d assuming ~ productionlevel of 22. 8 Mnt per year the county" W'4.11 b,e able to sustain

mining activities 'for DO mere than 20 years.No definite conclusions can be drawn from the results of

etudy1n1 the coal reserves of only one of Boone County' e dozen

or so 7 / l-minute quadrangles. If the economics of producingthe coal is considered, it appeare that the amount of

coalthat w~ll be ~ned an~ delivered will fall far short of theavailable coal reeoorces.

The lack of

~~,~~y

avai~abl~ coal could aeriously

affect the count.y~s. ecOIiomy in the future. Coal miningprovides 79. 3' of the county s TIO (fig. , 2), 41. .' of total

, "

~G' ~~ : s~ 800G-v0-N~I

VG'

1.2 DItAFr

employment (fig. 3), 62.7t of other incane, and 71. 4t ofemployee compensation (fig. 4).

RESULTS

Prior to analyzing Boone County' s econ~, regional datagathered directly from county officials were compared withdata existing in IMPLAN' B data base as a test of IMPLAN' Bvalidity for this analysis (14). Also items such as the' costof labor to produce coal, the costs of electricity, fuel,materials and supplies, ete" , were found to be withinacceptable limits. Employment JQUltipliers were verified. Forexample according to IMPLAN, in 1991 4. 02 people were requiredto produce goods worth $1. M in Boone County' s coal industry,which' trans1ates to a productivity of 3. 04 mt/employee-(3. 3S st/employee-hr). This compares well with the officialproductivity rate of 2. 98 mt/employee-hr (3. 29 Bt/employee- hr)calculated from county data.

Once the accuracy of IMPLAN' S data base was verified, , themodel was used to assess the county' s coal mining industryimpact on the economy.

Allocation of expenditures and cost per metric ton of themost important inputs to the coal industry, in percent of TIO,are shown on figure 7. Purchases by the industl:Y, in the formof supplies (excluding labor, overhead, and taxes), are$2S. 13/Mt, about 64' of the value of the industry' s output.

Coat analysis

,lUon'mead

82.14 M (7.6%)etroleum

PlGducta$0.&8 M(1.4%)

Figure 7. - Coal industry coats, 1"1, BOOQ. County, WV.(OV'erhead includes rayalti.., rent.,dividends, ,and corporate profit,)

~~ : s~ 800G-v0-N~I

130

, .

' i.. ',,"\' ,

'rab:1. 1. .. t; ar.e i..- 199~ BOCIQII Ccuft

, '/' "

Pu1"eiia:8.. $ II

, '

Sectpr Coal,. ~~.t.:IV Baaq.

WV',

, 8'ef:toi.

, '

:1K~'2- i'" 57a' 1 ,

, '

I',

:,

, 10'.

154,. 5.,

21.

, 9..

39.

, ' , .

..&1. &; ce,tail

" , ..

Sttrri. Ce 8

10. '5.44.

,~.

1 .

H~.

f 101'

Gov8ftMnt.

, ,

, 3.

'3.13:

.' . ',; , "

T~' '55.

, ,

'1 ' 'I'

, ~ , . : '~: ' , ' ,, ", , '' " . \ ,, . ' , '

comparison of the input market (supplies - no valueadded;): for the i:cnmty.' and the" 1;Q~l iIUpp:UJerti to. the coalin4U8't.zry lIhowa: a high: " i'D.terac;titm ' (ea.les)' betweea CO\I'l:' cdmpan!:.. (81d;t" $126.2/$154.:5): ' .(-table... ,1) ~ , This, ver;y

high: 1ntftact.ica prObably. t8flect.' -c~ie. 8eIli1il9"coal

~~\

' 2.,- , C;q~l ,~ ;1.~~I!;ri, ~Cf c~1:.1s BQO~~, ~p~tt ' MY.

' ,

19'8'5 , 199,1

" ,

Item. oif 'TIO

$ ,

TIO

(" , "

Labor II, 2;05

" ~

27. 204.. 2~.

....' ,

Inputs 385. 51. 573. 64.

Other Inputs, 259 . 34. 329. 36.excluding coalCoal 125. a 16. 243. 23.

Value added 156. 20. .11.6 . 13.

TIO 747. 894 . 3

" '

, ,I,, : T :; \1 "

,... : :-

through the parent company or through an affiliated salescompany or through brokers, and also, the purchases of usedequipment, such as draglines, shovels, trucks, etc., which is

SG' ~~ : s~ 800G-v0-N~I

9C:'

D&UI'

.. ""

a coamon practice between campanies. Comparing the differentsectors shows that 66' of the local output in the wholesaleand retail industry is purchased by the coal mining industry,and .~: o,f' t:he' output" servins' sect:or ,

" '

.8 ..,..11: 818' :it., of- thetr~r~td.OI1 net~rk., sat.isty deman4. :eront ~ o~;l, i,DdU8try~

The br~akddW11 of"" th~ ' coal :tttdUltry'" 8' no (OD" a constant!~pl"l!iiLr basis.) betwe~. 1~85 and 1991. i. shown on table 2. Th-

. TJ;Q, fX:~ 1985 to . i'~91 ~h~S" " an :s"l2:c~e~Be ; ij-"om ~ $74'

; .

' ~ to$894 ~ 3, M ' OJ!'" 19. ,",t _ile, til.. , iiDdivic1ual "

,'"

i.Dpit." '~ shOtJ" cons1dt;!rabi, ~1a.nce. Labor CO8~S i remained the same ~lthough' th~ labor faI"ce was'' reduc::ed "bY '20t" and: 'produc:ti~it1i~~re&,.,"",d".

'" ..

TP~ ~ec~,e~e ,~D t;!1~ valu, ~~e4 c~g, ~ Jnd~\gate't4a.t ,,~~e coa~: ft;Ld.u~try bec~ much less ~:.;o~itable bet~e~,'19S$", aJul- , 199--1.

' ~"

ot;her input,a incrGassd mnei4erablY,

~ "

asce~aiD"' :the caUBEII of' this increa8e, ; we ,~.t: examine

, "

therel' at'1Ye' changes ot the moElt 'iJllportatnt. Meters of inpa~:(Ru..~~') 9Y~;', t~--, ~,l""cliD:g c~~ ;~~ 1~,

~ ,

4~l~ar~;,;: iI:. '

) " ~ ~~",

sectorl!l listed in t~le 3 repr~8ent more than 0..

tot*'~ 'cOal mimng iach1atry "p~e. f#om .,,1 tiU4 , an4-,out~e:tAe c.~y. Expenditure,: for most" l;:Iectors, 8Jtcept equ1pnw!nt:rauta1; 'have increand" as 'expected' -(-~ince cod: prodUctioi)!J!i~~~~~' ~~:~~~ tI)~-~~:,!~~~io~. o~ ~.n~, r. (fer~e~agel

~~~ , \

~. consil8r~.i:~ :1DcreaS8 is not . J;I. ma i1t~ceand "

.:,

1~1Vtfia't: , ~eryf b.a.$1o.g." :,

~,

real., estat!rsec"~-

. .. ' "

:" n

~- " .

tiDwer ccai: Bale. .-prtc- ,probably i~du'C8d:" mi~'

, '

:4f

~~~' _

sp'~. ~re, .~1' 3 ~~

~~~~~~ '" ~~ ~~~

" n~t

~~ ~~, ,

.u~y~~g," new o~ rQt;uJ.g equ pmen",.I , as ~. eo,"e~ , Y

thlt" .:itJ;C%'e'DI....:s pet2.d~ng" em' ~1 tv" beu'i~.,. ' ana. , ~\1.t;r!aJ.: ~~J1eq.,

!.;, ,

(~e dec:teaB '" of . expen~t~r~s iD~, the ' other"'F,

~'

~~~.j;i,all

~~:

pet~leum products, 011 and lube, and;~ati' OD' see can" be at trlbut;.. t-o ,n.t.he / eomplet' icn

~~~-

~r;r~? ~~:i- t

~~,

~:ajn\i~ t..:.

~,,

~i= ~ al so ~:1on.: of::rea~ce's' "(r~",eat~) , by._ B)inins..nr;.PDJP~ies '~~~d coDsideraJ)ly beca:u88 of t~ a:urre~t., desirabilitycf" thf! 'CountT,8' -comfliec." ~l, ' 'aDd ,-t:~ dnl-re J.~o' acqUite,

, .-

more, c.t:aJ., resources. '

" ': '.", ,"" , .., ,.." .,..," " , ,~ ,, "".'"" ,,', ,'" ..' , " , ,, ,, ' ,,'

~~ : s~ 800G-v0-N~f

tlRArr

Table xnput expenditure for coal industry, Boone county, WV.

1985 1.991

S M nf' inn t; M t of inDo

Maint.

&:

Repairs

Explosives 10.

Petrol. & Refin. 13. 1.2 . B

Oil &: Lube

Tires 5 .

BeltingBolts etc 10.

Inter. Comb. Eng.

Surface Equip. 20. 19.

Pump S

BearingsIndus t.. Machinery 1.3 10.

Motor FreightTransportation.Blectrici ty 22. 29.

Wholesale Trade 22. B. 8 23.

Banking 13.

Real Bstate 25. 54. 16.

Equipment Rental 16. 2. a

Others 76. 29. 90. 27.

Total Inputs 259 . 70. 329. 72.

comparison of the behavior of the local (within thecounty) and import (outside the county) markets, on a constantdollar basis (1991), shows that an increase took place in bothmarkets for most sectors (table 4). ~owever, closer

v~ : s~ 800C:-v0-N~I

DRAPT

TablA 4.- Market coropariBon, Boone County,

1995 Ug1Total InputZ $237. 1 H Total :rnput $229. 7 M

Purchases $ M 'of input PurchaBes $ M \" of input

Sector Local J~rt. Local Tqx.rt. LocaL IlIpOrts Local t~rtll

III.Int.+ Repet r

Petr.+ ReHoe 13. 12.

Rat lro8d SeMI'.

Tr8n8part8tion

\lholes.l. Tr8de 19. 11.0/0

..nJci".

Real E8tah 210. 10. 52. 17.

Equip. Rent.l 15.

Auto Serv; eel

SectO1"8 choeen for c~ri.on, lIXhibrt both local BnCI i.rt 8et1Vfty

E_eludes coal and electricity

examination reveals that the local market lost ground to theimport market on roaintenance and repairs, railroad services,transportation, banking, and real estate. Table 4 stronglyimplies that outside banking and real estate interests haveincreased their presence in the Boone I Co. market. This isprobably related to 1) investment in low sulfur reservea as aresult of the Clean Air Act Amendments of ~990, and2) relaxation of the banking regulations and the concurrentemergence of regional banking corporations. In the petroleum

and refinery and equipment rental sectors, local market lostless ground than the import market. The rest of the sectorsshow a strengthening of the local market. The change of themarkets shows that accessibility through ~provedinfrastructure changes their dynamics, and this shifting willcontinued as more infrastructure is built.

The flow of the coal industry' s economy between 1985 and1991 is shown on figure 8. Comparison of the TIO of the coalindustry to the gross sales in the county (see fig. 5) shows

that the coal industry alone accounts for about 79* ($894. 3 M

out of $1, 128. 3 M) of the county s TIO.

BC:' v~ : s~ B00G-v0-N~I

PURCHASES SALES

Total

Inputs

"'7 ..

Coal

1741'. ' iii

:17 J)RAI"'1'

CoalGtoaaDemandIII...

.'.. ..

1985

PURCHASES

I~l ToUd

Inputs

SALES

:~r

..

1--.110Coal

8814-1 ..

Coal

D8ftIIIId

.......,...

ClIU N

1991

Figure 8. - Coal induBhy ec:onaaid flow diagrams, Boone County, WV.

The average annual compensation (including benefits) fora coal miner in 1991 was $57, 054. Although this was thesecond highest paying occupation in the county, it represented

591 jobs or 41% of the total employment. Manufacturing jobspaid an average of $16, 563, although some highly specializedoc~pations provided the highest pay in the county of about$57 250. Average government compensation was $:19 350,transportation $30,970, services averaged $:10, 990, and1'Iholesale

&:

retail averaged about $13, 530 per person per year.

SCENARIOS

Four scenarios (A, B, C, and D) were developed to considerthe potential effects of changing market conditions thatresult from significant changes in coal production (assumingproductivity remains the same). Because most of the coalmined in Boone County is exported, Final Demand very muchequals TIO. This will not be true in a broader geographicanalysis ,.,here coal would be used as an input by anotherindustry (e. g. electric utilities). In that case, coal demandwill represent an Intermediate Demand which won' t categorized as an Industry Output. For this analysis, because

6C:" v~ : s~ 800C:-v0-N~I

Ditaft

small fJ.uc~ua!ticms, ' in , pr~\lCtion do not effect no~iceabl.ecbaage8, a 4. 5 M,mt/yr (5..0; M' et/yr) changa-' was modeled. Inscenari:o.A, iD~MBipg the, f11\a1. d

~"'"

to" $921. 15, II caU8e8 iuctea.ll8, in ,coa1. p~oducticm o~ 4. 5 If mb/yr (5. M. st/yr). ' or

3 H mt:/yr (29' 1 N, stt!yrb For scenario B, a decre...,e of.che' Pinal' Demand to $614.. B9 M. reJrat'!-ve to. 199~ pinal. Demandof" $768", 02 M, leads to a decrease in production of 4. 5 M mt/yr(5. 0' It' st/yr) ~ or 18"..:3 ~ mt.llYr~ (2.0. 1 M'8t./yr):. 'I Tm a8f!t88.' , the, elC r;:m

om;:~t. of re4uced coal reserves,

USBM. st:udtBtt', JlUlP8.t,1i ,8J C an4 D: we:re evaluab!!ld. acenario, C,. 'Ciedr,eaeiDg' t"be:, piatl, to $1307.,4, '1(1 results in

decre.Be' o't:I coal: pr--ctiOQ at'

, ,

~' M III~, ',15' ., ~t/yr.) toan.' ~a ll~, :l.~.', Qf g.,. 0..'/ N rot/yr:; (1.0... 01:' M' .t!yr).. For scenarioD, a decrease of the Final Demand to $0. 61 M oauseS a decreasein production to a level of 18, 000 mt/yr (20, 000 st/yr) 5

S~IOS A AND B:~u,

\,~~ ~;' ",:,~' ! ' ; , .;. ",~,

.,"iW1,'t'" "

"" ".' ,;"

w"".effects result from increasedDirect decreased

~" '

CMI Sector

, ",~" ,.,' . '

".I...:....r!~;': " 'ry,I ' ,

.,~(' '

81"'00 ~

" ,

'8100

, ~" ;'

MOO $7, I;

, ",~~ .

$lao, .

, '

ft.:

"". ";"

'J';,o.,.,.no FD INPUTI Y A _R COIIR

!~\

.. ~1~,

~~, ~~

. (' c

, '

;:1

, ,, , ;, ,

Figure 9. - Direct effects, Boone County, WV.(Production increase (A) or decrease (B) of 4. 5 M mt/yr)

~roduction level was Chosen to approximate a zero production,as the IMPLAN model wil~ not recognize a zero production level.

0~' v~ : s~ 800c-v0-N~r

DRAPT

employment and purchases by the coal industry in response tochanges in demand. Indirect effects occur in otherindustries, caused by the need for inputs by the coal industry(additional purchases to produce additional output:). Totaleffects include direct and indirect effects plus the rippleeffect that: the extra income will create in regional householdspending.

The direct effects on the coal sector in scenarios A andB (fig. 9) will result in an increase (A) or decrease (B) onthe Final Demand of about $153 M. The indirect effects (fig.10) on the supplying sectors ~ill increase (A) or decrease (B)TIC about $125 M. The impact: on Employee Compensation, Inputs,

, and Value Added are shown in figures 9 and 10.

Supplying Sectors

IIIIIIon8

$t80$140

$120$100

S80

seo840

120

110 Inputl Emp. Compo

Sc8narlo 8 ~ 1 Hi Coal dat8 gj Scenario A

Figure 10. - Results of indirect effects, Boone County r WV.(production increase (A) or decrease (B) of 4. 5 M mt/yr)

~~'

p~ : s~ 800c-v0-N~r

C:~'

RAr1'

The total effects in scenario A (fig. 11) would increasethe value of the coal industry TIO to $1, 072. 65 M, an increaseof 20%, and the ripple effect of that increase on the county'economy would raise the overall TIO 20. Ot to $~, 353. 4 M (table5). , The economic impacts in the county level are shown onfigure 12. The 4. 5 M mt/yr (5. 0 M st/yr) increase wouldcreate about 71Ei additional jobs in the coal industry alone,wi th a total job increase of 1, 042, an increase of 12. 0% ,being added in all sectors in the county. This employmentincrease could absorb part or all of the county' s unemploymentor may induce families to move to Boone County. In that eventthe county' s population could increase by 3, 439 people, or1.3. 1% (based on the IMPLAN' s statistics of 3. 3 people perfamily) .

81200

11000

8eoo

8'00

$400

8Z00

All Sectors

Mlllloni

VA Emp. COmpoInput8

. ScenarIo B .1111 Coal Dna .8c8nar1o A

Figure 11. - Results of total effecte, Boone County, WV.(Production increase (A) or decrease (B) of 4. 5 M mt/yr)

s~ : s~ 800C:-v0-N~r

~~'

$1400

$1200

11000

8100

8100

$COO

8200

DRAFT

Economic Impacts in County

MIllion.

Input8 VA Emp. Camp.

. Sc8n8Ita B 1111 d8t8 . Scenario A

Figure 12. - Economic effects in Boone County, WV.(Production increase (A) or decrease (8) of 4. 5 M mt/yr)

Scenario B (decreased production) would have the oppositeeffect. The total effects in scenario B would decrease thevalue of the coal industry TIO to $715.9 M (20t), and theripple effect of that decrease on the county' s economy wouldlower Boone County' s overall TIO to $903. 3 M, a decrease of20% (table 5). The 4. 5 M mt/yr (5. 0 M st!yr) decrease wouldeliminate about 716 jobs in the coal industry alone, with atotal of ~, 042 jobs elimdnated, a decrease of 12. 0%, beinglost in all sectors in the county. This employment decreasewill add to the county ' B already high unemployment or coulddecrease the county' s population by 3, 439 people, or 13. 1%.

Table 5.- TIO comparisons (in millions of 199~ dollars)

Coal IndustBoone County

747.

997.

1, 072 . 6

353.

715.

903.

894.1, 128 . 3

s~ : s~ 800c-v0-N~f

DRAP't'

SCENARIOS C AND D

The total effects of the two scenarios and the effects inthe county caused by diminishing mining activities will resultin a serious economic distress as shown on table 6 (assumingthat productivity remains the same, and no other majorindustries move into the county, or other technological andregulatory changes occurred) .

Table 6. - Scenarios C &; D comparison (in millions of 1991 $)

TIO wageB Input Jobs

Coal Industry (C) 307. 358. 82. 229. 11.6. 1437Boone CountyCt) 394. 11.51. 114. 262 . 74. 3467

Coal Industry (D)

Boone Coun 1:yD) '13

(1) Coal relatedAll scenarios show that total direct and indirect

effects, population, and employment vary linearly with changesin coal production due to the linear nature of I/O models.For example, a 9. 0 M mt/yr (10. 0 M st/yr) increase in coalproduction would create twice the increase in total, directand indirect effects, population, and employment as comparedto the 4. 5 M mt/yr (5. 0 M st/yr) increase of Scenario A.A decrease of 9. 0 M mt/yr (10. 0 M B~/yr) in coal productionwould create twice the decrease in total, direct and indirecteffects, population, and employment as compared to the 4. 5 Mmt/yr (S. 0 M st/yr) decrease in scenario B. Similarly thedecrease in coal production in scenarios C and \oloulddecrease the above sectors proportionally.

In 1993 because of the union strikes and unfavorable formining weather conditions, the coal production decreased by

0 M mt (10. 0 M st) to 13. 6 M mt (15. 0 M st). According torMPLAN total employment in the coal industry is calculated tobe 2, 156 people. From the county s records the coal industryemployed 2 224 people in 1993 which proves the IMPLAN'validity as a forecasting tool.

CONCLUS IONS

The data contained in the IMPLAN system and the results Ofthe IMPLAN analysis demonstrate that coal mining is theprimary income producing industry in Boone County. Coalmining accounted for about 79% of the county' s income, and 41%of the total available employment, in the base, year 1991. The

v$: S$: : s~ 800C:-v0-N~I

t) RAr1'

retail, accounting for 4. 1' of the income while creating 18. of the available employment.

Should production increase as hypothesized, the countycould perhaps train some of its available labor force to fillthe demand for employees. A decrease of production wouldraise the already high levels of unemployment. In either casethe county would have to dete~ne hOw to handle the changesin employment and population levels, demands for housing,education, transportation, health care, etc., which would stemfrom the coal production variations.

Boone County officials should determine why the localeconomy is losing market share to imports in the maintenance& repair, banking, and real estate sectors. Perhaps thesetrends can be reversed.

IMPLAN has proven to be a valuable tool in examining theeffects of potential changes in selected sectors of local andregional economies. This program should be of great help inpredicting the economic impact of possible sooner-than-expected depletion of coal resources if , as initial USBMstudies seem to indicate, the economic recoverability ofavailable Central Appalachian resources is significantly lessthan previously estimated.

S~. S~:S~ 800G-v0-N~I

9~' d l~101

DRAPT

***

RE FBRENCBS

J.. Energy Information Administration. Annual Outlook forS. Electric Po~er 1991: Projections Through 2010. DOE/EIA-0474 (91), Washington, DC, June 1991.2. Electric Power Research Institute.

Central Appalachia:Production Potential of Low-Sulfur Coal. BPRI IB- 7116, Volume1, proj eet 3199 - 2 , Final Report , September 1991.3. Rohrbacher, T. J., D. D. Teeters, G. L. Sullivan, and L.M. Osmonaon. Coal Reserves of the Matewan Quadrangle,Kentucky. BuMines IC 9355 , 1993, 36 pp.4. Rohrbacher , T. J., D. D. Teeters, G. L. Sullivan , and L.M. Oemonson. Coal Reserves of the Boltsfork Quadrangle,Kentucky. BuMines IC 9379, 1993, 29 pp.S. Rohrbacher, T. J., D. D. Teeters, M. N. PIie, and L. M.Osmonson. Coal Reserves of Five Appalachian Quadrangles.B~ne8 Open File Report, 10- , 1994 , 35 pp.6. Miernyk , W. H. The Elements of Input-Output Analysis.Random House, Inc., New York, 5th printing, 1967, 156 pp.7. Taylor, C., S. Winter, G. Alward, andE. Siverte. MicroImplan User' EI Guide. u. S . Dept. of Agricul ture, ForestService, Land Management Planning Systems Group, Fort Collins,

, May 1993.8. Lindall, S. and D. Olson. MicroIMPLAN 1990/1985Database Documentation. Minnesota IMPLAN Group, MinneapOlis,MN, 1993, 78 pp. 9. CUrrey &: Company.

104 pp.10. West Virginia Certified Development Community Program.

Community Profile. Compiled by Larry LOdato, director, BooneCo. Development, December, 1993, 4 pp.11.. Hamilton , C. West Virginia Coal Association. Prinatecommunication, 1994; available upon request from R. :I. Geroyan,BuMinee, Denver, CO.

1.2. West Virginia Coal Association. Coal Facts ' 92, 52 pp.13. Bascombe M. Blake, Jr., and Nick Fedorko. The CoalAvailability Study in West ' Virginia; Sylvester 7.Quadrangle, Boone and Kanawha Counties. West VirginiaGeological and Economic Survey Morgatown, September, 1988,Open File Report OF9003, 9pp.14. State of West Virginia, Bureau of Employment Programs.

Employment and Wages Calendar Year 1991. Average Annual Wages119 pp.15. Brown, S. D. Coal Reae:tV'es of the Sylvester QuadrangleWV. Unpublished USBM report, 1994, 6 pp.J.6. USBM - Intermountain Field Operations Staff, Coalrecoverability and the Definition of Coal resezves,Appalachian and Interior Basins, 1994. USBM Open File Report1995, 43 pp.

Boone County, a Feasibility Study,

9~' s~ : s~ 800C:-v0-N~I