Please reflect on one or more of your readings from this week. Are there any perspectives we should be sure to cover in this topic? Feel free to suggest extra readings.
4 comments on “Lesson 7: Resource Development and Governance”
Arielle Wiggin
This article made Alaska’s financing of resource extraction projects reminiscent of the Soviet Union’s “more aggressive state role in development.”
In Globalization and the Economies of the North, Alaska is characterized as a case where resource development is primarily driven by market forces but supported by government tax incentives. The Soviet Union’s development strategy is offered in contrast.
However, Huskey’s description of resource development as a vehicle for state sovereignty brought to mind AIDEA’s leases in ANWR, and highlit potential motivations behind choices made by Alaskan leadership.
State autonomy is important to Alaska lawmakers. An outside observer might assume they view their constituency as members of an autonomous state under control of an alien power, rather than participants in a federal system. Choices made by state entities reflect this.
As discussed in this article, resources produced on a frontier must be valuable enough to cover high cost of production and transportation to market. The reading describes the cost of building the Trans Alaska pipeline, and a natural gas pipeline that, in 2023, has yet to be built.
When an ANWR lease sale was held at the end of the Trump Administration, no major oil companies bid on the leases. The lay person may assume market forces had turned away from development in ANWR. AIDEA, a public corporation with a governor-appointed Board of Directors, was the main bidder.
Without the major oil companies, AIDEA’s bid must be considered an act supporting Alaskan sovereignty in defiance of national trends and Outside public opinion. Given the descriptions of various approaches to economic and resource development in the circumpolar market, I believe AIDEA’s recent actions reveal a state sovereignty-driven approach to development, rather than market-driven strategy.
you make a very interesting connection between the Soviet Unions intensive state role in development and Alaskas financing of resource extraction. The Trans Alaska pipeline is a key point- obviously resource extraction in the north is a very lucrative business, however the location makes it fiscally very difficult to access without going immediately into the red. It is interesting that no big oil companies bid on the risky pipeline, leaving it to fall to AIDEA.
From the Baker article: “it is disputed whether DOI decisions (and those of other agencies) in offshore oil
and gas decisions in the U.S. Arctic are adequately reflective of Tribal input, or that of other Alaska Natives.”
Spoiler alert– they aren’t. The second their input goes against the wishes of oil executives and high-level government officials, the wishes of Alaska Natives will be conveniently ignored. The power dynamic is so ridiculously one-sided that the Alaska Natives who have lived in the Arctic for generations upon generations will never have the final say over their own land as long as things stay the way they are. At least American society is slowly becoming more aware of the negative effects of colonization, but recognizing there is a problem is only the first step of many.
Super cool Dr. Meek got cited in the paper though.
Lee Huskey in “Globalization and the Economies of the North” states: “When resource use is decided by legislation or judicial decisions there are few mechanisms to compensate the losers, which results in hard-fought battles by all sides to secure favorable results.” This is prominent in the Northern regions. Huskey delves into the international economy and traditional economy aspects. While many parts of the Arctic are heavily influenced by external factors, such as mining or oil/gas production, this does not diminish the traditional economy. Both exist in tandem. However, in today’s world, one could not exist without the external factors that the international economy brings into the region. Subsistence, while falling back on generations-past knowledge, has become enmeshed with the cash economy as well. For example, you would be hard-pressed to find many hunters who do not rely on snowmachine or motorized boats.
It is also important to distinguish between renewable and non-renewable sources of income. Much of the economy of the North has become dependent on non-renewable resources, like with mining. While the residents and governments can reap the benefits in the short term, if there is no long-term plan in action for when these resources run out, there is much trouble ahead. An example is the Red Dog Mine in Northwest Alaska. The end of life for the mine is in 2031, and the Northwest Arctic Borough relies on the mine for over 80% of its income. What will happen when that revenue dries up? It is a scary thought to imagine, yet as the year grows closer, and there is still no plan in action, one must be concerned.
This article made Alaska’s financing of resource extraction projects reminiscent of the Soviet Union’s “more aggressive state role in development.”
In Globalization and the Economies of the North, Alaska is characterized as a case where resource development is primarily driven by market forces but supported by government tax incentives. The Soviet Union’s development strategy is offered in contrast.
However, Huskey’s description of resource development as a vehicle for state sovereignty brought to mind AIDEA’s leases in ANWR, and highlit potential motivations behind choices made by Alaskan leadership.
State autonomy is important to Alaska lawmakers. An outside observer might assume they view their constituency as members of an autonomous state under control of an alien power, rather than participants in a federal system. Choices made by state entities reflect this.
As discussed in this article, resources produced on a frontier must be valuable enough to cover high cost of production and transportation to market. The reading describes the cost of building the Trans Alaska pipeline, and a natural gas pipeline that, in 2023, has yet to be built.
When an ANWR lease sale was held at the end of the Trump Administration, no major oil companies bid on the leases. The lay person may assume market forces had turned away from development in ANWR. AIDEA, a public corporation with a governor-appointed Board of Directors, was the main bidder.
Without the major oil companies, AIDEA’s bid must be considered an act supporting Alaskan sovereignty in defiance of national trends and Outside public opinion. Given the descriptions of various approaches to economic and resource development in the circumpolar market, I believe AIDEA’s recent actions reveal a state sovereignty-driven approach to development, rather than market-driven strategy.
you make a very interesting connection between the Soviet Unions intensive state role in development and Alaskas financing of resource extraction. The Trans Alaska pipeline is a key point- obviously resource extraction in the north is a very lucrative business, however the location makes it fiscally very difficult to access without going immediately into the red. It is interesting that no big oil companies bid on the risky pipeline, leaving it to fall to AIDEA.
From the Baker article: “it is disputed whether DOI decisions (and those of other agencies) in offshore oil
and gas decisions in the U.S. Arctic are adequately reflective of Tribal input, or that of other Alaska Natives.”
Spoiler alert– they aren’t. The second their input goes against the wishes of oil executives and high-level government officials, the wishes of Alaska Natives will be conveniently ignored. The power dynamic is so ridiculously one-sided that the Alaska Natives who have lived in the Arctic for generations upon generations will never have the final say over their own land as long as things stay the way they are. At least American society is slowly becoming more aware of the negative effects of colonization, but recognizing there is a problem is only the first step of many.
Super cool Dr. Meek got cited in the paper though.
Lee Huskey in “Globalization and the Economies of the North” states: “When resource use is decided by legislation or judicial decisions there are few mechanisms to compensate the losers, which results in hard-fought battles by all sides to secure favorable results.” This is prominent in the Northern regions. Huskey delves into the international economy and traditional economy aspects. While many parts of the Arctic are heavily influenced by external factors, such as mining or oil/gas production, this does not diminish the traditional economy. Both exist in tandem. However, in today’s world, one could not exist without the external factors that the international economy brings into the region. Subsistence, while falling back on generations-past knowledge, has become enmeshed with the cash economy as well. For example, you would be hard-pressed to find many hunters who do not rely on snowmachine or motorized boats.
It is also important to distinguish between renewable and non-renewable sources of income. Much of the economy of the North has become dependent on non-renewable resources, like with mining. While the residents and governments can reap the benefits in the short term, if there is no long-term plan in action for when these resources run out, there is much trouble ahead. An example is the Red Dog Mine in Northwest Alaska. The end of life for the mine is in 2031, and the Northwest Arctic Borough relies on the mine for over 80% of its income. What will happen when that revenue dries up? It is a scary thought to imagine, yet as the year grows closer, and there is still no plan in action, one must be concerned.