Resource Curse

Resource Curse

If West Virginia isn’t a good example of having a valuable natural resource and getting not much more than pain from it, there isn’t one. I’ve predicted no effective sanctions for the company that polluted the water of 300,000 people for weeks. I stand by that. Sometimes, an industry gains control of a regulating body. We call that a “captive” agency. In West Virginia, the government is held “captive” by the coal industry. They own that place. The coal industry is going to do pretty much what it wants there.

How sad it must be to live literally on top of billions of dollars of a mineral resource and know you are never going to get much out of it and what you get is likely to be more pain.

It would seem to me that basic ethics would dictate that a state would find a way to distribute profits more equitably from the people’s land.

James Pilant

West Virginians say they don’t fault coal industry for water crisis | Al Jazeera America

Some analysis of how the coal industry has affected the economy of West Virginia shows that it likely contributes to poverty rather than its alleviation, and that most counties where poverty reigns in the region are also those that rely the most on coal mining.

Two economists, Stratford Douglas of West Virginia University and Anne Walker of the University of Colorado Denver, published an analysis in December comparing 409 counties in Appalachia for trends in poverty and education stemming from the “resource curse” of coal.

“The ‘resource curse’ occurs when a region’s resource wealth makes its people poorer,” Douglas told Al Jazeera. “Some places, like Norway and Texas, are richer because of their resources. Some other places seem to be poorer because of their resources, and our study indicates that these may include the coal-mining counties of the Appalachians.”

While it can apply to many kinds of natural resources, from oil and gas to minerals and timber, the resource curse involves steep levels of inequality, high poverty and environmental degradation in places whose economies rely on one resource. The promise of the commodity also comes with the economy having to rely on its price, often leading to a cycle of boom and bust.

“No doubt, coal mining provides opportunities for relatively high-wage employment in the region, but its effect on prosperity appears to be strongly negative in the long run,” the economists wrote in their analysis.

One of the biggest problems, the analysis stated, is that the coal industry does not provide enough high-paying jobs to people who obtain college degrees. These people leave the state, contributing to economic decline over the long term.

In addition to taking steps to diversify the economy, the authors suggested that Appalachian authorities try the tactic that wealthy Norway has, charging higher dues on companies that mine coal in the area.

The authors noted the recent rise of hydraulic fracturing, or fracking, of shale gas deposits in the region, and said it wasn’t an antidote. 

“The shale gas industry, like the coal industry, shows a strong tendency toward boom and bust.”

via West Virginians say they don’t fault coal industry for water crisis | Al Jazeera America.