The State of Downeast Maine The State of Downeast Maine

Tamer Hassan, Andrea Notopoulos, and Brooke Wanlass

Executive Summary

The State of Downeast Maine is the fifth chapter in The State of Maine’s Environment 2010, a report produced by the Environmental Policy Group in the Environmental Studies Program at Colby College in Waterville, Maine. This is the sixth State of Maine’s Environment report published since 2004.

The Downeast region of Maine includes Hancock and Washington Counties. The area has a wealth of natural resources and the forestry, fishing, and tourism industries are the foundation of the local economy. The Downeast also has the lowest level of per-capita income and the highest rate of unemployment in the state.

Since the 1980s, employment in the natural resource-based industries has declined, tourism has grown, and employment in the service sector has increased. Cost cutting measures in forest products production have led to a decline in employment in the forestry industry and the conversion of land to non-industrial ownership. Conservation of land and resources has grown, with 60% of all land conservation now in the private sector. Twenty-nine percent of Washington County and 15% of Hancock County are currently conserved.

Depletion of the area’s fisheries has led to a decline in employment and revenue from fishing. Lobster are currently the primary source of income in the fishing industry, representing 45% of landings, but this resource is unevenly distributed along the Downeast coast and of more benefit to the economy of Hancock County. Tourism in the Downeast is concentrated in Hancock County, which has the top six overnight and top five day tourism destinations in the Downeast. There is a lack of infrastructure to provide wireless internet in both counties, and businesses, organizations, and individuals lack access to communication and research technology.

We recommend a number of policy approaches for future management of the Downeast’s resources. The state of Maine could provide tax credits to forest landowners who receive certification such as American Tree Farm System certification to encourage small-scale, sustainably managed forest operations. The state could also offer tax incentives for technology research and development such as the High-Technology Investment Tax Credit to encourage businesses to invest in the area. The Maine Department of Transportation could expand the Explore Maine program to facilitate travel of tourists throughout the Downeast. Finally, land trusts utilize the Maine Land Trust Network to increase collaboration and participate in the Maine State Planning Office’s conservation easement registry to aid the development of a conserved land database that may guide future conservation planning.

Introduction

The Downeast region of Maine includes Hancock and Washington Counties. It is an area rich in natural resources but also has high rates of unemployment and low levels of income among its population. This report explores the drivers behind the current state of Downeast Maine, questioning how the region’s resources can be used for economic benefit while they are conserved for the future.

The Downeast region as defined by the distribution of its natural resources is a transboundary area, crossing the US-Canadian border and extending from the Penobscot Bay in the south to the St. Croix Watershed in New Brunswick (Fig 1.1a) (TNC 2010). It is a single watershed with one common drainage flow and similar biodiversity and geological composition (EPA 2009). The area’s land cover is 77% forest, 11% open water, and 8% wetland. Only 1% of the area is developed (ISRWB 2008). The Downeast’s open landscapes serve ecological purposes and provide the people of the area with essential resources. Forests filter nitrogen pollution, absorb rainfall, regulate stream flow and temperature, stabilize soil, and provide wildlife habitat (ISRWB 2008). They also support local economies through the forestry industry. The region’s watersheds are some of the most unimpaired in the state, sustaining biodiversity while providing communities with waters for drinking, household use, agriculture, manufacturing, and recreation (EPA 2009). Wetlands protect water quality, provide wildlife habitat, prevent flooding, and stabilize shorelines (ISRWB 2008). Offshore fisheries support groundfish, shellfish, lobster, and other species that are the basis of the coastal fishing economy. The area’s coastlines provide the basis for the region’s growing tourism economy.

Government regulations are generally limited by state-drawn borders and resources in the Downeast are divided by national jurisdiction. Within US boundaries, the Downeast is geographically and culturally defined by residents as the lands of Hancock and Washington Counties in the state of Maine (Fig 5.1b).

Fig 5.1a The Downeast ecoregion (NBDE, 2010; EPA, 2009)

Fig 5.1b Downeast Maine including Washington and Hancock Counties

Methods

Our research builds on preliminary discussions that occurred at an August conference at the Schoodic Research and Information Center on Downeast Maine. We used this dialog as a framework to identify future research areas.

We conducted a literature review and visited Hancock County in September, 2010, to gather background and historical information on Hancock and Washington Counties. We used a geographic information system (GIS) regional map to combine the areas of the Downeast Watershed in Maine, as defined by the US Environmental Protection Agency (EPA 2009), and the St. Croix Watershed, as defined by the New Brunswick Department of Environment (NBDE 2007).

We derived demographic data from the US Census Bureau. We used population and age group data from the 2006-2008 American Community Survey 3- Year Estimates and 2000-2008 Annual Estimates and data on per-capita income from the Bureau of Economic Analysis database (US Census 2010). We derived economic data on the forestry and fishing industries from the US Bureau of Economic Analysis (BEA 2010). We used employment data from the 2000 Census to assemble a GIS map showing employment in Hancock and Washington Counties (USCB 2000).

We used data on forest certification from the 2005 Biennial Report of the Maine Forest Service (MFS 2005). We used GIS information on land ownership based on a map created by the James W. Sewall Company in Maine (James W. Sewall Company 2008).

The health of fish stocks were difficult to contextualize given a lack of historical data as a source of comparison (Ames 2010). We assessed changes in the fishing industry over time through a review of literature, personal interviews, and recent data on landings, the value of landings, and fishery license holdings. We obtained landings data by county starting in 1960 from the Atlantic Coastal Cooperative Statistics Program (ACCSP 2010). License information was prepared by Kevin Athearn of the University of Maine and based on raw data from Keith Fougere of the Maine Department of Marine Resources (Athearn 2010). Lobster harvest and value information was derived from the Maine Department of Marine Resources Historical Fisheries Landings Data (MDMR 2010). We generated a GIS map showing change in property value based on a map by Beth Darling for Colby College’s Atlas of Maine 2008 (Darling 2008).

Tourism data with respect to the economic impacts of Acadia National Park were derived from the Michigan State University website. In order to quantify the economic impacts of Acadia on the Downeast region, we used the Money Generation model (MGM), developed by the National Park Service and Michigan State University to aid parks in estimating local economic impacts of visitor spending. The MGM model estimates what park visitors spend in the area surroundings parks and quantifies the impacts of this spending in terms of sales, income, jobs, and local tax receipts (NPS 2004). We used 2004 and 2008 visitation data commissioned by Davidson Peterson Associates and obtained from the Maine Office of Tourism website (MOT 2008).

Land conservation data is based on an assessment of the area conducted by the Maine Land Trust Network, a literature review, and interviews with staff of local conservation organizations. Data for the land conservation map was derived from the Maine Office of GIS, based on April 2010 updates and mapped using ArcGIS. The Downeast Lakes Land Trust provided spatial data of the Downeast Lakes Forestry Partnership.

We obtained data on broadband availability and the abundance of cellular towers in the state from the Maine Office of GIS. We used ArcGIS to create a map illustrating broadband service types and cell phone availability in Maine, with a focus on the Downeast region.

Our research is a collection of synthesized data analyses, literature reviews and expert opinions. It does not incorporate direct input from residents of Downeast Maine. Further research is required to integrate community participation.

The State of Downeast Maine

This report begins with an overview of economic and demographic trends in Hancock and Washington Counties. It then explores five specific areas which have influenced the state of the area, addressing forestry, fishing, tourism, land conservation, and telecommunications technology. Each section includes a background history, an overview of relevant laws, institutions, and stakeholders, an assessment of the current state of the area, and policy recommendations.

Economic and Demographic Trends The lands and resources of Downeast Maine have supported the livelihoods of local communities in the region throughout recent history. Ethnographic studies document Wabanaki Native Americans on Mt. Desert Island around the year 1500, evidencing that their livelihoods were based on subsistence from natural resources (Prins and McBride 2007). After colonization, the economies of settlers were supported by fishing, agriculture, and hunting (Safford and Hamilton 2010). Use of resources in the area was historically guided by a principle of common access. Starting in the end of the nineteenth century, the majority of land was owned timber companies, but public use was allowed by the state government (Judd 1988).

However, in the early 1900s, privatization of resources began to be more strongly enforced as a result of lobbying from the growing the timber industry. Lobbying from the growing service sector economy to preserve resources for tourism also led to restrictions on public access (Judd 1988).

Maine’s economy has transitioned over the past 100 years from employment in manufacturing industries to employment in the service sector (Fig 5.2). This transition mirrors nationwide changes. In the early 1900s, two-thirds of American workers were employed in farming or manufacturing, while today these industries employ only 13% of the workforce (Reilly 2006). In the Downeast, natural resource industries of forestry and fishing dominated employment before the transition to the service sector (Safford and Hamilton 2010). The service sector surpassed manufacturing as the primary source of employment in the state in 1980. Changes in the Gross State Product (GSP) of Maine reflect this transition, showing a decline of manufacturing since the 1960s (Fig 5.3). Income from the finance, insurance, and real estate sectors surpassed income from manufacturing in the state in the early 1990s.

Figure 5.2 Employment by industry in Maine from 1969-2008 (USBEA 2009)

Figure 5.3 Industry percentage of Gross State Product in Maine (USBEA 2009)

Service sector employment is also growing in Hancock and Washington Counties (Fig 5.4-5.5). In Hancock County, this sector has been the main source of employment in the county since before 1970, showing the strength of the county’s service sector economy and a reduced reliance on manufacturing. This reflects the strength of the tourism industry in the county. In contrast, service sector employment does not exceed manufacturing as the main source of employment in Washington County until 1984. Tourism has had less of a role in Washington County, which is still largely reliant on natural resource industries. Figure 5.4 Employment by industry in Hancock County from 1969-2008 (USBEA 2009)

Figure 5.5 Employment by industry in Washington County from 1969-2008 (USBEA 2009)

The service sector provides more employment along the coast, where tourism in Acadia and the surrounding area have supported its growth (Fig 5.6). Regions with more employment in the service sector are concentrated in Hancock County. Parts of Hancock County without a strong tourism economy have more employment in the natural resource industries, which include forestry and fishing. Employment in Washington County is almost completely within these resource-based industries.

Fig 5.5 Dominant employment sectors in Washington and Hancock Counties (US Census, 2000)

Changes in the industries and sources of employment may account for demographic trends in the region. In Hancock County, the average per-capita personal income is on par with the state average and education rates exceed the state average (USCB 2000). The unemployment rate is below state averages and per capita income is above the state average (Fig 5.7, 5.8). The population of Hancock County has increased over time, which is in line with a statewide population increase (Fig 5.9). The greatest increase has been with 25-65 year-olds (Fig 5.10), which may be due to settlement in new developments in the coastal region (The Island Institute 2009). Figure 5.7 Unemployment rate in Downeast Maine and statewide from 1990-2009 (USCB 2000)

Figure 5.8 State, Hancock County, and Washington County per capita income from 1980-2008 (USBEA 2009)

Figure 5.9 Total population of Maine from 1970-2009 (USCB 2000) Figure 5.10 Population by age category of Hancock County from 1980-2008 (USCB 2008)

In contrast, in Washington County, the average per capita income and education rates are below the averages for the state, while unemployment rates exceed state averages (Fig 5.7, 5.8). The population of the county has decreased over time, especially for those under the age of 25 (Fig 5.11). This reflects an outflow of the workforce that may be a result of rising unemployment rates (Fishermens Partnership 2006).

Figure 5.11 Population by age category of Washington County from 1980-2008 (USCB 2008)

Demographic differences reflect the economic disparity between Hancock and Washington Counties that results from the prominence of different industries in each county.

Forestry

Forestry was historically a primary use of natural resources in the Downeast and a main source of employment for local communities. Maine is 86% forest land, the highest percentage of any state in the country, with about 88% in private hands (Acheson 2008).

In the past century, the forest industry has undergone two fundamental economic transitions. These transitions have transformed the natural resource based economy of the region.

The first transition was a consolidation of the industry and its integration into the national and then global economy. As New England corporate-industrial developers invested in Maine, smaller industries were unable to compete. This produced a shift from small to large scale industrial employment (Judd 1988). Integration into a national and, eventually, global economy transformed the forest industry into a competition-driven export business, fueling consolidation and the implementation of cost cutting strategies (Block 2001). By the 1970s, the price of paper had dropped due to low production costs in plants in other parts of the world. This resulted in a variety of cost-cutting measures by these industries. These included the reduction of the size of the labor force, liquidation cutting of forests, or cutting of all usable timber, and the sale of assets to larger paper companies or non-industrial owners.

The sale of land to non-industrial owners sparked the second major economic transition in Downeast forestry, in which the finance sector motivated ownership and management of forest land. EXPLAIN?

Forestry Laws and Institutions

The Forest Practices Act was introduced in response to liquidation cutting that began in the 1970s. As the forest products industry became less profitable, liquidation cutting became a common practice. The Forest Practices Act makes this type of forestry illegal (MFS 2010).

Maine’s Tree Growth Tax Law creates an incentive to maintain property as productive and sustainably managed woodland by providing tax exemptions for landowners who submit a Woodland Management Plan. Financial viability of the wood products industry is crucial to maintaining the long term health of Maine’s forests. If the industry is unprofitable, land may be converted to other use by non-industrial owners. Financial incentives support forest health as well as the forest products industry (MFS 2010).

Table 5.1 State laws regulating forestry and land value Law Year Description Location

The Tree Growth Tax 197 Reduces property tax by stipulating that land enrolled in the program is tax assessed based on productive forestland value rather than MRS 36 § 571- 584- Law 2 other use. A

Forest Practices Act 198 Regulates clear-cutting and liquidation forestry. MRS 12 § 805 9

Forestry Stakeholders

Industrial owners --Paper and wood product manufacturing companies pursue long-term health of Maine’s forests. Their headquarters are located in major cities around the world and they produce paper and allied products for national and international markets. The change in the value of their products and the shift to a global market has transitioned ownership away from industrial owners.

Non-industrial owners – As the forest products industry has become less profitable, forest land has been sold to various types of non-industrial owners. Non-industrial owners in Downeast Maine include:

Real Estate Investment Trusts (REITs) --Non-industrial financial timber owner such as large, out-of-state, banks, insurance companies and trusts of various kinds manage timberlands to maximize financial returns. For example, Plum Creek full name/explain what it is (Block 2001).

Timber Investment Management Organizations (TIMOs) – Non-industrial financial timberland owners buy, manage, and sell timberland on behalf of institutional investors. TIMOs manage land for REITs and forest product manufacturing companies. Non-industrial land owners are interested in the viability of forestland as long as the forest products industry is viable (Block 2001). For example, Seven Islands Land Company full name/explain what it is.

Non-profit organizations – Conservation organizations, such as the Downeast Lakes Land Trust, own conservation easements where logging takes place.

Certification organizations – Certified forest products are targeted at a specialized market to encourage sustainable forestry practices. Organizations with certification programs in Downeast Maine include:

The Forest Stewardship Council (FSC) – The FSC is an international non-profit organization which encourages responsible management of the world’s forests. They issue certification based on performance based measurements and stringent environmental protection policies (NWF 2001).

The American Forest & Paper Association (AFPA) – The AFPA certifies foresters under The Sustainable Forestry Initiative program (SFI) within the US. The SFI is an international certification program with a stated goal of sustainable development. Certification is based off of the adoption of specified management systems, but not on actual performance (NWF 2001).

The American Forest Foundation (AFF) – The AFF’s American Tree Farm System (ATFS) is a domestic certification program that certifies family forest owners with a commitment to forest stewardship. Family forest owners are the most interested in the long-term viability of their forests because they lack the capital to convert to other uses as financial owners would (NWF 2001).

State of Forestry in Downeast Maine

Employment in Maine’s forestry sector has declined, mirroring the overall decline in manufacturing jobs in the state over the last half century. This is especially true in the past two decades; in 1990 employment at about 24,000 but dropped to 12,000 in 2009 (Fig 5.12). However, forestry-related processes of harvesting and manufacturing of wood products and paper remain the area’s most important resource-based industry (ISRWB 2008). These two industries contribute about 30% of the revenue from the manufacturing sector and have maintained a consistent percentage of total revenue generated by manufacturing (BEA 2009).

Figure 5.12 Employment in wood products industry in Maine from 1990-2009 (BEA 2009)

Two of the 24 paper mills in Maine are located in the Downeast region, Domtar (now Woodland LLC) in Woodland, Washington County, and Verso Paper Holdings in Bucksport, Hancock County. Paper manufacturing has the highest value of shipment per unit of any manufacturing industry in the state, making even every mill a major source of revenue and employment. For example, Woodland LLC is the largest employer in Washington County (Mack 2010).These mills have changed ownership several times. George-Pacific was sold to Woodland and International Paper was sold to Verso. These have been the only two mills in the region in the past century. With forestry generating low returns, there are strong incentives to cut forests to convert the land to other uses. Between 1994 and 2007, there was a major transition from industrial to non-industrial ownership of forestland (Fig 5.13). New owners are financially motivated TIMOs and REITs, interested in the most profitable use of the land. They have divided the land into small parcels, allowing them to convert these smaller areas to other, more profitable uses. In the past decade, conversion of forest land to other uses has increased consistently (MFS 2009).

Fig 5.13 Changing ownership trends in Downeast Maine and statewide from 1994-2007 (James W. Sewall Company, 2008)

The process of parcelization is evident in the dramatic increase in number of parcels enrolled in Maine’s Tree Growth Tax program compared to the number of acres. Between 1980 and 2008 the number of acres enrolled has remained constant while the number of parcels has continued to increase. This parallels the decrease in average parcel size enrolled in the program. (Fig 5.14).

(Chart24) Figure 5.14 Total acres and total number of parcels enrolled in Maine’s Tree Growth Tax Program from 1977-2008 (MFS 2010)

Since the late 1970s, programs to protect the long term viability of forest land and forest industries have grown. The number of acres enrolled in Maine Tree Growth Tax Program (1972) increased from 1972 to1980 and currently remains constant. The percentage of land enrolled in the Tree Growth Program has been higher in Downeast Maine than the median county value (Fig 5.14). Between 1995 and 2000, there was significant growth in FSC, SFI and ATFS certification (Fig 5.15).

Forestry Discussion

Compared to other land uses, forestry generates low returns. This is a result of two factors. First, an increasingly competitive global market has driven down paper prices, generating low revenues for the industry and ballooning debt burdens. Companies cite debt reduction as the primary motivation for land transactions. Secondly, there has been a dramatic increase in property value, adding incentives to convert land to other uses. For example, a forest parcel that would have cost about $500 per acre in 1990 now cost about $1,000 per acre (Acheson 2008). The value of land is higher near the coast and other densely populated areas (Fig 5.15).

Figure 5.15 Acres of certified forestland in Maine from 1995-2007 (MFS 2005)

The increase in land transactions in the past two decades is largely because TIMOs and REITs are not taxed at the corporate level, allowing manufacturing companies to avoid tax burdens. Also, companies avoid management burdens in selling land because they shift management and harvesting responsibilities to non-industrial owners (Schwartz 2007).

The trend towards non-industrial ownership creates volatility within the forest industry. Historically, transactions with industrial buyers have included both land and production facilities (Schwartz 2007). New, non-industrial owners own only the land and the rights to cutting and other uses. Specific-asset motivated buyers are less interested in the long-term sustainability of the forests than industrial owners and are much more likely to sell assets for financial gain (Schwartz 2007). Changes in ownership of forestland in the Downeast region facilitates the parcelization of land.

There have been several strategies implemented in the region to ensure the long-term viability of Maine’s forests and natural resource based industries. As the property value of forestland has increased dramatically in the past few decades, financial incentives and forest certification serve as incentives for forest owners to maintain their lands as working forest. In an increasingly competitive global market, certification creates a niche market that may help the region maintain its forest products industry.

Forestry Policy Recommendations Continued funding for financial incentives provided by Maine’s Tree Growth Tax Law can help maintain the profitability of the forest products industry. A tax credit for forest certification such as the FSC, SFI and ATFS would offer incentive for forest owners to maintain their lands as sustainably-managed forests and help land managers and wood product manufacturers to gain a competitive edge in the global market for their products. A tax incentive for ATFS certification would also support owners of family-owned forests who lack the economies of scale to convert lands to other uses and might e more likely to maintain working forestland.

Fishing

Until the 1980s, the main source of income and employment in coastal areas of the Downeast was the commercial fishing industry. Fishing directly employed most of the community and supported other service and retail establishments that provided marine supplies, boat repair, trucking, fuel, and aquaculture (Langley 2004; The Island Institute 2009). There are still few employment alternatives to fishing-related industries in some coastal towns (NMFS 1996). In the town of Stonington, in Hancock County, at least 40% of the population of 700 is employed in fishing (NMFS 1996). In Jonesport and Beal Island, towns in Washington County, 50-75% of people are directly employed in the industry, and most others have jobs in industries related to fishing (Fishermens Partnership 2006). Social and cultural ties were formed within coastal communities as a result of generational employment in the industry (Beal 2005).

Fishing populations have historically fluctuated due to a variety of anthropogenic and ecological factors (Ames 2003). Historically, fishermen were able to transition from one fishery to another when overfishing occurred, allowing for the fish population to regenerate (Hoskin 2010). However, the fishing industry has experienced industrialization since the early 1900s, transitioning from locally-based management to more large-scale ownership and production (Murawski 2005). Increases in demand from foreign markets (Reilly 2006) and the development of increasingly efficient technologies such as gillnetting and trawling have led to severe multi-species depletion (Ames 2004).

The Haddock fishery crashed in the 1930s. Landings from fishing in the Gulf of Maine and George’s Bank in Boston decreased from 240 million pounds in 1929 to a quarter of that, 56 million pounds, in 1934 (Roberts 2007). Fishermen switched to fishing redfish, and by 1943 the overall fishing industry was assessed to have economically recovered (Roberts 2007). The cycle of fishery depletion continued as more efficient technology was increasingly more damaging to fish stocks. The redfish population was soon depleted, and as other species were overfished in succession, fishermen were left without alternatives for a source of income.

Overfishing of groundfish, including Cod, Haddock, and Flounder, has had the most severe impact on the Downeast given the dependence of the area on this fishery (NMFS 1996). Between 1983 and 1992, landings decreased by 55% in the Cod fishery, 94% in Haddock fishery, and 89% in Yellowtail Flounder fishery throughout New England (Hennessey 2000).

This decline was precipitated by domestic investment in fishing boats and technology in the 1970s that increased fishing efficiency to an unprecedented level that fisheries could not sustain (Roberts 2007). Development and industrialization of shorefront areas polluted nursery and estuary spawning grounds necessary for population regeneration. The construction of dams and concurrent depletion of other fisheries threatened the alewife and blueback populations, which are the food source for Atlantic Cod, a heavily fished groundfish species (Ames 2004). As a result, the groundfish fishery has been severely depleted. Recovery has been successful for some groundfish species, but in 1996, the New England Fisheries Service assessed that the Atlantic Cod stock was still near collapse (Dorsey 2009).

Commercial groundfishing is no longer the focus of fishing efforts in the Gulf of Maine. In 1990, the number of boats engaged in groundfishing decreased from 350 to 70 (Johnson 2010). Populations are depleted to the extent that spawning grounds identified by older fishermen are nonexistent (Ames 2003). Restrictions from the New England Fishery Management Council have also eliminated fishing through permitting. As of 2010, there were only 20 federal permits issued in the groundfish fishery and regulations for permitted fishers were so stringent that legal groundfishing was effectively eliminated (Ames 2010).

Overharvesting has also depleted other fisheries important to the Downeast fishing economy. Many marine invertebrate populations increased in the 1980s with the decrease of groundfish, as one of their main predators, Atlantic Cod, had been removed from the food chain (Roberts 2007). However, increased harvesting from these fisheries has since led to their decline. Urchin populations crashed as a result of increased demand from the Asian market which led to an unsustainable fishing effort (Roberts 2007). Herring populations have been depleted by trawling technology that increased fishing efficiency (CLF 2009).Shellfish beds have declined with overharvesting and pollution and were closed to harvesting in 2004 and 2005 because of low population estimates (Athearn 2008).

Fishing Laws and Institutions

Regulation of fisheries occurs at global, federal, state, and community levels. A major aspect of fishing legislation is the allocation of fishing rights and establishment of fishing boundaries. Response to fishery depletion on a national level began in 1976 with the Magnuson-Stevens Fishery Conservation and Management Act, which established an Exclusive Economic Zone (EEZ) off the US coast where only American vessels could fish (US Congress 1976). This ended intense fishing efforts from foreign trawlers, but also prompted American investment in fishing technology, which led to domestic overfishing (Roberts 2007; Dorsey 2009). The United Nations Convention on the Law of the Sea (UNCLOS) supported national authority over EEZs in 1982 (UN General Assembly 1982). In 1984, the World Court set a boundary line across the Gulf of Maine and Georges Bank fishery (NMFS 1984). This limited the area where American boats could fish, further intensifying overfishing off the coast of Maine (Dorsey 2009).

Fishing is also regulated by management plans for individual fisheries, which set limitations on fishing efforts through restrictions on time at sea, permitting, limitations on gear, and seasonal or geographical closures (NMFS 2010). The Magnuson-Stevens Act established regional Fishery Management Councils to implement Fish Management Plans (FMPs) for individual fisheries (US Congress 1976). The waters off of Hancock and Washington Counties are regulated by the New England Fishery Management Council (NEFMC). Management of the depleted groundfish fishery by the NEFMC began in 1977 and has continued with amendments to the Multispecies Fish Management Plan (NEFMC 1977). The 1996 Atlantic Coastal Fisheries Cooperative Management Act established the Atlantic States Marine Fisheries Commission (ASMFC) to oversee and coordinate management of regional councils (ASFMC 2008).

Fishermen and conservationists have partnered with non-profit organizations to influence federal management. In 1991, a lawsuit filed by the Conservation Law Foundation (CLF) against the US Department of Commerce mandated more stringent regulation of groundfishing, resulting in tighter restrictions in the FMP (Dorsey 2009). In 2002, a similar lawsuit in the shellfish industry resulted in more stringent protection of shellfish habitats (USDCDC 2002).

Table 5.2a Global and federal laws relating to fisheries management Law Ye Description Location ar

Magnuson-Stevens Fishery Conservation 19 Establishes US jurisdiction over fisheries as part of a National Fishery Management Plan for conservation. USC § and Management Act 76 1801

United Nations Convention on the Law of 19 Establishes federal authority over resource management in EEZs. the Sea 87

Atlantic Coastal Fisheries Cooperative 19 Recognizes that unsustainable practices jeopardize fisheries and allocates the establishment of a “Coastal Fisheries USC 16 Management Act 96 Management Plan” to the Atlantic States Marine Fisheries Commission. §5101

State legislation supplements regional regulation. State management formally extends three miles off the coastline (NMFS 2010). The State of Maine Marine Resources Law establishes regulations for specific fisheries under the mandate of “protecting the ultimate supply for present and future generations” (Maine House of Representatives 1977). The state also manages individual fisheries, such as lobster.

Many fisheries are also managed by community-level initiatives. Local management is largely based on traditional fishing knowledge of community members (Ames 2010). These initiatives often are more stringent than government-driven regulations. Prior to the passage of the Magnuson-Stevens Act, fishing communities managed fishery stability by setting their own fishing quotas (Snyder 2006). Community-based management is currently being applied in the management of the lobster industry.

Table 5.2b State laws relating to fisheries management

Law Year Description Location

Marine Resources Law 1977 Provides state-wide supplements to regional management plans. MRS 12

An Act to Establish a Management Framework for the Lobster Fishery within State 1995 Established a formalized, community-based lobster management MRS § Waters plan. 468

Case Study: Management in the Lobster Industry

The lobster stock is a unique case among New England fisheries, as it recovered from overharvesting and has sustained a stable population size since 1947 (NEFSC 2006; Acheson 2004). Historically, restrictions were imposed by fishermen within their own communities and included the protection of egg- bearing females from harvesting by demarcation with a “V”-notch on their tails (Taylor 1998). In 1995, the Maine Legislature passed the “Act to Establish a Management Framework for the Lobster Fishery within State Waters,” commonly known as the Lobster Zoning Law. It gives the Department of Marine Resources (DMR) authority to regulate fishing effort via trap limits and a trap tagging system, and also limits entry into the fishery via permitting requirements that include a mandatory apprenticeship program. It also divides the fishery into coastline zones, each managed by a council represented by lobster license holders with the authority to specify harvesting restrictions, integrating the involvement of stakeholders in developing regulation (Maine Legislature 1995). Critics of this management approach warn that fishermen lack incentive to conserve (Sesko 2002), but the reliance of local communities on the resource has led to cooperation to sustain the lobster stock (Acheson 1988; Ames 2010).

Fishing Stakeholders

Government Agencies - Legislation is federally managed by the NMFS under the National Oceanic and Atmospheric Administration to “achieve a continued optimum utilization of living marine resources for the benefit of the Nation" (NMFS 2010). Regionally, the ASMFC oversees regional councils along the coast from Maine to North Carolina focusing on interstate fisheries management, research and data collection, fisheries science, habitat conservation, and law enforcement (ASMFC 2008). The NEFMC has jurisdiction in New England and proposes policies on general fishery health for NMFS approval (NEFMC 2010). On a state level, the Maine DMR coordinates state-wide fishery management measures such as the Lobster Zoning Law. There is no formal fishery management in Maine on the county level. Independent initiatives within Hancock and Washington are community- based.

Local Community Members - Community-based management structures, such as lobster management councils, involve local stakeholders in management. Fishermen establish restrictions to conserve natural resources that support their livelihoods (Ames 2010). Others oppose regulations that they see as too stringent or limiting to their profits (Rioux 2004).

Non-Profit Organizations – Many organizations support fishery research as well as fishermen. The Maine Sea Grant program, a partnership of NOAA and the State of Maine, grants funding to individuals for research on the state’s fisheries (Maine Sea Grant 2010). The Schoodic Education and Research Center is based at Acadia National Park and facilitates research and education on natural resources in relation to local communities (SERC 2006). The Penobscot East Resource Center supports fishermen and promotes community-based management by facilitating research and cooperation among stakeholders. Their work includes lobster zone management and the Downeast Groundfish Initiative (PERC 2010). Similar organizations in the region include the Cobscook Bay Resource Center (CBRC 2009) and species-specific initiatives such as the Stonington Lobster Working Group and Lobster Co- Op in Hancock County (Town of Stonington 2010).

The State of Fishing in the Downeast

The state of the coastal communities of Hancock and Washington Counties is determined by the health of the local fisheries and the contribution of this resource to the local economy. An analysis of changes in these fisheries over time gives insight into the economic implications for each county.

An analysis of landings in pounds and values of these landings in dollars shows continual fluctuations in the output and income from the fishing industry in both the state of Maine and in Hancock and Washington counties (Figs 5.16-5.17). Landings represent the amount of catch brought to shore by fishing vessels (NMFS 2010). Values are adjusted for inflation to 2008 dollars. These fluctuations reflect growth and decline of fishing stocks as well as changing regulations that limit harvesting. Landings decreased until the1976 Magnuson Stevens Act increased domestic fishing landings by removing foreign competition. This increase continued until more efficient technology and intensified fishing off the coast because of the establishment of a boundary line with Canada in 1984 led to overfishing that began to deplete fish stocks in the early 1980s. This decrease continued until a low-point in 1990 which reflected the crash of the groundfish fishery offshore. Figure.5.16 Total landings by pound and value of catch in Maine from 1960-2010 (ACCSP 2010)

Figure 5.17 Total landings by pound and value of catch in Hancock and Washington Counties from 1960-2010 (ACCSP 2010)

Landings and values increased after 1990, with growth that was steeper in Hancock and Washington Counties than in the state as an average. The overall growth in landings and values in each county since 2000 contrasts a state-wide decrease. Relatively few new licenses have been issued in the Downeast since 1990, showing that the increases in landings do not reflect that more fishermen have entered the market (Fig 5.18). The groundfish fishery has not rebounded to the point that it could support large-scale commercial fishing (Ames 2010). Increased landings and income are instead derived from other, more well-stocked fisheries (Athearn 2010).

Figure 5.18 Number of state harvest licenses held in Downeast Maine from 1990-2009 (Athearn 2010)

There are differences in total pounds of landings and the value of landings derived from the fisheries of each county. Landings are 26% higher in Hancock County than Washington County and the value of landings is 35% higher in Hancock County (Fig 5.17). This may be due to the types of species fished in each.

The types of licenses issued by each county since 1990 show differences in the two fishing industries (Fig 5.19-5.20). The number of groundfish permits remains low in both, while permits for lobster and other types of fishing increase, reflecting the unhealthy groundfish stock. There are more lobster licenses issued in Hancock County, where lobster licenses represented 54% of all licenses in 2009. In Washington County they represented only 34% of licenses. The shellfish industry is more prevalent in Washington County than in Hancock County. In 2009 shellfish comprised 17% of permits in Washington County, compared to 8% in Hancock County. Figure 5.19 Number of sate harvest licenses held in Hancock County by type from 1990-2009 (Athearn 2010)

Note: The “other” license category denotes a license in shrimp, eel, elver, green crab, marine worms, mussels, scallops, urchins, mahogany quahogs, or seaweed fisheries.

Figure 5.20 Number of state harvest licenses held in Washington County by type from 1990-2009 (Athearn 2010)

The differences in the types of species fished in each county may be due to non-uniform distribution of these species along the coast. Shellfish, such as mahogany quahog and scallops, are most abundant in Washington County’s waters, leading to higher landings of shellfish in the county. From 2001 to 2005, fishermen in Washington County harvested more of the state-wide harvest of soft-shell clams than those in any other county (Athearn 2010). Hancock County is perhaps able to land more lobster than Washington and other counties because these is a greater availability of the species in its offshore waters (Athearn 2010).

Lobster landings and values have generally increased over time (Fig 5.21). Landings increased at least four times from 1964 to 2009 in both counties, and the value of landings (adjusted for inflation to 2008 dollars) has at least doubled. Increased harvesting of lobster is supported by the stability of the fishery, given successful management (Taylor 1998; Acheson 2004; Ames 2010).

Figure 5.21 Lobster harvest and value in Hancock and Washington Counties 1964-2008 (MDMR 2010)

Lobster landings have increased at a higher rate in Hancock County, with 54% more pounds of lobster landed there in 2009 than in Washington County. Landings of lobster in 2010 were higher in the Hancock County town of Stonington than in any other ports in Maine (Penobscot East Resource Center 2010). The difference in the size of the lobster harvest between the two counties may account for the overall disparity in the growth of the fishing industry of each county in the last 10 years.

A recent decline in landings and values in all fisheries may be due to economic recession, but also raises questions about the sustainability of current management (Safford and Hamilton 2010).

Fishing Discussion

The state of the coastal Downeast is dependent on its fisheries. Despite the strength of the lobster fishery, the fishing industry in Hancock and Washington Counties is generally declining. This has economic, demographic, and social implications for local communities.

Reductions in landings, the value of landings, and the number of permits issued have directly led to unemployment among fishermen and indirectly decreased funding for local businesses (The Island Institute 2009). The historic dependence of fishing families on groundfish is well documented (Ames 2003; Roberts 2007; Fishermens Partnership 2006; NMFS 1996). A study by Kevin Athearn of the University of Maine at Machias (2008) notes the dependence of Washington County on the shellfish industry. The economic value per household generated by the shellfish industry in Washington County may be proportionately more than in other counties because it is harvested more there and because the county has the lowest median household income in the state. Economic and employment losses from recent closures of the fishery may have a greater effect in Washington County (Athearn 2008). The fishing economy of Hancock County is supported by the abundance of lobster in the area and the increase in the value of lobster over time. Successful management of the lobster resource benefits Hancock County’s fishing communities by providing a stable source of income and employment.

The effects of fishery depletion have been intensified by other factors. Increases in operating costs have burdened the small-scale fishermen operating out of Downeast ports. The adoption of new technologies necessary to be competitive with larger operations and operation costs given increasing fuel prices are expensive (The Island Institute 2009). Constant changes in the regulation of depleted stocks make it unclear as to how future restrictions may impact fishing, also causing economic instability (NMFS 1996).

As the fishing industry offers gradually less income and employment, people are turning to service-sector jobs that are largely dependent on tourism (The Island Institute 2009). In Stonington, for example, a hardware store, a clothing store, a drug store, and two welders were replaced by two art galleries and two souvenir shops in recent years (NMFS 1996). Others coastal homeowners leaving the industry have sold their property to move inland (The Island Institute 2009). This outflow of workers is especially notable among younger residents (Fishermens Partnership 2006).

A rise in shorefront property values has led many families moving inland for employment to sell their homes to development corporations and outside-of- state individuals looking to build second homes (ISRWB 2008; Hoskin 2010). Property values in the past decade have increased by 60-80% in many coastal areas, twice as much as many inland areas (Fig 5.22). This disparity reflects the demand for shoreline property which gives incentive to homeowners to sell their lands for a profit and move to a less expensive area. In Jonesport, a coastal town in Washington County, a property valued at $10,000 ten or fifteen years ago is estimated to have risen in value to $150,000 (Fishermens Partnership 2006). Out-of-state buyers have built larger second homes on these lots along the shoreline (Hoskin 2010; The Island Institute 2009), changing the structure of coastal communities.

Fig 5.23 Percent change in property value in Downeast Maine and statewide (Darling, 2008)

Changes in ownership and development have also had social and cultural consequences. The cultures of communities and families on the coast are based around generations of engagement in the fishing industry (Fishermens Partnership 2006; NMFS 1996). The April 2010 closure of the nation’s last sardine cannery, located in Prospect Harbor in Hancock County, resulted in the loss of 130 jobs and also ended social ties and cultural traditions in the community for employees whose families had worked at the cannery for decades (Russell 2010; Mostue 2010). Declines in the groundfish, shellfish, and other fishing industries have resulted in similar changes for communities (Fishermens Partnership 2006; NMFS 1996; The Island Institute 2009).

Fishing Policy Recommendations

The stability of the fisheries in the Gulf of Maine determines the future state of the Downeast coast. Sound management practices can sustain the lobster population and restock groundfish, shellfish, and other fisheries, continuing their contribution to the local economy.

Management should be developed to integrate community stakeholders, which results in more effective overall policy for a variety of reasons. Fishermen can supplement scientific research with traditional fishing knowledge, which can be more ecologically detailed than existing information on the area (Ames 2003). Fishermen may resent top-down policy mandates from government institutions that do not seem to incorporate community needs (Rioux 2004). Adherence to policies is promoted when individuals have a voice in outcomes and feel that regulation is a result of collaborative input (NMFS 1996; Wilson 2006). Devolved decision-making lessens economic burdens on individuals by reducing the uncertainties of future regulations and also minimizes the government’s transaction costs of regulation by delegating responsibilities for policymaking and enforcement (Wilson 2006; Hennessey 2000). The success of community involvement in the lobster industry is well documented and should be used as a model for the development of future management frameworks (Acheson 1988, 2004; Taylor 1998; Ames 2010). There are obstacles to the use of community knowledge which must be addressed in the implementation of management strategies. Fishermen may initially be hesitant to share information which may compromise their fishing, such as the location of key fishing areas (Ames 2003). They also may resist involvement with institutions that are outside of the community and have historically have been viewed as causing economic harm (Rioux 2004). The process of gathering data from fishermen must include the involvement of community members who can represent the perceptions of fishermen which influence their willingness to participate and adhere to regulations (Ames 2003).

Research in the haddock and cod fisheries, led by fisherman and researcher Ted Ames, is using fishermen’s knowledge to chart and document historical spawning grounds (Ames 2003). The current Downeast Groundfish Initiative is using local involvement in a plan to diversify the local fishing industry by rebuilding the groundfish fishery (PERC 2010). These and similar initiatives should be financed by funding through regional organizations and initiatives such as the Penobscot Resource Center and Maine Sea Grant and through state-based agencies such as the NEFMC.

Devolved management involving stakeholders may fit into larger, ecosystem-level measures for fishery conservation. The coordination of local efforts throughout the ecological extent of fisheries can result in species-level recovery (Wilson 2006). This collaboration can be facilitated by the NEFMC and ASFMC.

More immediately, local initiatives will influence the stability of the fisheries resource in Hancock and Washington Counties, which determines the extent to which the Downeast coast undergoes economic, demographic, and social change in coming years.

Tourism

Commercial tourism in Downeast Maine is a diverse sector comprised of a variety of retail, dining, lodging, and service providing establishments. Tourism is an integral part of Downeast economy. As of 2003, it directly generated nearly seven percent of Maine’s gross state product ($2.5 billion), exceeding the combined contributions of agriculture, marine fisheries, and aquaculture (Vail 2004). In addition to providing the region with a consistent source of revenue and employment, tourism has the potential to facilitate conservation efforts through the preservation of lands and resources for public enjoyment. Nature- based tourism may provide an educational outlet for visitors and provide income to fund additional environmental protection initiatives.

Tourism Stakeholders

Government Agencies - The National Park Service (NPS) has collected a wide range of data quantifying the economic impacts of national parks that is useful in characterizing the state of Downeast and Acadia. Through Acadia National Park, the NPS has provided the region with a consistent and reliable source of employment and revenue. On a state level, the Maine Office of Community Development (OCD) is a division within the Department of Economic and Community Development. It involves Maine municipalities, regional partnerships and non-profit groups to meet a broad array of economic and community development needs. The Maine Department of Transportation (DOT) is a state agency focused on facilitating the movement of both residents and visitors throughout the state. It has developed a number of transportation programs for the state, including the “Explore Maine” plan. The Maine Office of Tourism (MOT) is an agency within the Department of Economic and Community Development (DECD) responsible for funding, marketing, and data collection with respect to tourism. Regionally, the Downeast and Acadia Regional Tourism (DART) is the tourism office for the Downeast region that is responsible for implementing marketing plans and other initiatives for increasing visitation in the area.

Organizations - The Eastern Maine Development Corporation (EMDC) is a private, non-profit organization based in Bangor, serving the six eastern counties of Maine that include Hancock and Washington counties. EMDC includes representatives from each of the county’s planning boards and its service area covers the largest economic development district in Maine. The EMDC’s Strategic Investment Plan is focused on the development of transportation in Eastern Maine.

Businesses – Corporations and business owners are also important stakeholders in that they directly benefit from revenue generated by visitors. Initiatives to facilitate the flow of visitors throughout the Downeast region and marketing strategies to increase visitation are supported by companies.

Public Individuals – Tourists benefit from the resources of the Downeast. Changes in infrastructure or the natural landscape of the region influence the visitation to Downeast Maine. Preferences of tourists determine the extent to which potential policies affect the state of tourism in the region.

The State of Tourism in the Downeast

The Downeast region ranks third among the most frequented destinations statewide, trailing the Southern Coast and Greater Portland/Casco Bay area (Fig 5.23). A large part of Downeast Maine’s success as a top vacation spot is Acadia National Park, located in Hancock County and providing a variety of ecological services and an abundance of outdoor recreational opportunities. It attracts visitors from all over the country, and the Downeast and Acadia Regional Tourism Strategic Marketing Plan cites the national park as one of the region’s “best-known and most visited attractions” (DART 2005).

Figure 5.23 Total expenditures per trip by overnight and day leisure travelers, 2008 (MOT 2008) A 2008 regional report commissioned by the Maine office of Tourism reveals that the overall number of visitors in the Downeast region exceeds 5.6 million. It is estimated that 3.8 million are overnight visitors, and the remaining 1.8 million are day visitors. This represents a significant departure from the 2001 market composition, where the ratio of overnight visitors to day visitors was one to four (MOT 2004).

It has been shown that the primary destinations within the Downeast region are very different for day and overnight visitors (Fig 5.24). Seventy percent of overnight travelers frequented Bar Harbor, and among them, 60% visited Acadia. Other popular destinations in the overnight trip market include Ellsworth and Northeast and Southeast Harbor, all of which are within Hancock County. In fact, The six most frequented towns by overnight visitors are all located in Hancock County.

Figure 5.24 Top Downeast destinations by town in 2008 (MOT 2008).

Top day trip destinations are also mostly in Hancock County, with five of the six most frequented towns by day travelers are located in Hancock County. However, Calais, located in Washington County, ranked as the second most popular destination, receiving 34% of trips (MOT 2008). Canadian tourists were responsible for a quarter of these visits. This may be due to the town’s proximity to the border, as well as a variety of financial factors including lower taxes, prices, and exchange rates (as of 2008). In addition, the bridge from Lubec to Campobello Island and the Quoddy Loop Ferry from Eastport to Deer Isle, New Brunswick may serve as key entry points for day visitation.

Tourism has ecological, physical, and economic effects (NPS 2004). These outcomes include the high volume of tourism generated by the park that affects local residents. Ecologically, habitats can be degraded by recreation and travel both by foot and vehicle. These activities can also inadvertently track invasive species into the area is a legitimate concern that needs to be addressed. Lastly, tourism has economic impacts of Acadia on the surrounding region.

Total spending associated with the park in 2008 was $161,066, and a total of 3,340 jobs were created (NPS 2008). These levels of revenue and employment have been relatively stable over time, showing that the park has consistently been a reliable source of revenue and employment for the Downeast region.

However, national parks are often seen as distinct entities, with benefits that are isolated from the surrounding community. The NPS recently acknowledged the need to manage parks in a manner that takes into account the effects on the areas surrounding parks (NPS 2004).

A variety of external forces impact also tourism in the Downeast region. Macroeconomic fluctuations, including variations in exchange rates, energy prices, and various ecological factors such as the health of fish stocks influence visitors’ demand (Vail 2003).

Tourism Discussion

Acadia National Park is an important source of revenue to the Downeast economy. However, an analysis of its economic impact does not necessarily reveal how this money is distributed throughout the region. Per capita personal income in Washington County has been below that of Hancock since 1980. In addition, unemployment rates are higher. This suggests that many of the economic benefits from tourism are concentrated in Hancock County, where the park is located.

An analysis of the day and overnight visitation patterns supports the unequal distribution of benefits from tourism. Overnight visitors to the region are significantly more affluent than Maine’s average overnight visitor. In 2008, the average household income of overnight leisure visitors to the region was $117,520, more than $10,000 higher than the average overnight leisure visitor to the state. The average expenditures by overnight visitors in the region exceeded the state average, as well as the expenditure by day visitors. Specifically, overnight leisure visitors to Downeast and Acadia spent more on lodging, food, transportation, and recreation (Fig 5.25). This increase in spending may be due to the variety of fine lodging and dining options in the Bar Harbor area, the relative distance of this destination from population centers, and to admission fees for park entrance, outdoor equipment rentals, schooner tours, and other recreational opportunities (MOT 2008). Day visitors, on the other hand, spend significantly less. Moreover, the average income among day travelers to this region was $69,270, more than $40,000 lower than the average income for overnight visitors to this region and more than $10,000 lower than the average income for all day travelers to Maine (MOT 2008). Figure 5.25 Top Statewide Destinations by Region, 2008 (MOT 2008)

Hancock County is home to all six of the most popular overnight destinations, and five of the six most frequented day destinations. Consequently, the majority of travel revenue is concentrated within that region, potentially contributing to the overall income gap between the two counties.

Despite the evident popularity of the Downeast, there are limitations to the region becoming a more prominent tourist destination in Maine. While day visitors are primarily from Maine and New Brunswick, the overnight market is comprised largely of visitors living outside New England. A third of overnight visitors are from the tri-state area, which includes New York, New Jersey, and Connecticut, and an additional 14% are from Massachusetts (MOT 2008). Although the relative remoteness of the Downeast region may add to its appeal, it is likely that its distance from interstates and major modes of transit may limit visitation from non-local visitors. The relative proximity of the Southern Coast and Greater Portland/Casco Bay to major highways may be largely responsible for its success as a top destination. There is also a lack of public transportation to bring visitors to the Downeast. Regional transportation providers, including the Washington Hancock Community Agency and Faith in Action, transport people within the area. However, there is a relatively low volume of intercity buses traveling to the Downeast region other than the Greyhound stop at Bar Harbor (DOT 2010). This also prevents tourists from being able to reach the Downeast area.

Tourism Policy Recommendations

Improvements to public transportation can facilitate visitation to the Downeast. The Maine DOT’s “Explore Maine” program publicizes and supports infrastructure for transportation by train, ferry, bus, taxi, moped, and bicycle (DOT 2010). State investment in the program would further facilitate visitor flow, reduce dependence on personal vehicles, and help to preserve Maine’s environment (Vail 2004).

Acadia is the most popular destination in Maine for cyclists, and the Downeast region contains an abundance of bike paths and trails (DOT 2010). Moving these paths outside of the immediate vicinity of the National Park and into Washington County may be a mechanism for more evenly distributing Acadia visitors throughout the Downeast in a way that is both recreational and environmentally friendly.

Creating more routes for public bus transportation, specifically, from Acadia National Park into Washington County, would enable visitors to more easily access the entire Downeast region without a personal vehicle. Moreover, it would allow both in-state and out of state visitors to combine regional trips, thereby increasing the Downeast’s position as a secondary destination.

Marketing efforts can also increasing visitor flow beyond Acadia. The Open Lighthouse Day, implemented in 2009 by the Coast Guard, the state of Maine, and American Lighthouse Foundation educated the public about the history of lighthouses by opening them throughout the Downeast region for public visits. The event was supported by a variety transportation services provided by boat companies and endorsed by MOT. The development of more frequent events of this nature would increase visitation throughout the region.

The development of a marketing campaign to “brand” the Downeast region is another strategy to increase interest of tourists. Similar efforts have been made by the Maine Highlands, and the “It must be Maine!” campaign devised by MOT (Vail 2004).

Additional state aid is required to implement these strategies effectively. Strategically chosen and adequately funded public investment will leverage high returns not only to tourism businesses themselves, but the surrounding economically distressed rural areas. A study by Fleischer and Felsenstein examined the implications of state aid to small businesses in rural Israel. They compared tourism establishments with other businesses and found that tourism yielded higher cost-benefit ratios and net present values per job. In terms of welfare, an examination of the income distribution impacts of the support program revealed a more pronounced effect among the tourism firms than among the others. It is likely the case that these results are significant for any rural region where the economy is somewhat reliant on tourism. Thus, state aid has an equity justification in addition to a pure efficiency rationale (Fleischer and Felsenstein 2000). However, it is important to note that unless this state aid is distributed properly and in a way that is not damaging to the environment, these benefits will not be realized.

State funding could come from taxation. It is likely that tourists in Maine are not sufficiently charged for the infrastructures and natural resources that they utilize. As cited in a 2004 report by David Vail, Maine’s meals and lodging taxes are below the New England median. In addition, the state charges no sales tax on amusements and recreations. State park fees are low and turnpike tolls remain the same even at peak hours (Vail 2004). Vail further points out that a number of other industries throughout the state have taken advantage of taxes as a lever to increase revenue. For instance, currently, a share of the gasoline tax is to snowmobile and ATV trails, as well as a small real estate transfer tax on shorefront properties, a saltwater fishing license fee (Vail 2004). The large volume of visitors that exist coupled with their high expenditures means that these taxes would not have to be high, and would represent a negligible fraction of their total spending. This suggests that it may be possible to obtain the capital necessary to fund at least a portion of tourism initiatives through taxation without reducing demand for travel. Funds could also be derived from state agencies. The MOT, for instance, offers a variety of funding sources to help Maine’s regions promote tourism and local economic development. The Maine Tourism Marketing Partnership Program (MTMPP) Regional Grant, designed to distribute awards to each of the region’s nonprofit tourism offices, contributes to advertising, public relations, website and brochure development, market research, product development, and technical assistance training (MTMPP 2010). In the Downeast and Acadia Regional Tourism Strategic Marketing Plan (2005), these regional grants are listed as an important component of the organization’s annual budget. The OCD can facilitate both public and private investment in the forms of grants and loans (MDECD 2010).

Finally, private organizations may play an important role in funding tourism initiatives. Increased support by Maine DOT in the EMDC’s Strategic Investment Plan would facilitate its work in linking key economic regions in Eastern Maine through transportation corridors (EMDC 2009). This may effectively move visitors into Downeast region, while simultaneously improving infrastructure.

Land Conservation

The Downeast’s unique forestland, open waters, offshore fisheries, and wetlands benefit the area’s ecosystem and local communities. Forestry, fishing, and tourism are the basis of the economy of Hancock and Washington Counties. However, the use of natural resources can have negative environmental consequences. Unmanaged exploitation and development jeopardize the habitats and biodiversity which constitute the area’s valuable resources.

Patterns of land use generally changed in the early 1800s, as small-scale farmers were increasingly overtaken by larger-scale operations. This transition was often accompanied by a loss of traditional land ethic and conservation-based management approaches (Donahue 2004). Changes to the forest landscape of Maine began in the 1970s, when the forest industry experienced pressure from the global market. This economic pressure resulted in clear cutting and a transition to non-industrial ownership that created potential for land sale and development of forestland (Judd 1988). Land in coastal areas was affected by the decline of the fishing industry in the 1980s that caused many fishermen to sell their properties and move inland. This was furthered by the growing tourism in the area which increased coastline property values (The Island Institute 2009).

Land conversion has resulted in fragmentation of wildlife habitat and an increase in air pollution and runoff. Ecologically, these changes harm biodiversity and ecosystem functions (ISRWB 2008). Additionally, depletion of natural resources that fuel forestry and fishing industries and changes to the pristine landscapes that are the basis of the tourism economy potentially damage the region’s economy.

Land conservation protects resources and lands for ecological and economic functions. Conservation in the Downeast developed in the early 1900s as a response to pressures of land conversion from the timber industry. In 1901, Charles W. Eliot established the state’s first land trust, the Hancock County Trustees of Reservations, acquired land on Mt. Desert Island to be protected. The 1919 delineation of Acadia National Park on these lands permanently conserved what would become the focal point of conservation in the Downeast (Kandell 2008).

Current conservation efforts in Hancock and Washington Counties combine public and private sector initiatives. Public conservation follows a mandate of public access, which is either restricted to recreation or managed under multiple-use mandate that may allow timber harvesting or hunting (MDOC 2009). Conservation is financed by government agencies and organizations and initiated by the purchase or donation lands or conservation easements.

A conservation easement is established when a landowner agrees to restrict development rights on their lands in exchange for tax deductions and benefits. To qualify for tax benefits with the Internal Revenue Service (IRS), lands under easement must be conserved for the interest of the ecosystem and the general public (Gattuso 2008). The use of natural resources on these lands can continue on these conservation lands if allowances are included in the easement. Working forest easements allow forestry activities if the management of harvesting follows a prescribed plan for sustainability (Lind 2003). Public access easements allow public use of the land and facilitate tourism to conserved areas.

Lands publicly conserved through federal agencies in the Downeast include Acadia National Park in Hancock County, Saint Croix Island International Historic Site in Hancock County, and Moosehorn and Petit Manan National Wildlife Refuges in Washington County. Areas within the Maine State Park system include Holbrook Island Sanctuary and Lamoine State Park in Hancock County and Cobscook Bay State Park, Quoddy Head State Park, and Rogue Bluffs State Park in Washington County (MDC 2009). Other areas are conserved within individual municipalities (MEGIS 2010).

Private land conservation is based on the decision of independent landowners to conserve their lands. Private conservation is achieved through conservation easements, deed restrictions, which are similar to conservation easements but do not receive tax benefits, and ownership of conserved lands by land trusts. A land trust is a non-profit organization that supports conservation. Land trusts assist landowners in putting their properties under easement and hold and manage easements and donated properties (Aldrich and Wyerman 2006). Land trusts operate throughout the Downeast, some restricted to Hancock or Washington County while others operate throughout the state or nation.

Land Conservation Laws and Institutions

The mandate for federal public conservation was established in 1916 by the National Park Organic Act, which founded the NPS to manage preserved lands for public use (US Congress 1916). The NPS manages Acadia National Park and Saint Croix Island International Historic Site, which was established as a National Monument in 1937 under the Antiquities Act. Saint Croix Island became an International Historic Site in 1984 within the framework of the National Historic Register program with the 1966 National Historic Preservation Act. Moosehorn National Wildlife Refuge was acquired in 1937 using funds from the sales of duck stamps authorized by the 1934 Migratory Bird Hunting and Conservation Stamp Act. The 1997 National Wildlife Refuge Improvement Act formerly established the refuge system for the purpose of conserving wildlife resources (US Congress 1997).

Table 5.3a Federal laws relating to public land conservation

Law Ye Description Location ar

The Antiquities Act 19 Authorizes the president to establish historic landmarks and “other objects of historic or scientific interest” as national USC 16 06 monuments for the protection of these areas. §431-433

The National Park Organic Act 19 Establishes the NPS and declares that it is for the public good for the government to manage “well-planned and well- USC 16 §1- 16 managed multiple use of land and resources.” 4

The Migratory Bird Conservation Act 19 Establishes the Migratory Bird Conservation Commission with the mandate of establishing waterfowl refuges in areas USC 16 § 29 715

The Migratory Bird Hunting and 19 Establishes funding for waterfowl refuge areas from the public sale of “duck stamps.” USC 16 § Conservation Stamp Act 34 718 The National Historic Preservation Act 19 Establishes the National Register of Historic Places to preserve areas that reflect the nation’s historic heritage. USC 16 § 66 470

The National Wildlife Refuge Improvement 19 Formerly establishes the National Wildlife Refuge System for the purpose of the preservation and conservation of wildlife USC 16 § Act 97 resources. 668

State-level conservation in Maine includes a mandate for public access codified in the 1969 Forests, Parks, Lakes, and Rivers Use Regulation. A 1997 amendment to the regulation outlined that the “essential purposes of public reserved and non-reserved lands are the protection, management and improvement of these properties for the multiple use objectives” (Maine Legislature 1997). State conservation is largely based on the state park system, which was established in 1935.

The Land for Maine’s Future (LMF) program provides state funding for conservation. LMF was established in 1987 and issues public bonds by referendum vote to finance public and private land conservation (MSPO 2010). The 2010 November election extended the mandate of the LMF, when the public approved Question 3 of the ballot referendum. This approved a $9.75 million bond, matched by $9.25 million in federal funding, to protect waterfront access, open farmland, state parks, and other areas (MBC 2010).

Conservation easements are also held by the state Land Use Regulation Commission (LURC). Guidelines for the selection of easements by the LURC stipulate that their purpose is the “protection of significant natural resources” (LURC 1993).

Table 5.3b State laws relating to public land conservation.

Law Y Description Location e ar

State Parks 1 Establishes the state park system. MRS 12 § 9 211 3 5

Forests, Parks, Lakes, and Rivers: 1 Declares that it is for the public good for the government to manage “well-planned and well-managed multiple use of land and MRS 12 Use Regulation 9 resources.” §681 6 9

Use Regulation: Maine Land Use 1 Establishes LURC to manage state land use and planning. LURC policies stipulate that easements acquired by the agency, must MSR 12 Regulation Commission 9 be for the “protection of significant natural resources.” §206 7 1

Land for Maine’s Future 1 Identifies conservation and lack of public lands as issues of the state’s attention. Establishes state funding for land conservation MRS 5 9 through direct and easement purchases. §6200- 8 6211 7

Forests, Parks, Lakes, and Rivers: 1 Defines the role of publicly reserved land in “essential purposes of public reserved and non-reserved lands are the protection, MRS 12, Designated Lands Definition 9 management and improvement of these properties for the multiple use objectives.” §598 9 7

Laws regarding private land conservation are based on easement tax regulations. Tax-related easement law is institutionalized on a federal and state level, including IRS guidelines and other acts and laws that facilitate deductions for easements, providing incentives for landowners to conserve. Precedent for this was established in Maine in the 1960s, when Tom Cabot and Peggy and David Rockefeller petitioned for an income tax deduction for the conservation of lands on Bartlett Island off the coast of Hancock County (Levitt 2010). The Internal Revenue Service (IRS) approved this deduction and codified it into tax law with the 1976 Tax Reform Act, which secured easements as tax-deductable. The act stipulates that landowners can receive tax benefits from lands approved to serve the interest of the ecosystem and/or the general public (Gattuso 2008).

The Uniform Conservation Easement Act gives guidelines to be adopted by individual states on requirements for landowners receiving tax benefits from conservation easements. In 1989, Maine incorporated these guidelines in Title 33 of Maine state law.

Table 5.3c Federal laws relating to private land conservation.

Law Ye Description Location ar

Internal Revenue Service 19 Sanctions the first charitable income tax deduction from conservation easement donation. IRS Rul. 64-205, Revenue Ruling 64 1964-2 CB 62.

Tax Reform Act 19 Recognizes conservation easement donations as tax deductable. Outlines the purpose of easements to conserve areas for public US Pub. L. §94-455 76 use, historical site preservation, or ecological functions.

Taxpayers Relief Act 19 Allows a 40% exclusion from estate tax on undeveloped conservation lands (which can incorporate farming and forestry, but not US Pub. L. §105-34 97 significant recreational activity) by a landowner’s descendents.

A number of state laws in Maine regarding the assessment of properties for taxation include stipulations on how land is assessed as to maximize benefits for landowners holding easements. Title 36, along with additional programs such as the Tree Growth Tax and Farm and Open Space Tax Laws, allow areas to be assessed by their use value. This means that land taxed at the value it would have if harvested for natural resources, rather than if it was sold for development (Maine Legislature 1969). These measures minimize tax burdens on landowners, as development potential values are often higher than productive-use values (MCHT 1994). Until 2007, there were no formal federal or state standards for land trusts other than voluntary accreditation by the Land Trust Association (Roche 2009). A 2006 initiative by the Maine Coast Heritage Trust (MCHT), Maine Land Trust Network, Land Trust Alliance, and Maine Coast Protection Initiative resulted in the formation of a voluntary registry of conservation easements (MCHT 2006).

The Maine state legislature amended its conservation easement laws in 2007 to require easement holders to report information on their lands under easement in a centralized conservation easement registry. The Maine State Planning Office (MSPO) is currently using the registry to develop a more accurate database of conserved lands in the state.

Table 5.3d State laws regarding private land conservation

Law Year Description Location

Taxation – Power of Duties and 1969 Notes that property values can be assessed based solely on land use alternatives, which MRS 36 §701-A Assessors: Just value defined are limited by conservation restrictions.

The Tree Growth Tax Law 1972 Allows conserved forestry land to be assessed at productive-use value, rather than consider MRS 36 §571 - §584 development potential (such as shorefront value).

Farm and Open Space Tax Law 1975 Allows agricultural and open properties to be assessed at productive-use value, and allows MRS 36 §1101 - 1121 for reductions for alternate (non-development) uses.

Uniform Conservation Easement Act 1981 Recommendations by the NCCUSL on uniform definitions and terms of conservation National Conference of Commissioners easements for the enactment by states. on Uniform State Laws

Conveyance of Real Estate: 1989, Maine’s adoption of the Uniform Conservation Easement Act. MRS 33 §476-479 Conservation Easements amended 2007

Conservation Easement Registry 1997 Establishes reporting requirements for conservation easements. MRS 33 §479-C

Land Conservation Stakeholders

Government Agencies – The NPS manages Acadia National Park and Saint Croix Island International Historic Site. The US Fish and Wildlife Service oversees Moosehorn and Petit Manan National Wildlife Refuges under the National Wildlife Refuge System. The Maine Bureau of Parks and Lands, within the Department of Conservation, manages Maine state parks. Other agencies such as the Maine Department of Conservation (MDC) and Maine Department of Inland Fisheries and Wildlife (MDFW) manage conservation holdings. Municipalities own conservation lands within Hancock and Washington Counties. Government support for conservation is a function of political will and the availability of public funding.

Environmental Organizations – Non-profit organizations support conservation initiatives by lobbying for political support and fundraising. Organizations like The Nature Conservancy also function as land trusts, buying or holding privately conserved lands and easements.

Land Trusts - Land trusts manage private land conservation, operating within Hancock and Washington Counties, regionally, or on a state or nation-wide level. Collaboration of land trusts within the state is facilitated by the Maine Land Trust Network (MLTN 2010). There are 21 land trusts operating in the Downeast (Table 5.4), distributed relatively equally between Hancock and Washington Counties. The number of land trusts in each county is similar to that of other Maine counties, which host a total of 100 land trusts (Maine Land Trust Alliance 2010).

Table 5.4 Land trusts operating in Hancock and/or Washington Counties and Statewide. (Maine Land Trust Network 2010)

Land Trust Year Founded Parcels Owned Acres Owned Parcels Under Easement Acres Under Easement

Hancock County Blue Hill Heritage Trust 1985 34 1793 52 3190 Crabtree Neck Land Trust 2005 - - - - Frenchman Bay Conservancy 1987 10 2047 29 2561 Great Pond Mountain Conservation Trust 1993 1 4300 2 152

Washington County Downeast Coastal Conservancy 1987 35 1640 36 2412

Downeast Lakes Land Trust 2001 1 33708 - - Downeast Rivers Land Trust 2000 27 1375 6 555 Pleasant River Wildlife Foundation 1998 22 1619 - -

Regional or Statewide Conservation Trust of Brooksville, Castine & 1978 17 580 18 460 Penobscot Forest Society of Maine 1984 5 1807 17 370361 Island Heritage Trust 1987 18 501 27 708 Islesboro Islands Trust 1985 10 175 24 617 Landmark Heritage Trust 1992 - - 3 92 Maine Audubon 1843 15 2934 2 70 Maine Coast Heritage Trust 1970 79 6266 157 13235 Maine Farmland Trust 1999 6 1116 63 9237 New England Forestry Foundation 1944 - - 4 762842 Northeast Wilderness Trust 2002 2 2107 - - Small Woodlot Owners Association of Maine 1975 12 1429 4 1983 The Nature Conservancy in Maine 1956 81 136233 45 22792 Woodie Wheaton Land Trust 1994 - - - - Corporations and Industries – Private businesses fund land trusts or donate lands for easement. Timber companies also work with land trusts by harvesting lands under working forest easements.

Residents – Landowners and individual investors donate funds and land to public conservation agencies and land trusts. Private sector conservation is dependent on the willingness of individuals to conserve.

The State of Land Conservation in the Downeast

Before 2010, there were no uniform reporting requirements for land trusts in the State of Maine, complicating the assessment of currently conservation lands (Roche 2009). This report is based on the data on conservation lands from the Maine Office of GIS, which are generally accepted as the most current database (Mytar 2010).

Twenty-four percent of land in the Downeast is currently conserved by either the public or private sector (Fig 5.27). As a comparison, 15% of land in the state of Maine is conserved (MEGIS 2010). Forty-two percent of the trans-boundary Downeast watershed is conserved, with 80% of this protection occurring on the Maine side of the Canadian border (ISRWB 2008). Figure 5.27 includes lands which are conserved but are not categorized within the Maine Office of GIS conserved lands database. These comprise an additional 5% of Downeast conservation lands.

Fig 5.27 Land conservation in Washington and Hancock Counties from 1994-2010 (Maine Office of GIS, 2010)

Publicly owned conservation is held under government ownership and has been protected since before 1997. There has been a growth of private conservation in the Downeast since 2007. About half of conserved land is now held by private organizations by fee-simple ownership. This growth mirrors the state trend of increasing private-sector conservation (Aldrich and Wyerman 2006).

The majority of conservation in the Downeast currently occurs in the private sector, which represents 60% of conservation. The prominence of private land conservation mirrors conserved land management in the state of Maine as a whole. The state has second-highest amount of privately conserved acres and second-highest percentage of privately conserved land in the nation (Roche et al. 2008).

Seventy-five percent of the total acres of land conserved within the Downeast are in Washington County. Washington County also has relatively more of its land conserved than Hancock County, with 29% conserved, compared to 15% in Washington County. The distribution of conserved lands became more unequal between 2007 and 2010, when conserved lands in Washington County increased. The growth of conservation in Washington County is the result of a recent initiative by private and public organizations known as the Downeast Lakes Forestry Partnership (DLFP). The project conserves 342,000 acres of forestland that was at risk for parcelization and development (see Case Study).

Land Conservation Discussion

Development and parcelization in Hancock and Washington Counties jeopardize the environment ecologically and hinder access to natural resources that supports the local economy. However, current public-sector conservation is dependent on government funding and support, which is dependent on political salience. Private conservation relies on the willingness of private landowners to provide funding or donate easements and land. Both these approaches often acquire and conserve land on an opportunistic basis (Levitt 2004), which may not incorporate the most critical areas for protection in the trans-boundary Downeast region. Additionally, efforts may not address the specific economic and social conditions of Hancock and Washington Counties, where natural resources provides the basis for the local economy.

Much of the increase in conserved land in recent years has occurred as a result of public-private partnerships. Land trusts have partnered with public organizations by donating easements or holdings to government agencies. Friends of Acadia, a land trust operating on Mt. Desert Island, obtains easements for donation to the Park Service (Clement 2010). Government agencies also provide funding for acquisition by land trusts. The LMF program has contributed 117 million dollars for conservation in the state since its foundation, including funding for private conservation initiatives (MSPO 2010).

These partnerships provide resources necessary to conserve critical areas on a large scale. Large institutions, including government agencies and industries, offer funding and lobbying power. Agencies such as the NPS can also independently acquire lands to be integrated into a larger conservation framework. Private organizations can hold conservation lands and facilitate conservation of targeted areas by landowners. As a result, partnered initiatives such as the DLFP have successfully conserved large tracts of land that preserve regional ecological functions.

Landscape-level initiatives in the Downeast focus on the area as a trans-boundary ecological region, considering ecological goals, such as the conservation of wildlife corridors and watershed functions, while incorporating economic social concerns that include the use of natural resources by local industries (Levitt 2004). Case Study: The Downeast Lakes Forestry Partnership

The DLFP is a trans-boundary public-private partnership that conserves 342,000 acres of land in Washington County (Fig 5.28). The seven year project, completed in 2008, was a community response to changing land ownership and development threats when former timberland company owner, Wagner Forest, began the process of parceling and selling their properties in the area (Tetreault 2010). The Downeast Lakes Land Trust (DLLT) was formed to purchase acreage from Wagner Forest for conservation. The DLLT partnered with the regional New England Forestry Foundation (NEFF), which offered fundraising capacity and the resource of experience in implementing large-scale forest conservation projects (DLLT 2010). Funding for land acquisition was derived from public agencies, including the U.S Fish and Wildlife Service and LMF program, as well as private organizations, including corporations, land trusts, and private donors (NEFF 2008).

Fig 5.28 Conservation easements in the Downeast Lakes Forestry Partnership (DLLT, 2010)

The DLFP unites three separate parcels into one large-scale conservation area. The St. Croix Corridor conservation area is 3,019 acres and runs along Spednic Lake and the upper St. Croix River on the Canadian border (not pictured in Fig 5.27). The area was purchased as fee-simple land by land trusts and is now managed by the MDC and MDFW. The Farm Cove Community Forest is a 27,080 acre property that was acquired as fee-simple land and easements held by The New England Forestry Foundation and Sweet Water Trust. The 312,000 Sunrise Tree Farm is conserved under easement and jointly held by the New England Forestry Foundation and the State of Maine (NEFF 2008; DLLT 2010).

The project has ecological benefits and preserves of a 1-million acre corridor of nearly undeveloped land across Washington County and New Brunswick when combined within initiatives in Canada. Three and a half thousand acres within the DLFP are protected as an undeveloped ecological reserve (NEFF 2008).

Most of the area is managed as working forestland. The area’s forests are currently harvested by Orion Timberlands LLC. Logging occurs under the NEFF’s Focus Species Forestry approach, which integrates timber management with the preservation of certain biologically important forest species. The DLLT has received certification from the Forest Stewardship Council and Rainforest Alliance which supports that timber resources are being managed sustainably (DLLT 2010).

The area’s tourism economy, based in the town of Grand Lake Stream, is supported by management which allows recreation, hunting, and fishing uses of the land (GLSCC 2009). The working forestland of the Farm Cove Community Forest is open to the public and the Sunrise Tree Farm easement held by the MDC is a public access easement. Revenues from forestry and tourism make the project economically viable for the communities of Washington County.

Land Conservation Policy Recommendations

Future conservation planning in the Downeast establish requires a framework for the management and monitoring of growing private-sector efforts. The establishment of a clear database of conserved lands would assist in the assessment of the current status of lands and plan future conservation. The strengthening of the existing Maine Land Trust Network may assist the cooperation of agencies and organizations in establishing a conserved lands database. The Maine State Planning Office’s Conservation Easement Registry project would be aided if merged with the MCHT’s private-sector registry initiative.

The collaboration of all stakeholders is necessary in achieving the landscape-level, multi-use conservation required in the region. Public agencies such as the MDC can continue to support private-sector initiatives through funding programs such as LMF. Voters in the state of Maine can support LMF by approving bonds for land conservation on election ballots in future years.

Telecommunications Technology The state of the Downeast economy is increasingly driven by businesses who invest in the area. The engagement of large corporations, as well as the success of local businesses, is influenced by the availability of telecommunications technology. Within this report, telecommunications technology references wireless and broadband internet access and cellular communications technology. Most of Hancock and Washington Counties have poor broadband access, which may act as a disincentive for investment of corporations and harm business development. Enhanced telecommunication networks would facilitate communication, coordinate funding, and enable planning, which aids businesses, residents, and other organizations. The development of this technology may result in the creation of additional jobs and revenue. From a conservation standpoint, it may also support research and coordination between organizations.

Telecommunications Technology Laws and Institutions

Tax credits are provided by the state of Maine to companies for technological innovation. The High-Technology Investment Tax Credit is available to businesses that provide high-powered technology, including internet or e-communications access services, support access to electronic media, data and associated communications support, or advanced telecommunications capabilities (DECD 2010). The credit provides up to $100,000 for the costs of eligible equipment placed into service (i.e. cellular towers). The credit cannot reduce the tax liability below that of the proceeding year after use of credits, and it cannot reduce the tax liability in the current year below zero. However, unused portions of the credit may be carried forward up to five years. The Research and Development Tax Credit provides an income tax credit for qualifying research and development activities related to discovering information that is technological in nature and is intended for use in developing a new or improved business. The Super Research and Development Credit is available to taxpayers also qualifying for the Research and Development Credit. This subsidizing research spending that has grown by more than 150% over the past three years (DECD 2010).

Table 5.5 State laws regarding technology tax credits

Law Y Description Location e ar

High-Technology 1 Credit based on the adjusted basis of eligible equipment available to businesses providing high-powered technology, including internet or e- 36 Tax Credit 9 communications access services, support access to electronic media, data and associated communications support, or advanced telecommunications MRS § 9 capabilities. 5219-M 7

Research and 1 Provides an income tax credit for qualifying research and development activities related to discovering information that is technological in nature and is 36 Development tax 9 intended for use in developing a new or improved business. MRS. § Credit 9 5219-K 7

Super Research 1 Available to taxpayers also qualifying for the Research and Development Credit. The credit is based on qualified research payments exceeding 150% of 36 Development 9 the average for the three-year period prior to the effective date of the credit. MRS. § Credit 9 5219-L 7

Telecommunications Technology Stakeholders

Organizations and Agencies – The Office of Innovation was established in 2004 by the Maine legislature to “encourage and coordinate the State’s research and development activities to foster collaboration among the State’s higher education and nonprofit research institutes and the business community.” Among its most prominent programs is the Maine Technology Institute (MTI), which is a state funded, private non-profit organization that provides grants and loans to Maine companies to jointly fund technology development projects to strengthen Maine’s high-potential technology clusters. These clusters span the state’s mature industries, such as forestry and agriculture, as well as emerging industries, such as environmental and energy technology, and biotechnology. MTI also administers the Maine Technology Asset Fund, which is based on $53 million state bond to increase research and economic development across Maine (MDECD 2010).

The Technology Association of Maine (TechMaine) is a trade association for Maine's technology industries that aids networking and development. They also work to pass legislation supporting the growth of technology.

Service Corps of Retired Executives (SCORE) is a nationwide association dedicated to entrepreneur education and the formation, growth, and success of small businesses. It receives funding and support from the U.S. Small Business Administration (SBA). SCORE has a variety of chapters across the country, including one in the Downeast region. Counseling typically provides general information on financing options, advice on strategic business planning, marketing tactics, product development, and cash flow management, and a sample startup business plan guide. Follow up counseling sessions and workshops throughout the area are funded by SCORE (SCORE 2010). \

Maine & Company is a private organization providing free and confidential consulting services to businesses looking to relocate to Maine or expand within the state. Examples of these services include real estate site searches, data collection and analysis, incentives identification and valuation, site visit coordination, workforce analysis, and financing coordination (Maine & Company 2010).

Maine Businesses – Businesses throughout the Downeast region benefit from increased access to wireless telecommunication networks. Technological improvements may reduce barriers to entry, spurring innovation and competition in the area. However, this is reliant on businesses receiving both adequate aid to utilize new technologies and the training required to understand them. Premium Choice Broadband is a company based in Bangor that specializes in providing broadband access to rural communities across Maine. It was established in 2008 and has recently constructed several service towers in the Downeast region.

Tourists – Improved technological capacity can benefit tourists by providing them with additional means of entertainment, information, and connectivity. Tourists’ decision to visit the Downeast may be influenced by the provision of telecommunications technology.

Residents – Enhanced wireless telecommunication networks provide Downeast residents with access to a wide range of information and enhanced communication abilities. This may make the Downeast region a more attractive place to live, resulting in an influx of new full-time residents. It is also important to consider that existing residents may have differing reactions to technological development in the region. For instance, some may be opposed to technological expansion due to the potentially negative impacts of constructing telecommunication networks on the environment.

The State of Telecommunications Technology in the Downeast The Downeast has a low concentration of internet and cellular providers relative to the rest of the state (Fig 5.29). Only seventeen cellular towers exist in the area and there is a lack of internet providers in inland Washington County.

Fig 5.29 Broadband access by type and cell phone tower locations in Downeast Maine and statewide (Maine Office of GIS, 2010)

Recent progress has made the development of telecommunications technology in the Downeast region more feasible. Premium Choice Broadband recently extended coverage in Ellsworth, Eastbrook, Franklin, and Waltham in Hancock County (Swatrz 2010). Many feasibility studies are need to explore the expansion of coverage to the rest of the Downeast region. Furthered connections could ultimately lower long run costs for businesses, visitors, and residents.

Telecommunications Technology Discussion

There is a variety of reasons for the relative lack of telecommunication networks in the Downeast region. Low population density coupled with below- average income levels in much of Washington County may not generate enough revenue to cover the high fixed cost of installation faced by service providers. In addition, the landscape of the Downeast region poses a variety of ecological concerns. In a region that is acclaimed for its pristine views, it is likely that a constituency wary of constructing potentially obtrusive towers may exist.

Limited technical capacity presents a variety of challenges to business and tourists. In a dissertation paper by Marc Edwards, businesses cited access to technology as one of their most important concerns, and one of the primary factors limiting their success (Edwards 2003). From an economic perspective, lack of wireless internet and cell phone service poses a barrier to entry for new businesses. Reduce competition in the market limits choices for consumers and discourages innovation and growth. Without new businesses, it becomes difficult to attract valuable and productive human capital to the region. The relatively low population of college graduates in Washington County may reflect the lack of incentive for entrepreneurs to stay in the region.

Increased access to technology may increase visitation to the Downeast. A 2008 study commissioned by MOT revealed that visitors to the region are significantly less satisfied relative to the national average in the area of entertainment and slightly less satisfied with respect to luxury. This suggests that improvements in telecommunication may likely increase the utility of tourists, and subsequently increase the volume of visitors to the area. On a similar note, the study also demonstrated that tourists to the Downeast region are more likely than visitors in the rest of the state to use books rather than the internet to plan their trips (MOT 2008). This may suggest that the Downeast region currently attracts visitors who are less reliant on technology, implying that there is potential to capture a portion of the visitor market that values telecommunications more highly.

The growing presence of technology in the Downeast region has social and demographic. Increased connectivity may attract more full time residents who rely on communication with metropolitan areas. The area may also become more appealing as a second-home location and to tourists. Investment by this new population would fuel growth in the service sector. Additionally, if increased technology fosters growth and expands businesses, a new cohort of young professionals may be attracted to the area.

The implementation of technology may also have negative environmental consequences. The potential influx of visitors that may result from enhanced technology could increase stress on the environment. Moreover, the process of constructing telecommunication networks, as well as structures for new businesses, that may develop, has the potential to be ecologically harmful. However, internet access may enhance communication, coordination of funding, and research which may aid environmental organizations and facilitate ecologically sound planning of any development.

Telecommunications Technology Policy Recommendations

Tax incentives may lower upfront costs of large-scale technological projects and encourage continued growth in the Downeast region. Further investment by the state in the High-Technology Investment Tax Credit will subsidize costs for businesses providing telecommunications technology in the area.

As the installation of wireless telecommunication access becomes more feasible and widespread, research and development is required to continue technological innovation and teach businesses how to most effectively utilize new technology. Increased state funding for existing credits could enhance the development of technology. The Research and Development Tax Credit provides an income tax credit for qualifying research and development activities and the Super Research and Development Credit subsidizes growing research payments. Collectively, these two programs may be an effective way to encourage businesses in the Downeast region to invest in additional technology and utilize current technology as efficiently as possible. Increasing awareness among businesses of the tax rebate programs available may also increase the effectiveness of these programs in offering incentive for technological growth.

While tax credits may facilitate more rapid construction of wireless telecommunication networks, it is important that the Downeast region has the institutional capacity to support these changes. There are a variety of organizations seeking to utilize new technologies to their fullest capacity by offering capital assistance and training to small businesses. The Office of Innovation’s MTI program could take a larger role in supporting technological growth by expanding the Maine Technology Asset Fund. County-wide, state, or federal funding for other programs, such as TechMaine, SCORE, and Maine & Company, would enhance the ability of these organizations to increase education and awareness for businesses with respect to utilizing new technologies and provide financial assistance to companies in making initial technological investments. The expansion of organizations that support the growth of technology, coupled with increased support for state tax credits for technology investment, research, and development, has the potential to enhance the technological capacity of the Downeast region.

Scenarios

The state of Downeast Maine has been influenced by changes in the natural resource industries of forestry and fishing, the growth of tourism and telecommunications technology, and the development of land conservation. The approach applied to the management of these areas in coming years will determine their impact on the region. We suggest three possible scenarios for the future of the state of the Downeast.

Development and Disparity Downeast

The decline of natural resources progresses as the service sector continues to grow. Tourism becomes the primary source of income and employment, but the resulting development is not managed sustainably. The natural resources relied on by industries and tourism are depleted, and residents lose access to the environment which has historically supported their livelihoods. Though the economy of Hancock County prospers from the growing presence of the service sector, Washington County lacks the infrastructure and environmental amenities to support tourism to the same extent and as a result, the income gap widens between the two counties. The transition to the service sector is accompanied by a change in the cultural of the Downeast’s communities.

Status Quo

Current trends continue. However, management efforts limit excessive development and conserve natural resources. Natural resource industries remain secondary to the service sector, but still serve as a viable source of employment and a basis of culture. Tourism provides jobs and revenue to the region. Hancock and Washington Counties remain on unequal footing, as natural resources and revenues generated from tourism and technological investment are not distributed evenly. Resources are used by the public and industries, but land conservation initiatives protect selected areas.

Driving Local Innovation

The historically important natural resources of the Downeast are revived. The forest industry is maintained through certification and management plans to promote ecosystem health. Community-based management in fisheries recovers fish stocks and fishing is again a viable source of livelihood for coastal communities. Improved transportation infrastructure and marketing attracts tourism and enhances income from the service sector. Wireless internet access and support for technological start-ups are available, facilitating the networking of businesses and conservation organizations and aiding research on the area’s resources. Business investment and tourism are expanded to Washington County, reducing the disparities between the Downeast counties. Development is managed to minimize negative environmental impact and conservation of areas of ecological importance is pursued by a partnership between stakeholders in the private and public sectors. Local residents of Downeast Maine ultimately determine the fate of the area within their own vision through collaborative involvement in decision-making processes.

Conclusions

High rates of unemployment and low levels of per-capita income in the Downeast region could increase in coming years, as the continuing transition to a service sector economy perpetuates differences within and between Hancock and Washington Counties. The outflow of the workforce in Washington County, reflecting of the lack of jobs in the area, and differences in resource distribution, with lobster populations, tourism destinations, and telecommunications technology concentrated in areas of Hancock County, may increase this disparity.

However, the natural resources of the Downeast have the potential to stimulate the local economy and support the area’s population if they are successfully conserved. Sustainable forestry initiatives and participatory approaches to management in the fishing industry could sustain the area’s natural resource industries. The development of the tourism industry and telecommunications technology in both counties could add additional sources of employment and income to the region. Land conservation could also protect the natural resources which underlie the economy and communities of the region.

Stakeholders in the Downeast are responsible for the management of an area endowed with incredible natural resources. The future of this unique ecosystem and of its residents will depend on how these resources are valued.

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