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Alaska Seafood Industry Economic Importance Alaska’S Seafood Industry Is World-Scale

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Alaska Seafood Industry Economic Importance Alaska’S Seafood Industry Is World-Scale Some of the Most Important Things to Know About the Economy of Alaska by Gunnar Knapp Professor of Economics Institute of Social and Economic Research University of Alaska Anchorage April 2007 Subsistence salmon Subsistence drying Subsistence--Alaska’s original economy--remains an important part of the economy of rural Alaska. People in rural Alaska get much of their food from subsistence. Subsistence is a vital part of Alaska Native culture. Subsistence faces challenges, including a limited resource base and growing demands from sport and commercial users. An important debate has been going on for many years over who should have the right to participate in subsistence, and the relative roles the federal and state governments should have in managing subsistence resources. How important is subsistence? Annual Approximate subsistence cost of buying harvest per the food in a Area of Alaska person (lbs) store Northern, $2,064- Western & 516-774 lbs $2,656 Interior Alaska A woman at a subsistence “fish camp”—an important Anchorage & 16-35 lbs $64-$140 Fairbanks Subsistence harvesting part of summer family life in of Beluga whales much of village Alaska The Rural Alaska Economy The economy of rural Alaska—particularly villages in western and interior Alaska—is very different from that of urban areas that account for most of Alaska’s population. These population of “village Alaska” is overwhelmingly Alaska Native. Residents get much of their food from subsistence. Costs are very high, and basic infrastructure such as housing and water are far below the standards of urban Alaska. There are few jobs, and a very high share of jobs are in local government, education and health care. The economy is heavily dependent on federal and state transfers. A major economic challenge facing Alaska is how to create economic opportunities in these areas. There are no easy or obvious answers. Two Rural Census Areas Many Alaska villages are Anchorage Wade Yukon- accessible only by small Hampton Koyukuk planes, boats or % Alaska Native (1999) 8.1% 94.7% 63.3% snowmachines. Freight Unemployment rate (2000) 4.7% 17.8% 15.4% costs are heavily Adults Not In Labor Force (1990) 26.7% 44.3% 39.5% subsidized by the U.S. Transfer payments per person (1999) $4,000 $5,900 $7,100 Postal Service’s “bypass % of population below poverty level (1997) 6.7% 39.4% 24.2% mail” program. Alaska Land Ownership Federal government 59% State government 28% Native Corporations Native corporations* 12% In 1971, the United States Congress passed the Alaska Native Other owners 1% Claims Settlement Act (ANCSA) *Native corporations were created by the which was intended to settle the Alaska Native Claims Settlement Act of rights of Native peoples to Alaska 1971. The shareholders of these land. Alaska Natives became corporations are Alaska Natives. shareholders in “Native Corporations,” which were allowed to select lands from land owned by Federal the federal government. Today, lands (white) about 12% of Alaska is owned by State lands Native corporations. (grey) Native lands There are two kinds of Native (blue) corporations: twelve “regional corporations” and hundreds of smaller “village corporations.” There is a regional Native corporation for each of twelve Alaska regions. Some of the regional Native corporations have become very large and profitable businesses with many subsidiaries in Alaska and other states. Some of the most financially successful Native corporations, such as Cook Inlet Regional Corporation (CIRI) and Arctic Slope Regional Corporation have paid large dividends to their shareholders. Others have not been as successful and have paid very small dividends. Many of the regional corporations have large headquarters office buildings in Anchorage. Geography Alaska’s geography—its location, climate, topography, and resources—have driven Alaska’s economy in the past and define and constrain its opportunities for the future. Alaska has abundant natural resources—oil, minerals, forests, fish. But Alaska’s remoteness from major markets, cold climate, mountainous topography, and permafrost make Alaska a costly place to extract resources compared with other parts of the world. In the twentieth and twenty-first centuries, Alaska’s strategic location has contributed to the role of the military and more recently the international air cargo industry. Another Alaska natural resource--its natural beauty—represents an increasingly important natural resource. Arctic Alaska is a very large state. There are significant differences between different parts of Alaska with respect to climate, natural resources, Native cultures, Northwest population, types of economic activity, Interior and so on. It is useful to think of Alaska in terms of six major regions: Southeast, Southeast Southcentral, Interior, Arctic, Northwest, and Southwest. Southwest Southcentral Alaska’s Population Alaska’s population is about 650,000. Alaska ranks 48th among U.S. States in population. Alaska’s population is about 1/5 of Oregon’s, 1/10 of Washington’s, and 1/50 of California’s. Alaska’s population is about the same as that of Memphis, Tennessee. Alaska’s population compared Alaska’s population compared with other states with selected cities California 35 million New York, NY 8 million Memphis, TN 646 thousand Washington 6.1 million Alaska 649 thousand Oregon 3.6 million Seattle, WA 569 thousand Maine 1.3 million Montana 918 thousand Alaska’s population compared with selected countries Alaska 649 thousand Finland 5.2 million Vermont 619 thousand Norway 4.6 million Wyoming 501 thousand Alaska 649 thousand Source: Statistical Abstract of the United Iceland 309 thousand States, 2004-05. Data are estimated populations for 2003. Alaska Population Growth Alaska’s population grew rapidly from about 100,000 just after WWII to about 225,000 at Statehood, about 550,000 in 1986 and about 650,000 today. Alaska’s population growth—like Alaska’s economic growth-- has slowed significantly since the mid-1980s. Growth in Alaska Population 1964-1974 37% 1974-1984 51% 1984-1994 15% 1994-2004 9% Alaska Population Change Alaska population change is the combined result of natural increase (births minus deaths) and net migration (people moving in minus people moving out.) Alaska’s rapid population growth during the 1970s and early 1980s was driving by net in-migration: people moving to Alaska. The history of booms and busts in Alaska’s economy can be seen by periods of net in-migration and periods of net-outmigration. In most years over the past decade, more people have moved out of Alaska than have moved to Alaska. But the population continues to grow slowly because of natural increase. Alaska’s economy has always depended heavily on natural resources. Before Alaska became a state in 1959, the fishing and mining industries—along with government—accounted for most of the jobs and income in Alaska, directly or indirectly. The discovery of oil on Alaska’s North Slope in the 1960s drastically changed Alaska’s economy. Alaska’s oil production is so valuable that it now dominates Alaska’s economy. The Scale of Alaska’s Economy in Jobs Total Alaska employment is about 320,000. A quick indication of how “big” or significant an industry or project is for the Alaska economy is to compare it with 320,000. Job numbers in the tens of thousands or thousands are “big.” Job numbers in the hundreds are less significant relative to the total economy. Alaska employment grew from 350 94,000 in 1961 to about Alaska Employment: Relative Magnitudes 320,000 today. Total Alaska employment 321,000 300 Local government 38,000 250 Retail trade 34,000 Seafood processing 7,900 200 Air transportation 6,600 150 Mining employment (excl. oil & gas) 1,400 Wood products manufacturing 300 100 Employment (thousands of jobs) *Note: Data are for 2003. Total includes estimated 50 uniformed military and commercial fishing employment. Data are “annual average” employment; 0 for industries such as fish processing, seasonal employment may be considerably higher. 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 The Scale of Alaska’s Economy in Dollars Alaska has a $30 billion economy—as measured by the size of it’s Gross State Product.* That’s also about the size of the Alaska Permanent Fund. A quick indication of how “big” or significant a dollar value is for the Alaska economy is to compare it with $30 billion. Dollar values in the billions or hundreds of millions are “big.” Dollar values in the tens of millions or millions are much less significant relative to the total economy. *Gross State Product is the total value of goods and services produced in Alaska, minus the cost of inputs purchased from outside Alaska. The Scale of Alaska’s Economy in Dollars: Some Relative Magnitudes Alaska Gross State Product 2002 $29.7 billion Value of Alaska Permanent Fund 4/4/05 $29.9 billion Total Alaska employee compensation 2002 $14.9 billion Total federal spending in Alaska FY03 $7.9 billion Value of Alaska oil production 2002 $7.2 billion Total State investment earnings FY04 $3.5 billion Total State oil revenue FY05 $2.4 billion A million is NOT the same as a billion!!! A billion is 1000 million! Measures of Alaska’s Economy There is no easy or “best” way to measure or describe the Alaska economy. Different measures give different pictures of the structure of Alaska’s economy and the relative importance of different industries. The best available data are for employment and for Gross State Product—but there are problems with each of these measures. Employment data leave out important parts of Alaska’s economy, such as commercial fishing and self-employed workers, and don’t take account of the fact that many workers are not Alaska residents. Gross State Product (GSP) is the total value of goods and services produced in Alaska.
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