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Coal Mining and Tourism COAL MINING AND TOURISM Engines of Economic Development for Campbell County and Claiborne County, Tennessee Report Prepared for the Tennessee Department of Environment and Conservation by Matthew N. Murray, Ph.D. Charles Sims, Ph.D. Rebecca Davis and Bongkyun Kim, Graduate Research Assistants January 9, 2015 Howard H. Baker Jr. Center for Public Policy 1640 Cumberland Avenue Knoxville, TN 37996 TABLE OF CONTENTS EXECUTIVE SUMMARY…………………………………………………………………… 4 1. INTRODUCTION………………………………………………………………………… 8 1.1. Purpose of Report…………………………………………………………………….. 8 1.2. Overview of Campbell and Claiborne Counties……………………………………… 9 2. COAL………………………………………………………………………………………14 2.1. Resource Curse Phenomenon……………………………………………………….....16 2.2. Coal Outlook in the Central Appalachian Basin………………………………………21 2.3. A Profile of Coal Mining in Campbell and Claiborne Counties……………………... 28 2.4. Economic Impact of Coal in the Study Area…………………………………………. 38 2.4.1. Campbell County……………………………………………………………….41 2.4.2. Claiborne County…………………………………………………………….....43 2.5. The Future of Coal in the Study Area…………………………………………………46 2.6. Summary……………………………………………………………………………….60 3. TOURISM 3.1. Tourism as a Driver of Rural Economic Development………………………………..62 3.2. Tourism Trends Across Tennessee………………………………………………….... 64 3.3. Economic Impact of Tourism in the Study Area……………………………………... 67 3.3.1. Campbell County…………………………………………………………….....67 3.3.2. Claiborne County…………………………………………………………….....70 3.3.3. Future Tourism Impacts………………………………………………………..72 3.4. Potential Tourism Strategies…………………………………………………………..73 3.4.1. Retirement Community and Vacation Homes………………………………….74 3.4.2. Historical and Cultural Tourism………………………………………………..76 3.4.3. Outdoor Recreation………………………………………………………….....78 3.5. Summary………………………………………………………………………………80 4. DISCUSSION AND CONCLUDING REMARKS………………………………………82 5. REFERENCES……………………………………………………………………………..87 6. APPENDIX A: Tourism Assets in Campbell County…………………………………...89 7. APPENDIX B: Tourism Assets in Claiborne County…………………………………...93 Howard H. Baker Jr. Center for Public Policy – January 9, 2015 1 List of Tables Page Table1 : Select Socio-demographic Variables 10 Table2 : Primary Economic Sectors 10 Table 3: Summary of Economic Benefits of the Coal Industry in Campbell County, FY13 42 Table 4: Summary of Economic Benefits of the Coal Industry in Claiborne County, FY13 44 Table 5: Summary of the Statewide Economic Benefits of the Coal Industry, FY13 45 Table 6. 2012 Campbell County Coal Asset Values Under Alternative Coal Market 58 Futures Table 7. 2012 Claiborne County Coal Asset Values Under Alternative Coal Market 58 Futures Table 8. 2012 Campbell County Coal Asset Values Under Alternative Recoverable 60 Reserve Futures Table 9. 2012 Claiborne County Coal Asset Values Under Alternative Recoverable 60 Reserve Futures Table 10: Summary of Coal Industry in the Study Area 61 Table 11. Impact of Travel Spending in Tennessee in 2013 and (Percent Change from 65 2012) Table 12: Economic Impacts of Tourism in Tennessee, 2013 67 Table 13. Percent Change in 2013 Travel-Generated Impact Measures in Campbell 68 County Table 14: Summary of Economic Benefits of the Tourism Industry in Campbell County, 70 FY13 Table 15. Percent Change in 2013 Travel-Generated Impact Measures in Claiborne 71 County Table 16: Summary of Economic Benefits of the Tourism Industry in Claiborne County, 71 FY13 Table 17. Examples of Economic Impact Associated with Potential Tourism Strategies 74 Table 18: Summary of Tourism Industry in the Study Area, FY13 81 Table 19: Summary of Total Economic Impacts in the Study Area, FY13 84 Table 20: Locations on the National Register of Historic Places in Claiborne County 95 Howard H. Baker Jr. Center for Public Policy – January 9, 2015 2 List of Figures Page Figure 1: County economic status in central and southern Appalachia 12 Figure 2: Real price of bituminous coal and mean growth of real per capita 19 personal income of coal and non-coal Appalachian counties Figure 3: Mean growth rate of per capita personal income of coal and non- 19 coal Appalachian Counties Figure 4: Historic trends and future projections of (a) average minemouth 23 price/quadrillion Btu and (b) coal production by region (quadrillion Btu) Figure 5: Coal production, 1940-2011 24 Figure 6: Lowest delivered cost by basin 25 Figure 7: Fuel cost of generation for Appalachian coal and natural gas in 26 Pennsylvania, 2013-2012 Figure 8: U.S. monthly net electric power generation, January 2007-March 27 2013 Figure 9: TN coal production vs. Campbell and Claiborne County coal 29 production, 2005-2013 Figure 10: Campbell vs. Claiborne County coal production, 2005-2013 30 Figure 11: Campbell vs. Claiborne County coal industry employment, 2005- 31 2013 Figure 12: Tennessee total vs. Campbell and Claiborne County coal industry 31 employment, 2005-2013 Figure 13: Tennessee average annual pay for coal mining (North American 32 Industry Classification System code 2121) from 2007 to 2013 Figure 14: Tennessee coal production technology breakdown 2005-2013 33 Figure 15: Campbell County underground and surface mine production 2005- 34 2013 Figure 16: Claiborne County underground and surface mine production 2005- 35 2013 Figure 17: Number of companies mining in Tennessee counties, 2005-2013 36 Figure 18: Number of mines operating and idling in Tennessee, 2005-2013 37 Figure 19: Historic and projected minemouth coal prices in the Appalachian 49 Basin Figure 20: Historic and projected recoverable coal reserves at producing 52 mines Figure 21: Recoverable reserves and coal production. 53 Figure 22: Value of coal assets in Campbell County in millions of dollars 55 Figure 23: Value of coal assets in Claiborne County in millions of dollars 56 Figure 24: Map of Cumberland Trail 90 Figure 25: North Cumberland Wildlife Management Area 92 Figure 26: NCWMA off-highway vehicle riding area in Campbell County 92 Howard H. Baker Jr. Center for Public Policy – January 9, 2015 3 COAL MINING AND TOURISM Engines of Economic Development for Campbell and Claiborne Counties EXECUTIVE SUMMARY The coal industry has been an important source of employment, income, and tax revenue generation for Campbell County and Claiborne County. At the same time, the natural environment and cultural heritage in these counties is also serving as the foundation of an emerging tourism industry with activities that may conflict with coal mining. Recent trends show declining coal production in the two counties which suggests a challenging outlook for the future of the state’s coal industry. Fracking has led to low natural gas prices that make coal less attractive as a source of power generation. Adding to this downward pressure on the demand for coal are domestic and global environmental concerns. Travel-related spending, on the other hand, has been growing statewide and in Campbell and Claiborne Counties as well. This likely means greater potential benefits from tourism-based economic development in these counties in the years to come. In 2013, there were 46 coal industry workers in Campbell County and 267 coal workers in Claiborne County, yielding total employment of 313. In the same year, employment tied directly to tourism spending stood at 420 in Campbell County and 120 in Claiborne County, for total employment of 540 across the two counties. While tourism accounts for a larger number of jobs, workers who directly support tourist spending in sectors like retail trade and leisure and hospitality services are relatively poorly paid compared to their coal industry counterparts. For example, statewide average annual pay for a coal worker was $64,207 in 2013 compared to $27,851 in retail trade and $19,120 in leisure and hospitality services. Howard H. Baker Jr. Center for Public Policy – January 9, 2015 4 Coal extraction and tourism spending each have economic impacts that extend beyond employment and income creation for workers in these sectors. Each sector relies on suppliers and vendors who also create jobs and incomes. Workers in the coal and tourism sectors, along with workers in supplier and vendor firms spend a portion of their incomes in Campbell County and Claiborne County that support additional job creation through the ripple effects of the multiplier. Finally, in addition to jobs and income, both the coal industry and tourism support expansions in state and county output (gross domestic product) and state and local government tax collections. An evaluation of the total economic impacts of the coal industry and tourism indicates the following: • Total employment related to coal production was 645 for the two counties combined in 2013, with Campbell County accounting for 100 jobs and Claiborne County accounting for the remaining 545 jobs. Total tourism-related employment was 945 in 2013, with 709 jobs in Campbell County and 236 jobs in Claiborne County. • The coal industry in the two counties boosted total output (gross domestic product) by $124.9 million in 2013, with nearly $107 million in output being accounted for by Claiborne County. Total tourism-related output was $109.2 million, with nearly $82 million of output coming from the Campbell County economy. • The coal industry created more personal income for residents of the two counties in 2013 ($30.5 million) than the tourism sector ($22.7 million). This study does not provide forecasts of the future of the coal and tourism sectors in Campbell County and Claiborne County. However, an asset valuation of the coal industry in the Howard H. Baker Jr. Center for Public
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