Final 2.0 Flashcards
name some of the important mines that occurred pre-World War II
- Kennicott Copper Mine
- The Treadwell Mine
- Independence Mine
Who receives the benefits and who pays the cost of value-added requirements on natural
resources?
They face higher costs for the “value-adding” activities than do other less remote places. For example, remote regions typically have higher labor costs, higher energy costs, and higher costs of shipping the final products to end markets. So even though the remote region may have a relative economic advantage in extracting the natural resource (because it is physically located there) it usually doesn’t have a relative economic advantage in value-adding.
understand
the difference between direct, indirect, and induced effects
Direct effects are income generated in that industry Indirect effects are income generated by purchases of the industry from other industries Induced effects are income generated by household spending of direct and induced income
John Demagogue is running for state senate. He campaigns, “Our state government needs money, but rather than tax our people, we should grow our economy.” Is this possible? Does growing our economy make the state government better off? Can state government get more money by growing some parts of our economy? Can growing the economy, in general, make local government better off?
Most economic development does not pay for the state government for the incremental costs that new employees and increased population. But some does. So, if John Demagogue want to grow the oil or mining industries, these industries frequently (but not always) provide more money for the state government to spend for services to its citizens without a tax (oil more than mining). But if he’s talking about general economic growth – support industries, other resources, etc – then he is not correct. However, facilities within city or borough frequently (but not always) pay property tax, and so growth within municipality is likely to help the local government.
know the three major periods into which the reading divides mining history – and what
divides one period from another
• Historic Era: pre-World War II; • “Low” Era: World War II to 1989; and • Modern Era: 1989 to the present.
understand the difference between the two systems, and be able to name one or two minerals which are
locatable minerals and at least one leaseable mineral
Gold and Silver
Coal
understand the government revenue structure; the three
revenue streams that the state gets from mining, and whether they are a gross value or net profits
revenue streams. Which ones do the state receive from mines on state land? Which streams does the
state receive from mines on private land?
Royalty
Mining License Tax
Corporate income tax
Define Geologic risk
The risk that the mine will not
hold as much of the target mineral
as expected.
Define Commodity risk
The risk that the price of the
mineral will go down.
Define environmental risk
The risk that a mine cannot be
permitted.
The Three-legged stool. This is from Dr. Goldsmith’s conceptual model of the Alaskan
economy. You must be able to demonstrate your understanding of this concept by being able to
discuss what each “leg” does, and to apply this understanding in a specific way to questions
like, “what would happen to the economy if the oil industry suddenly disappeared.”
Federal government
Petroleum
Other Resources
Takes three legs to sustain the economy and keep it strong and each job relies on one leg of the stool. Petroleum is more important than you think
The Alaska Disconnect. What does it mean? What industry(ies) pass this test?
Without broad-based taxes, growth in (nonoil) industries increases government costs without corresponding increases in government revenues.
Oil
The Resource Curse. You must be able to define the paradox of the Resource Curse. You do
not have to memorize each and every one of the symptoms of the “curse,” but you should be
able to name a few and apply any one of them if given the concept.
Resources can lead to
conflicts
Governments which don’t
tax citizens aren’t responsive
to citizens.
Rich governments are more
likely to become corrupt.
Forestry
Review the definitions, terms, land ownership, and similar information in Reading 1. With respect to
the history of the Forest Industry, you should understand the economic forces the government
intentionally or unintentionally affected which helped create and then helped with the demise of the
industry, including the effect of the 50-year contract on investor uncertainty, the effect of having pulp
contracts on the other value-added sawmills. The effect of the primary processing requirement on
USFS land, and the incentives which affected private Native corporation decisions to cut quickly. You
do not have to memorize the specific ups and downs of international demand, though you should
recognize that the Alaska exports were forced to accept rather than significantly influence market
MBF = thousand board feet MMBF = million board feet.
- Forest products come in a number of categories.
- Round log exports are just that. Trees that are cut down and exported without processing as round logs.
- Cant. A cant is a portion of a log sawed on all four sides
-Pulp or Pulpwood. This is wood cut into wood pulp to make paper, fiberboard, or other
wood-fiber products. Pulp are small fibers. Small, otherwise unmarketable trees can be a
pulpwood source.
-Sawlogs. Timber capable of being made into dimensional lumber.
-Biomass. Sometimes low-quality trees are harvested as biomass – to burn for heat.
Firewood is a biomass product. However, Tok and a few other communities harvest lowquality trees on an industrial scale for burning to produce electricity or community-scale
heating.
-Kiln dried lumber. Kiln-dried wood is wood
that has been dried in an oven (kiln)
-Stumpage or Stumpage fee. Stumpage is the price on standing timber. It is frequently
calculated per board feet, cubic meters, or some other measure. (i.e., $/MBF).
Land Ownership. Alaska holds the two largest National Forests in the country. Tongass
National Forest in southeast Alaska is the largest. Chugach National Forest, surrounding Price
William Sound and part of the Kenai Peninsula, is the country’s second-largest National Forest.
Tourism
We expect you to remember general concepts about the industry including the role of the Cruise Ship
tourism, wages, seasonality, location where tourism occurs, activities tourists participate in, and other
similar economic facts and concepts. You should have some idea of the economic impact – you don’t
have to memorize it, but you should understand it well enough to impact numbers out of a multiple choice answer with well-spaced choices (i.e., are wages from tourism $1.5 million, $1.5 billion, or $15
billion). With respect to fiscal impact, you should know how it roughly affects state and local
governments.
55% cruise ship. 40% Air; 5% highway/ferry.
