Resource-Dependent Communities

In both academic and popular discourse, the common assumption has long been that the potential environmental threats associated with extractive industries such as logging and mining will be accompanied by economic benefits for host communities and regions. At the end of the twentieth century, however, a growing body of findings pointed to the paradox that surprisingly often, where resources are rich, people are poor. In 2002, in what may be the most comprehensive assessment of quantitative findings ever assembled, the sociologists William Freudenburg and Lisa Wilson discovered that of just over three hundred North American findings on jobs, incomes, and poverty rates in mining communities, roughly half indicated negative economic outcomes, with the remainder split roughly evenly between favorable and neutral or indeterminate outcomes. Over half of the positive findings, moreover, were at least twenty years old; from 1982 on, nearly 60 percent of all findings indicated negative economic outcomes in mining communities.

The reasons behind the North American findings are not yet fully understood. Some of the earliest challenges to the common assumptions of economic benefits from extractive industries came from studies made of the developing world in the 1960s, when authors began to draw attention to underdevelopment. Some of these studies argued that the poverty of resource-rich regions resulted in part from unfavorable terms of trade—with raw materials sent out from extractive regions at relatively low prices, in unequal exchange for finished products that needed to be imported at high prices. Others have pointed to spatial inequities in development, with extractive industries often located in remote and inaccessible areas where the potential for development of spin-off industries and associated economic growth is extremely limited.

Another important factor appears to lie in the highly fluctuating nature of resource-related employment. In analyzing a decade's worth of U.S. data that included both the boom years of extractive industries in the late 1970s and the agricultural crisis years of the early 1980s, sociologists Richard Krannich and A. E. Luloff (1991) found that mining-dependent counties had higher levels of unemployment in every year than did agriculture-dependent counties. In addition, there is at least suggestive evidence that mining communities' economic problems become increasingly pronounced over time, exacerbated by the volatility of commodity prices, the potential for a cost-price squeeze—created by the fact that overall direction of the fluctuating process has tended to be flat or downward, while the costs of operation at any given facility tend to rise over time, as the more readily accessible resources are exhausted—and the periodic shutting down of extractive operations when prices fluctuate above and below the costs of operation in specific locations.

What is now clear is that it can no longer be responsibly asserted that the socioeconomic impacts of resource extraction will be favorable ones for rural communities. Communities that become economically and socially dependent on natural resource extraction almost inevitably experience cyclical patterns of growth and decline, high levels of unemployment and underemployment, and deep and enduring poverty.