Thursday, November 20, 2014

Turkeys and extractive economy in Louisiana

In the mid-1980s, a social program was introduced in Yucatan, and it was one of the more brilliant programs I have ever encountered. The government gave out turkey chicks to people in villages.

Strange thing to give, right? Free program. Just take the chicks, and raise them. No strings attached. But we will be back in a year, and will offer to buy the turkeys back.

The turkeys thrived in the village setting. The villagers got some money for minimal upkeep (the turkeys usually took up residence in a chicken coop that was already being used, and ate scraps and insects along the margin of the property) and the government got turkeys for redistribution. At a time when many young villagers were flocking (sorry) to the cities, following jobs, it provided one easy source of cash for villagers, and an additional source of protein for lean times.

Image from www.yucatanliving.com

To me, that seems to be the way an extractive economy should work. Yes, there should be profits that go to the group enacting the program. And yes, the guys providing the turkey chicks should make money - whether it is a government, or a non-profit - there should be a way to turn one turkey into a bunch more.

But the people who provide turkey with room and board get something, too. After all, when the turkey is gone, they are left to clean up the poop.

So it is with the Gulf of Mexico.

The people of the Gulf of Mexico have put up with the poop of turkeys for decades. In 1901, a well in Jennings, Louisiana first produced oil within the state. Since then, the oil industry has provided jobs for the people of Louisiana, oil companies made a profit and sent the final product across the nation, but it was the local environment has paid the price. Canals cut through healthy marsh to access wells, leading to saltwater intrusion and the death of the marsh. Oil leaks occurred, small and large. The fat turkeys grown here are sent out of state for the benefit of the nation (as well as for the benefit of the stockholders).

Progressive erosion in Coastal Louisiana, 1958, 1996.

But in this case, the villagers are not being paid for cleaning up turkey poop.

Essentially, in some ways, Louisiana is being treated as an American colony with an extractive economy. (And typical of such colonies, corruption seems to go hand in hand with the tie between the imperials and the colonial governance).

Oil companies are not the only responsible agents for the marsh that is disappearing at an alarming rate. If they were, the solutions would be easy. Unfortunately, there are a number of forces at play. 

The levees that prevent the Mississippi River from overflowing its banks and flooding resident also prevents the Mississippi River from overflowing its banks and nourishing the marshes. Managing the flow of the Mississippi River upstream starves the downstream area of sediment that would rebuild marshes. Storms tear through wetlands and tear them up, and have been doing more tearing since we have started seeing climate change. Nutria are unchecked destroyers of wetlands. Sea level rise and subsidence are brutal influences on marshes and swamps in coastal Louisiana. Added to all of these pressures, the canals carved into the marshes by the oil companies introduce saltwater into fresh marshes and essentially poison the plants.

I don’t believe that Louisiana has not benefitted from the relationship[i]. Concessions are always being made to avoid losing jobs and tax revenue for the state, so clearly the state has a vested interest in the investments made by the oil companies. And we, like all other states, benefit from the reduced cost of petroleum products. But the investment of 113 years of oil extraction has not resulted in huge strides towards development, while the impact from that investment has been increased at every step along the way.

It might be an exaggeration to say that Louisiana has not received any revenue from the offshore oil drilling, as Mary Landrieu famously claimed after the BP spill, but the state has certainly received very little (see an interesting breakdown here). Landrieu used the BP disaster as an opportunity to push for revenue sharing, a successful effort which will begin to show up in our state coffers in 2017.  We’ll see if the additional income can be used to reverse the impacts.

It would be an interesting comparison to take the income from the seafood industry and the oil industry and compare the two. Louisiana supplies 35% of the shrimp and oyster consumed by the US. We have a $220M sport hunting industry. Coastal fisheries in Louisiana make up 30% of the national total.

I suspect that a far greater proportion of the income from those industries stays in Louisiana than from the oil industry.

Turkeys.



[i] Davis (1995) found that extractive economies as a whole have higher levels of development than economies without a substantial extractive sector. “Learning to love the Dutch disease: evidence from the mineral economies.” World Development 23(10):1765–1779.

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