Economic and fiscal impacts of lignite development for the Brazos Valley Economy of Texas

Vita.The purpose of this study is to estimate the economic and fiscal impacts of lignite development for the Brazos Valley Economy of Texas for 1977 through 1999. A regional economic-demographic model was used to analyze the economic and fiscal impacts of lignite development on this economy. This model provides the linkage between project induced employment and population necessary for a rigorous treatment of this problem. Demand for lignite resources for use in the generation of electrical output has increased as a result of escalating energy prices and rapid economic and population growth in Texas. Expectations of the economic and fiscal impacts of lignite development are varied. Many communities impacted by lignite related development have been experiencing declining levels of economic and demographic activity. Increased employment as a result of development is an important issue for these communities, as well as the fiscal impacts. Five lignite projects, providing a total of 3,400 megawatts of electrical output were simulated for the forecast period. Employment generated as a result of lignite development is not the long term answer to the development of rural municipalities included in this analysis. Communities that have been suffering from a declining economic base and the associated problem of declining employment gain a short term increase in employment opportunities. In the long run, however, the declining trends in employment are reestablished. Based on the findings of this study, the question of whether the benefits of lignite development are greater than the costs to the public and private sectors would have to be answered in the affirmative. While all governmental entities have positive present values, counties and school districts benefited to a greater extent than municipalities. The short run impacts of development at the municipal level were negative for most municipalities analyzed..