COLUMBUS — Boom, then bust. It’s a scenario often played out in local economies heavily reliant on one type of industry, especially in the energy sector.
And it’s an underlying concern for Ohio communities experiencing a boom in shale oil and gas development.
But the cycle isn’t inescapable, say community development specialists with Ohio State University Extension. They have received funding to help eastern Ohio communities examine how shale development, also known as fracking, is affecting their economies, environmental conditions and social structures and to create plans for long-term viability.
With $200,000 in funding for a three-year project from the U.S. Department of Commerce’s Economic Development Administration, OSU Extension has joined forces with four regional economic development districts representing 25 eastern Ohio counties.
Thinking long term
“We are trying to help the communities in the region position themselves for sustainable economic development that leverages the shale play and prevents the bust that inevitably would happen,” said Nancy Bowen-Ellzey, an OSU Extension field specialist in community economics and one of the project’s principal investigators.
Learn from past
“History tells us that energy-related projects are especially vulnerable to the boom-bust cycle,” Bowen-Ellzey said. “Coal mining is a good example. It will fluctuate tremendously over time. It can help the economy greatly, but during downtimes, there is nothing to cushion the fall.”
Bowen-Ellzey explained that the researchers are looking at data back to 2010, when shale development-related injection wells started coming into the area. They are tracking changes every quarter and are also collecting data on an annual basis.
“We are looking, for example, at whether there’s a jump in employment in this sector or a change in that sector,” Bowen-Ellzey said. “And we’re not just tracking economic changes. We’re also looking at the social and environment aspects — school enrollments, housing starts, water quality.”
What does it mean
“This is the ‘so what?’ to our cluster analysis,” said Eric Romich, Extension field specialist in energy development who is also helping lead the project. “If industries are showing signs of growth, what does that mean? What type of change is this compared to a national average?”
Specifically, Romich said, the team will examine how dependent companies’ growth is related to the construction aspect of shale development.
“We want to find out if, after the wellheads are built, they will continue to grow or if they will be reducing their staffing. We want to try to avoid the specialization of an economy tied to shale, especially the construction aspect of shale development.”
By assisting communities with business retention and expansion programming, OSU Extension specialists can help companies determine if they can increase their business by marketing their products to other regions or states, such as Illinois, that are just beginning to explore shale development, Romich said.
“But if they can’t do that and the rise in employment is going to go away after the construction phase, we want to know that, too,” he said.
OSU Extension and its EDA partners will take the information and incorporate it into the EDA district offices’ Comprehensive Economic Development Strategies, which are designed to foster collaboration across community lines and are submitted to EDA every five years.
“This is the hidden gem in the project, the glue that holds everything together,” Romich said. “The information we gather as part of this project will give planners the insight to really address shale development in their CEDS plans.”
“We’re not just rolling into a community and saying, ‘Here’s what you need to do,’” Romich said. “Maybe one area’s infrastructure is fine but it needs to invest more in micro loans for manufacturing or in workforce training. Maybe another area needs infrastructure improvements to support new industry or training opportunities.
“The core of the idea is to determine how we can maintain long-term employment even when there’s a downturn in a major sector.”
The EDA offices working with the team include the Eastgate Regional Council of Governments based in Youngstown in Mahoning County, the Northeast Ohio Four County Regional Planning and Development Organization based in Akron in Summit County, the Ohio Mid-Eastern Governments Association based in Cambridge in Guernsey County and the Buckeye Hills-Hocking Valley Regional Development District based in Marietta in Washington County.
In addition to the EDA grant, the team received a related $20,000 grant from the North Central Regional Center for Rural Development to develop educational materials for local leaders in communities experiencing shale development.
In Ohio, the team is piloting materials with leaders in Guernsey County to identify local assets, challenges and benefits related to shale development and how they fit into the area’s strategic plan, said team member Cindy Bond, also a community development educator for OSU Extension.
The goal with this second grant is to develop a comprehensive classroom and web-based curriculum that can be used by communities throughout the north-central region of the U.S.
Materials are also being piloted by partners in North and South Dakota as part of the grant.