BY KAREN LOWRIE, MICAEL GREENBERG, and MICHAEL FRISCH
The end of the Cold War has dramatically decreased the need for continued nuclear weapons production in the United States. The communities around the largest of the weapons production and research sites owned by the Department of Energy are now facing the socioeconomic impacts caused by downsizing, mission changes, and in some cases, eventual closure of the sites. The resultant job losses reduce local incomes, property values, retail sales, and housing demand and cause other economic stresses that damages the fiscal health of some of these communities.
DOE owns some 140 sites in 38 U.S. states and territories, encompassing 2.3 million acres and containing tens of thousands of buildings and structures. This weapons complex employs more than 100,000 workers in various activities, ranging from continuing research and production at some sites to cleanup of contaminated water, soil, and buildings at other sites. Nearly all of the major weapons facilities were built in the 1940s and 1950s in locations that were relatively remote and rural, for reasons of national security. During Cold War production, communities that were supported almost totally by the nuclear weapons industry developed near the entrances to these facilities.
When a large industrial facility lays off workers, local communities often suffer economic decline.1 In general, the smaller the local community and the further removed the facility is from metropolitan areas, the larger are the anticipated effects.2 Towns and counties near U.S. nuclear weapons production sites are like company towns in their heavy reliance on DOE jobs to maintain their economies.
These communities have additional problems to confront, however. In the past they were forced to react to decisions made in secret because of security considerations.3 Moreover, because some of the communities are rural, they often lack the professional expertise and budgets required to provide services, impose controls, or interact fruitfully with a large federal bureaucracy. Closing a massive nuclear facility is also more expensive and takes more time than closing an ordinary private plant. Remedial actions will be required for several decades and prospects for private reuse are problematic at best.4
Since the late 1980s, all of these sites, for the most part, have undergone a boom-and-bust cycle that included a build up to peak employment in the early 1990s followed by drastic reductions of employment starting in 1994. By 1996, workforce cutbacks ranged from 8.5 percent (Sandia) to 53 percent (Rocky Flats), representing tens of thousands of jobs. (See Table 1.)
Local governments usually financed roads, sewers, schools and parks to support the nuclear facilitys employees and their families through local tax revenues and the sale of bonds, creating a long-term financial obligation for the host community.7 The regional infrastructure created as communities grew up around the nuclear facility is therefore too big to be supported solely by the rural region. When the large facility downsizes or leaves, the region needs replacement support.8
At DOE weapons sites, the loss of jobs is the biggest problem for surrounding communities. In a typical scenario, the decrease in jobs lowers the demand for housing, which causes a decline in market value of housing. This, in turn, reduces property tax revenues. Without a continued DOE presence, laid-off workers have trouble finding jobs in the area, and off-site private investment loses its economic value, leading to what economist Milton Russell calls "stranded capital" in homes, businesses, and schools built during boom times.9 Fewer paychecks also affect retail sales and personal income, causing local government revenues to drop more in those communities where a portion of sales and income tax is retained locally.
The growth prospects of weapons-site regions depend on the extent the facility spawns local suppliers or spins off new businesses.10 At most DOE sites, however, such new businesses are rare.11 Because of the rural nature of many locations chosen for weapons facilities, few suppliers are located in these regions. DOE purchases are made outside the immediate areas, and spin-off jobs are created elsewhere. Since purchasing nuclear weapons does not enhance production capacity and does not create many additional local jobs, host regions wind up paying an economic penalty.12
In addition, the high wage structure of DOE facilities may deter competing employers from locating in the area, which in turn increases the economic dependency of the region on the nuclear facility. Augusta State University economist Jurgen Brauer describes the "bifurcated labor market" in the Savannah River region and a substantially higher cost per job at Savannah River compared to nonfederal jobs in the surrounding counties.13 He suggests that two of the largest U.S. sitesSavannah River and Hanfordhave actually repelled new private investment and hence job creation.
The presence of a stigma effect on past and future economic development in weapons site areas is debatable, however.14 Adjacent landowners, on the one hand, have claimed that nuclear activities diminish property valueswitness, for example, lawsuits at Rocky Flats and at smaller sites in Portsmouth, Kentucky, and Fernald, Ohio. On the other hand, the lack of social and cultural amenities may be what makes these areas unattractive for business.15
The shift to environmental cleanup has provided some job-loss compensation for the large weapons-site regions like Hanford and Savannah River, but only small amounts of federal aid have been provided for long-term community economic adjustment.
This problem is not unique to the United States. Funding levels in the European Unions KONVER program, which was established to help diversify defense-dependent regions, have also been inadequate to solve the problems they address.18 Industrial conversion, worker retraining, and community economic development are strategies put forth by those studying the issue.19
Recognizing that the changing mission of the nuclear weapons complex would result in a difficult adjustment period for regional economies, Hazel OLeary, who was Secretary of Energy at the time, incorporated economic development as a mission of DOE in 1993. A year later, she established the Office of Worker and Community Transition (OWCT). One of the offices objectives is to assist local communities in achieving economic independence from DOE. The office provides technical and financial assistance to community partnerships, called Community Reuse Organizations. These partnerships are designated to speak with one voice for the affected region, with the goal of establishing and implementing local economic development programs.20
The challenge is to stimulate local growth to replace jobs lost from closure or downsizing. Overall, more than 22,000 jobs were cut from the seven major DOE sites from 1994 through 1996, including more than 4,000 each at Savannah River, Hanford and Rocky Flats. According to one report, economic development assistance created 5,085 jobs to replace those that were lost during that period, although the Community Reuse Organizations took credit for only about 890 of them.21 A more recent report stated that local impact assistance led to the creation of more than 8,000 private-sector jobs at these sites. (See Table 2.)
DOE budgeted about $61 million for the OWCT in fiscal year 1998. About half of this budget was allocated to community assistance, with the other half going toward workforce restructuring. The amount decreased in fiscal year 1999 to about $45 million, with about $20 million available for community assistance. Two projects will exhaust a little over half of the $20 million: one is an appropriation to the state of Idaho as part of a legal settlement, and the other is a commitment to accelerate reuse of the Mound facility in Miamisburg, Ohio. This leaves less than $10 million to fund community assistance at all other sites, including the heavily affected Savannah River and Hanford regions.22
The community transition efforts thus far are inadequate, and the cleanup funds being distributed to the sites have become a substitute for adjustment to a post-DOE world. Continued dependence on cleanup jobs at the sites rather than transitioning to a non-DOE economy will exact a toll on long-term economic sustainability. Milton Russell, at the University of Tennessee, recommends the creation of a separate governing body, with its own mandate and its own funding, to deal with community impacts.23 This organization would promote economic vitality in the regions by focusing on each communitys particular needsfor example, worker retraining, public school improvements, and federal buy-out of local debt.
Initially, we asked what were the most important fiscal impacts of the DOE sites on the region. Nearly half of the responding towns and counties reported that DOE provides some type of direct payment to them. Those reporting financial support were primarily the host counties who receive payment in lieu of taxes for the land that was taken for the site, or places like the City of Broomfield near Rocky Flats, where DOE provided $56 million to fund a special capital project to replace the water supply.
The $40,000 in-lieu-of-taxes allotment that DOE pays to Butte County, Idaho, for instance, amounts to about 11 cents per acre of land the Idaho Lab occupies in the county. The fiscal official there lamented that the lack of impact fees from DOE limit the countys revenue base. Even in Los Alamos, the official there referred to the lab as a billion dollar industry that is virtually tax exempt. The fiscal official from Westminster, Colorado, near Rocky Flats, commented that the city does not receive DOE money to pay for local government staff to oversee Rocky Flats activities that affect surrounding land use and water quality. This staff time takes away from work needed to meet the citys routine operations. The absence of adequate levels of direct payments from DOE to local governments is a pervasive issue that has fueled resentment at the major sites.
Effects on employment levels are the most frequently cited as major impacts. Jobs are the number-one concern among residents living near nuclear weapons facilities. Even though all of these sites have dangerous radioactive materials and the potential for, if not a history of, public health threats, concern over the loss of jobs rated even higher than the concern for site contamination.
Only 15 percent of the respondents said the facility had little or no effect on employment. Nearly half said that employment had dropped precipitously. Others reported employment decreases or a roller coaster of increases and decreases. Because DOE dollars account for a large percentage of local income, reductions in these dollars, as one official put it, may be "good for the U.S. economy but they hurt the local economy."
Employment losses have caused property values to drop near Savannah River, Hanford, Rocky Flats, and Oak Ridge. In fact, loss in property value was the second largest fiscal effect caused by the shrinking of the nuclear weapons complex. The only place to report that a DOE site actually increased property values greatly was Bernalillo County, New Mexico, host county to Sandia Lab. Sandia has experienced the least layoffs, and well-paid scientists and engineers continue to create a demand for high-priced housing. A similar effect occurs at Los Alamos, where high property values make affordable housing for nonlab jobs virtually unavailable.
Compared to employment and property values, fewer officials said that other secondary effects from layoffssuch as impacts on debt, tax rates, school enrollment, and social serviceswere substantial. But if effects were noted, they were almost always economically bad. A comment from a fiscal official in one of the cities near Hanford summed up the interaction of these effects well:
Hanford hired 5,000 employees then turned around and laid off 5,800. We built a new $29 million high school to deal with the build upnow we pay for it during the downsizing. We have a property tax base that is 74 percent residential. What happens when the largest employer lays off 25 percent of its workforce!
The picture that emerges is that fluctuating employment levels cause fiscal strains on local governments faced with building homes and schools in the good times and paying for them in the bad times.
Stronger and more diversified economies in the greater Denver, Knoxville, and Albuquerque regions will help Rocky Flats, Oak Ridge, and Sandia, respectively, to bounce back much better from dependence on military facilities. The constraints to growth at Los Alamos are not as much related to lack of infrastructure and amenities as to lack of available space and few connections to Santa Fe. Los Alamos, which is located on a relatively small section of plateau, occupies most of the available land, leaving little physical space to expand or diversify the economy.
The economic legacy of downsizing and closure hits hardest in those regions such as Savannah River, Hanford, Idaho, and Los Alamos that are more remote and have few amenities to entice other business to stimulate their economies. Another detractor is the wage effect; contractors and other employers cannot match DOEs high wages. Notably, very few respondents believed that a nuclear stigma per se deters growth.
The economic legacy of the nuclear weapons sites takes different forms in each of the regions, but a common thread is that while dependence on a large number of high-paying jobs from a single employer for 50 years has supported these economies, it has also stunted long-term growth.
Communities around Rocky Flats, however, which were also the only places to prefer complete closure of the site, do not want future nuclear uses. One of the big municipal impacts from Rocky Flats is the threat the nuclear facility poses to drinking water supplies. Removing nuclear and hazardous materials and closing the site therefore are probably in the communitys best interest, both economically and for public health. Moreover, nearby communities, like Boulder, are anxious to designate the site as open space to limit growth and development.
Jobs are too important in the other major site-regions to let go of the sites missions entirely. Waste management, parks and reserves, commercial uses, and recreationin that orderare the preferred uses in those areas. Residential and agricultural uses are not widely preferred for the sites, partly because most of the regions do need additional land for these purposes and partly because leftover contamination renders the land unfit, or at least unappealing, for these uses. Regardless of the future use, however, many communities would like to see lands shift back into private ownership and be put back on the local tax rolls following decommissioning.
Although some efforts are being made, more undoubtedly could be done to alleviate economic stresses in these communities and help them prepare for a lessened DOE presence. And even if DOE chose not to offer more financial support, it could help immeasurably by communicating in a forthright manner about future plans, working directly with local governments, and committing itself to future plans, whatever they may be. Our survey showed that only rarely are local leaders invited to contribute to site future use decisions, though most want to be involved.
Most of the secondary and tertiary impacts of job reductions are hitting hardest in the rural regions least equipped to respond to them. Similar impacts occurred with the restructuring of the defense industry and military downsizing worldwide, where the more remote regions faced a tougher transition than regions close to more urbanized areas.
Each DOE site region will respond differently to site downsizing, and each will face a unique set of issues in managing the community transition. For instance, some rural regions that have relatively shallow and leaky economiesthat is, their investment dollars tend to end up outside the regionare less able to produce jobs from investment dollars, so a greater effort and a different type of assistance will be required there than in the more urbanized areas.
Economic assistance programs cannot be monolithic. After 50 years of doing business behind closed doors rather than actively listening to community officials, DOE cannot rely on a one-size-fits-all approach. Such an approach may be suitable for managing technical operations but will not work for site-specific economic development activities that require community involvement. Citizens and local officials at different sites have very different messages to convey, which poses a great challenge to DOE since it has little organizational experience in listening to stakeholders.
DOE should feel obligated to mitigate impacts on communities that have supported its operations over the years. A private firm can shut its doors and leave a community to fend for itself, but most people would agree that as a federal department, DOE should take some action to cushion negative effects of its decisions. There is precedent for this in other regions dominated by federal dollars; military bases and national forests are good examples.
Certainly, DOE is not the only contributor to the economic plights of these regions, and DOE cannot and should not correct every area of deficiency. Nevertheless, political pressures will continue for increased assistance to these regions, even if DOE could ignore its moral obligation. At a minimum, DOEs acknowledgment of its fiscal impacts, forthright communication with the affected local and county governments about future plans, and a sincere effort to honor those plans would be a necessary and welcome step toward helping these communities manage their own destinies in the post-Cold War world.n
Karen Lowrie, Michael Greenberg, Michael Frisch are post-doctoral associate, professor, and doctoral candidate, respectively, at Bloustein School of Planning and Public Policy, Rutgers University, in New Brunswick, New Jersey.25
1. US Department of Labor, "Responses to Defense Cutbacks: Demonstration Evaluation Findings," Research and Evaluation Report Series 97-A (Berkeley Planning Associates: Oakland, CA, 1997); S. Groves and M. Valente, Evaluating Financial Condition: A Handbook for Local Government (Washington, DC: ICMA, 1994).
2. National Research Council, Social and Economic Aspects of Radioactive Waste Disposal (Washington, DC: National Academy Press, 1984); Milton Russell, "Toward a Productive Divorce: Separating DOE Cleanups from Transition Assistance" (Knoxville, TN: Joint Institute for Energy and Environment, 1997).
3. T. Allison, F. Calzonetti, and S. Hunter, "Analysis of the Formation, Expression and Economic Impacts of Risk Perceptions Associated with Nuclear Facilities" (Argonne, IL: Argonne National Lab, 1993).
4. Zenia Kotval and J.R. Mullin, "The Closing of the Yankee Rowe Nuclear Power Plant: The Impact on a New England Community," Journal of the American Planning Association 63 (Autumn 1997), pp. 454-468.
5. Although the Nevada Test Site is the largest DOE site in land area, we do not include it in our study because its budget is relatively small, and employment that peaked over 8,000 has dropped off gradually since the mid-1980s. The same employment trend occurred at a very small site in Kansas City that employed about 7,000 at its peak. We exclude Lawrence Livermore because it has suffered only a moderate decline since 1991, and employment was relatively constant at about 8,000 before that time.
6. Michael Greenberg et al., "Local growth near nuclear power stations in the United States," Town and Planning Review 57 (1986), pp. 225-238.
7. William J. Weida, "Substituting Employment in Cleaning up the Environment of Defense Facilities for Jobs Lost through Disarmament," in Jurgen Brauer and M. Chatterji, eds. Economic Issues of Disarmament (New York: New York University Press, 1993), pp. 179-192.
8. Ibid., p. 183.
9. Russell, "Toward a Productive Divorce."
10. Ann Markusen, "Sticky Places in Slippery Space: A Typology of Industrial Districts," Economic Geography 72 (1996), pp. 293-313.
11. T. Allison, F. Calzonetti, and S. Hunter, "The Formation and Economic Impact of Perceptions of Risk Surrounding Nuclear Facilities" (Argonne, IL: Argonne National Lab, 1993).
12. William Weida, "The Economic Implications of Nuclear Weapons and Nuclear Deterrence," in Stephen Schwartz, Atomic Audit: The Costs and Consequences of U.S. Nuclear Weapons Since 1940 (Washington, DC: Brookings Institution Press, 1998), pp. 519-543.
13. Jurgen Brauer, "Do Militaary Expenditures Create Net Employment? The Case of U.S. Military-nuclear Production Sites," in Jurgen Brauer and William Gissy, eds., Economics of Conflict and Peace (Brookfield, VT: Ashgate, 1997), pp. 201-226.
14. William C. Metz, "Historical Application of a Social Amplification of Risk Model: Economic Impacts of Risk Events at Nuclear Weapons Facilities," Risk Analysis 16 (1996), pp. 185-193; Allison et al. "The Formation" (1993); P. Slovic et al., "Perceived Risk, Stigma, and Potential Economic Impacts of a High-level Nuclear Waste Repository in Nevada," Risk Analysis 11 (4) (1991), pp. 683-695.
15. T. Allison and F. Calzonetti, "How Significant is Perceived Environmental Risk to Business Location Decisions?" (Argonne, IL: Argonne National Lab, 1996).
16. E.L. Gertcher and W.J. Weida, Beyond Deterrence: The Political Economy of Nuclear Weapons (Boulder, CO: Westview Press, 1990).
17. Ann Markusen, "Structural Barriers to Converting the US Economy," in Jurgen Brauer and M. Chatterji, eds. Economic Issues of Disarmament (New York: New York University Press, 1993), pp. 111-136; Weida, "The Economic Implications of Nuclear Weapons and Nuclear Deterrence."
18. Bonn International Center for Conversion, Conversion Survey 1996: Global Disarmament, Demilitarization and Demobilization (New York: Oxford University Press, 1996), p. 137.
19. Lloyd J. Dumas, "Finding the Future: The Role of Economic Conversion in Shaping the Twenty-first Century," in Lloyd Dumas, ed., The Socioeconomics of Conversion from War to Peace (Armonk, NY: M.E. Sharpe, 1995), pp. 3-22.; Ann Markusen and Joel Yudken, Dismantling the Cold War Economy (New York: Basic Books, 1992).
21. Karin Schill, "Fed Money Creates Few Jobs," Augusta Chronicle (April 13, 1997), p. C1.
22. US Department of Energy, Office of Worker and Community Transition, "FY 1999 Congressional Budget Request" (1998).
23. Russell, "Toward a Productive Divorce."
24. Michael Greenberg et al., "Bombs and Butterflies: A Case Study of the Challenge of Post Cold War Environmental Planning and Management for United States Nuclear Weapons Sites," Journal of Environmental Planning and Management 40 (1997), pp. 739-750.
25. The authors would like to thank Veena Singh for her assistance in data collection. They also want to thank Bernard Goldstein, Charles Powers, Jack Moore, Arthur Upton, and other colleagues for encouraging this work. The Consortium for Risk Evaluation and Stakeholder Participation funded the research through a cooperative agreement with DOE. The viewpoints expressed are solely the responsibility of the authors and do not necessarily reflect the views of DOE, its contractors, or any other members of the consortium.