NORTH DAKOTA LIGNITE ENERGY INDUSTRY'S CONTRIBUTION TO THE STATE ECONOMY

Abstract

The lignite energy industry of North Dakota has become a significant force in the state's economy since the energy crisis of the 1970s. Key economic measures of the industry's contribution to the state's economy have been estimated annually since 1982. Industry expenditures peaked in 1995 at $543.8 million, excluding the early 1980s when significant plant expansion was occurring. Annual expenditures have been over $400 million since the early 1990s and were $464.9 million in 1998, the most recent year of the analysis. Lignite energy related expenditures were applied to the input- output multipliers to estimate levels of business activity. Personal income resulting from the industry was estimated at $490.5 million in 1998, with retail sales at $320.6 million for the same period. Total business activity resulting from the lignite industry amounted to over $1.4 billion in 1998. The industry has generated over $1 billion in total business activity annually from 1982-1998, except for 1987. Tax revenues resulting from the industry's activities totaled $63.4 million in 1998, and were over $50 million in all but two years from 1982-1998. The largest tax revenue source was the coal severance tax which grew from $17.5 million in 1982 to $27.7 million in 1992, and was $23.6 million in 1998. Industry-wide direct employment has declined from 6,458 to 3,078 workers between 1982 and 1998. Secondary (indirect and induced) employment has also declined during the study period, declining from 31,981 to 17,175 full time equivalent jobs. The lignite energy industry has contributed significantly to the North Dakota economy as its expenditures have resulted in higher levels of personal income, retail sales, business activity, tax revenues, and employment within the state.