Natural Resource Economies

Thoughts on a Free Market Economy…
“Natural Resource Economies”
By Phyllis Hunsinger
June 1, 2017

As I attended the celebration this past week-end of the 100th graduating class from Nucla High School, I was once again reminded of the cycle of “boom and bust” in natural resource economies. Nucla High School and its supporting communities on the western slope of Colorado have experienced this cycle many times in the past 100 years.

Natural resource economies rarely experience the depletion of the natural resource. More often the natural resource is regulated out of existence; the competition from foreign sources makes retrieving the resources uneconomical; or the demand is no longer sufficient.

The “boom and bust” cycle is a defining characteristic of the resource extraction economy. This cycle in the context of coal, oil, or uranium often locks communities into economic dependency. Busts are especially detrimental to small mining towns.

A drop in demand or profit can mean huge losses for individuals, families, and communities, causing direct and long-lasting effects on the local and regional economy. When busts occur, people and money drain out of mining towns. Because some people come to the area to find work only to leave when the mine is closed, it is difficult for small towns to maintain funding for public operations such as education and other services needed in the community.

The need to diversify the economy of these declining mining towns seems obvious, but what is not so obvious is how to make this happen. Very often the location of the mining town is geographically undesirable for transportation of goods and services. In today’s age of technology, when some businesses can operate outside the larger commerce areas, the lack of a trained workforce and the sheer distance to a more developed municipality creates special challenges. The quality of life in a small, mining town is often excellent; however, there must be an economic driver for the community to be successful.

The challenges are very real to the communities that are depending on natural resources as the basis of their economy., Phyllis Hunsinger © 2013 All Rights Reserved

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1 Comment on "Natural Resource Economies"

  • Ronald Harrison says

    I see this in many communities in which I work. The employment VS lifestyle tradeoffs can impact families for generations.

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