Economy

The following narrative attempts to provide perspective to changes in the economy of the region over the last 40 years, but the story of the regional economy runs much deeper than day jobs and paychecks.

The Copper River watershed is vast and sparsely populated. At over 27,275 sq. mi. there are about 5.4 sq. mi. for each of the 5,037 residents. From 1990 to 2003 there has been an out-migration of population. Poor fishing seasons, reduced state spending, and the lure of urban lifestyles and job opportunities are among the reasons.

Close to half of the population lives in Cordova/Eyak (pop. 2,372), on the westernmost edge of the Copper River Delta area. 50% of Cordova/Eyak jobs are directly related to commercial fishing, and an additional 25% are indirectly dependent on the industry. Nearly half of all households have someone working in commercial harvesting or processing. Alaska State Troopers, Department of Fish and Game, U.S. Forest Service, Federal Aviation Administration, and the Prince William Sound Science Center, a small hospital and local and tribal government offices are located in Cordova/Eyak.

In the upper Copper River Basin there are 3 communities with populations over 350, and 10 smaller communities ranging in size from 44 to 192. Glennallen (pop. 574) is the business hub of the Copper River Basin region. Local businesses primarily serve travelers along the Glenn Highway, providing gasoline, supplies and services. Schools, Tribal Government and medical care provide other full-time employment for local residents. Offices for the Bureau of Land Management, Alaska State Troopers, the Department of Fish and Game and state highway maintenance are located in Glennallen.

The Chugach Mountains are the natural divide between the upper and lower watershed. The lower watershed, the Copper River Delta, is coastal plane, river deltas, and glacial ice fields and is bordered by the Gulf of Alaska. The land area is over 5,000 square miles, including the near shore estuarine areas. There are no roads connecting the lower watershed to the “outside”, and access to the Copper River Delta is either by ferry or airplane. The upper watershed, the Copper River Basin, is over 22,000 square miles. It is the site of a large Pleistocene era lake, a flat and gently rolling plain, crossed by hundreds of streams and rivers, completely surrounded by high mountains, volcanoes, and more glaciers. Over six hundred miles of roads provide access to areas within the upper watershed, and connect the area to Anchorage, Valdez, Fairbanks, and the Alcan Highway.

Copper River salmon have been the foundation for the regional economy since time immemorial. Salmon were the measure of wealth and the key to survival for the indigenous people of the region. Athabascan people settled here before recorded time, and left their mark on the language of both the Eyak and the Ahtna. The first settlers of the region share the same ancestry, but the languages of the Eyak of the Copper River Delta, and the Ahtna of the Copper River Basin developed independently, separated from their mother language by some 1,500 years. Although separated by mountains and glaciers, the Ahtna and Eyak have always shared the salmon of the river system.

Subsistence is a major factor in the economy of both the upper and lower reaches of the river. Jobs are few, most are seasonal, and wild game, fish, birds, berries, eggs, herbs and plants are all important to the subsistence lifestyle. Each year on the lower river Cordova residents harvest about 175 pounds of subsistence food per person. In the upper basin, residents in Chitina harvest about 340 lbs., and residents in Chistochina about 260 lbs. Almost all families participate in subsistence foods harvest, and Copper River salmon are the most important component in the subsistence economy.

Over the last one hundred years, commercial fishermen at the mouth of the river, and personal use and sport fishermen in the upper watershed area have come to share in the harvest of the salmon. About 1.4 million salmon are harvested at the mouth of the Copper River by the commercial fishing fleet contributing about $20 million each year to the regional economy. Upriver fishermen harvest on the order of 200,000 salmon. Various economic formulas have placed sport-fishing value over $5 million, and subsistence and personal use value in excess of $1.5 million. There is no known formula that can place dollar values on the cultural importance of subsistence harvests.

Over the past thirty years, population growth, demographic shifts and better access have resulted in increased harvests of traditional subsistence foods by growing urban populations. Developing businesses in tourism and guiding often provide services to customers who target fish and game resources already fully utilized. Reallocation of resources to create new job opportunities is a contentions and difficult management issue.

The Alaska Boards of Fish and of Game were traditionally charged with making the allocation decisions that provide access and bag limits for the resources. Because federal law provides for a rural priority for subsistence resources, and State law provides access regardless of residency, federal lands and state lands are now managed separately. Growth in upriver harvest pressure will continue, and reallocation of salmon from the delta commercial fishery to upriver harvest can be expected.

Over the 110-year history of commercial salmon harvest, railroads, mining, road construction, and the Trans-Alaska pipeline have played significant parts in the regional economy, but before and after each new economic boom cycle there has been the salmon.

The challenge to both the upper and lower Copper River Watershed in terms of generating additional jobs and economic opportunity will be in balancing development of the available resources with preserving the capacity of the river system to maintain salmon populations. For the mining, timber and real estate development sectors, Alaska has shown a trend in tolerance for development practices that have long and short-term negative impacts on salmon populations. It will take collaboration between agencies, tribes, communities and individuals to maintain healthy wild salmon habitat.

There is no simple answer to robust economic opportunity and robust salmon populations. Understanding the region, the people, the economy and the fish may help guide our decisions.

ON THE HORIZON: Oil exploration has not been successful in either the basin or on the delta, and oil development is not expected to play a role in a developing economy.

The upper basin is poised to take advantage of the construction of a proposed Alaska Natural Gas Pipeline. If the route follows the oil pipeline, the upper basin will again reap the benefits of construction and support jobs. Natural gas could also drastically reduce energy costs in the basin. No start date for construction has been announced, and there are proposed routes that would bypass the region and pipe the gas through Canada for the US mid-west markets.

Large tracts of land in the upper Copper River basin are scheduled for transfer from the federal government to the State of Alaska, and to the Ahtna Corporation. As more lands become privately owned, poorly managed development in critical habitat areas will accelerate. The region is likely to follow in the path of northern California, Washington and Oregon, where continued loss of habitat for the renewable salmon resources will be tolerated in exchange for short cycle jobs in non-renewable resource development sectors. We are challenged with developing and enforcing public and private land use regulations that maintain salmon habitat while encouraging compatible land use and economic development.

In the Copper River Delta area, the new Alaska Marine Highway System fast ferry Chenega will begin operating in Prince William Sound in spring 2005. The ferry service will reduce travel time by more than 50%, to less than three hours between Cordova/Eyak and Valdez or Whittier. The challenge for the lower Copper River region is to capture economic opportunities afforded by improved access while maintaining control over quality of life.

THE REGIONS: Although they are connected by and share the salmon resources, the upper and lower regions of the watershed are two very distinct areas driven by very different economies.

The Upper Copper River Watershed

Known as the Copper River Basin, and the Copper River Valley, the region is rural. Access to the cash economy is severely limited in the traditional native communities and within the more isolated settlements. The economy is dominated by service sector jobs, federal and state government, and traditional subsistence lifestyles, where locally harvested fish and game, summer gardens and wild plant and berry gathering supplement limited “cash economy” opportunities. The largest community, Glennallen, (pop. 574) is the service center, and sits near the crossroads of the Glenn and Richardson highways which serves the ports of Valdez and Anchorage, and connects Fairbanks and the “outside” via the Alcan Highway. The road system was developed in the early 1940′s, but the area remained only sparsely populated for the 25 years following road construction. The economy was based more on subsistence lifestyles – trapping, small mines, and guiding services – than on the limited opportunities in road maintenance and state and federal service jobs. The Native communities remained almost wholly subsistence based in lifestyle and opportunity.

The discovery of oil in Prudhoe Bay in 1968 completely changed the economy of the state of Alaska and the Copper River basin. The discovery prompted federal legislation to settle native land claims to clear the way for construction of the Trans Alaska Pipeline. In 1971, the Alaska Native Claims Settlement Act (ANCSA) extinguished all claims of other title to lands by Alaskan natives in exchange for fee simple title to 40 million acres (1/9th of Alaskas land) and $962.5 million in compensation. Instead of reservations, ANCSA created 13 regional corporations to own the land and administer the cash settlement. The regional native corporation created in central Alaska, Ahtna Incorporated, has entitlement to 1,770,000 acres, and much of the land is within the Copper River basin. Headquartered in Glennallen, Ahtna, Inc., has six operating subsidiaries and two joint ventures. Subsidiaries are involved in construction, pipeline maintenance, facilities maintenance, administrative and janitorial services, electrical contracting, fiber-optic telecommunication, and forestry and gravel sales. Except for gravel sales and forestry, most of the jobs created by the corporation are located outside the watershed. Ahtna, Inc. owns 609,472 acres in fee simple title within the boundaries of the Wrangell-St. Elias National Park and Preserve.

Land claim settlement opened the right of way for construction of the Trans Alaska Pipeline, and 20% of the pipeline transected the Copper River basin. Construction of the pipeline took over $8 billion, planning, surveying and construction would take over six years, and during the peak of effort, over 20,000 people were employed. Close to 5,000 people were housed in six camps within the Copper River basin during construction, and the money was unlike any employment opportunity in the history of the region. The largest Camp at Isabel Pass had over 1,600 beds. Many workers settled in the Copper River Basin, new communities were developed, but employment opportunity was severely limited after completion of the pipeline in 1977.

After the boom years of the pipeline, the Upper Basin settled into a “seasonal employment” economy. Road repair and maintenance, small retail stores, local community organizations and schools, facilities construction, seasonally driven resource management jobs and tourism services are significant contributors. A growing segment of the regional economy is generated by tribal government employment. There are 7 federally recognized tribal governments in the upper basin: Chistochina, Chitina, Kluti-Kaah, Gakona, Gulkana, Mentasta Lake and Tazlina. Over the last two decades tribal governments have continued to develop local capacity to deliver services once provided by state and federal agencies. Education, health care, community safe water, and research project support provide jobs in local villages. Tribal governance will continue to play an important role in the evolution of the economy in the coming years.

With opportunities for year round employment limited, many work away from home in seasonal construction. Federal projects play a big role in the region, with missile defense system construction projects north of the watershed currently providing some opportunity. These types of projects are all short-lived, lasting only months, or at best a few years, and they require extended stays away from home. They are, however, a critical component to regional income.

The economy in most of the Copper River basin is less than robust, with poverty rates as high as 40% in some communities, and unemployment over 25% in eight of the 13 communities. Options for increasing cash economy opportunities within the upper watershed are limited. The local cost of living based on the University of Alaska index for 2004 is about 135% of Anchorage.

Lodges, tourist services, and guiding services are growing in number, but the increase in pressure on salmon and wild game resources that follow these developments is of concern. Traditional communities that rely on subsistence harvest food have seen major increases in pressure on local fish and wildlife resources. New competition from urban users, and subsequent loss of harvest opportunity may have significant impact on families with limited opportunity to participate in the cash economy.

In the upper Copper River basin, resource development in forestry and mining are the two most likely areas of increased economic activity. If constructed, the Alaska Natural Gas Pipeline has the potential of both short term employment, and long term impact on energy costs.

The Lower Copper River Watershed and Delta

Cordova/Eyak is the single population center for the lower Copper River. Cordova was the name given to the town when it was incorporated in 1909, but the traditional name was Eyak, the name of the tribal people who had lived on the river delta for thousands of years. The Copper River delta area has been a cultural crossroads for hundreds of years, and today tribal members represent many native cultures, including Eyak, Tlingit, Alutiiq, Aleut and Ahtna.

Fisheries related jobs dominate the local economy, with over 800 vessels fishing for salmon, cod, halibut, shrimp, herring and other seafood. More than 1000 fishermen from Cordova harvest the bounty of Prince William Sound, the Copper River Delta, and the Gulf of Alaska. Nearly half of all households have someone working in commercial harvesting or processing. 50% of Cordova’s jobs are directly related to commercial fishing, and an additional 25% are indirectly dependent on the industry. All five species of salmon are harvested, along with herring, halibut, crab, shrimp, bottom fish and other species. Four major processing facilities serve the fishing fleet, and several smaller marketing and value added businesses contribute to the fisheries economy. Measured in 2002 dollars, the revenue generated by fisheries has averaged about $30 million per year over the last 30 years, but there have been periods when over $100 million was generated.

In 1965, the year after the great Alaska earthquake changed much of the area around the delta, Cordova was a small and isolated coastal fishing community. Fishing was a lifestyle and income modest. Within I0 years, to prevent the uncontrolled expansion of fishing effort, the state limited the number of licenses to fish commercially. The price of fish was slowly going up, and these new “limited entry fishing permits” became a freely traded commodity whose value related to the value of the fishery for which they were issued. As fishermen bought and sold the permits, their cash value was established. As an example, if you qualified for permits for salmon and herring gillnetting, seining, and herring pounding in the 1970′s, by 1988 (the peak in fisheries value), your permits were worth about $400,000, and your equipment about $350,000 more. By 1998 permit value would be $170K, and by 2004, less than $ 70K. Expensive and rarely used equipment would require constant maintenance, and high storage costs would eventually mean equipment was scrapped and dumped. Low salmon prices, and herring fisheries failures resulted in catastrophic losses to the fishing fleet.

In 1974, fishermen created a private hatchery system to produce more pink salmon for Prince William Sound. The system of hatcheries had returns of pink salmon of 2.2 million pink salmon in 1975; by 1988, the numbers were 20 million pink salmon. Every pink salmon was worth $1, and every chum over $5. The peak in salmon values made commercial fishermen comfortable and the Cordova economy strong, but farmed salmon would change the seafood business forever. By 2004, pink salmon were worth about $0.30 each, and the hatcheries were forced to harvest 85% of the 10.8 million fish return in an attempt to meet operating costs. Less than half of the eligible pink salmon permits fished. In addition to the loss of value in the pink salmon fishery, the once valuable herring fisheries have been closed since their decline and final collapse following the Exxon Valdez Oil Spill.

Although farmed fish drastically drove down the value of most wild salmon, Copper River Red and King salmon have maintained value. The Copper River fisheries have become the cornerstone of the local fisheries economy. Pink salmon, halibut and cod, and some oyster mariculture, help keep processing facilities busy during the main season between May and the end of August.

Tourism and outdoor recreation are playing a greater role in the local economy, and winter opportunities, including a helicopter skiing operation, are developing. Annual earnings in Leisure and Hospitality ($15,937) are lower than the Alaska statewide annual income ($37,101). Many of the jobs in the Leisure and Hospitality sector have lower hourly wages and are part-time and seasonal which results in incomes below the statewide average.

The top employer remains the seafood processing industry, followed by local, state, federal and tribal government. The US Coast Guard, the Forest Service and the Prince William Sound Science Center are important segments of the economy. Because of the diversity of fisheries and a diversity of employment opportunity in service sectors and government, the Cordova economy is less volatile than twenty years ago, but could be considered less than robust. The yearly unemployment average for the area is 8.4%. The local cost of living based on the University of Alaska index for 2004 is 153% of Anchorage.

© 2011 Copper River Knowledge System