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9 Effects on the Human Environment There is no turning back. We were introduced to the cash economy and now we can't do without it. How do we bal- ance these? I don't know. We are learning it as we go. I don't know where is the middle place and I don't know what the future holds. Bernice Keigelak The land can tell us everything we want to know. The only problem is that it doesn't have a voice. But the spirit of the land is always there talking to us. We must listen. Arctic Elder Some effects on the human environment of oil and gas activities are analogous to effects on physical and biotic en- vironments in that they are related in space and time to physi- cal changes in the environment. But others differ in major ways because an effect on humans can occur without a physi- cal change in the environment. Information the announce- ment of a leasing decision, or knowledge about an event that occurred far away, for example can profoundly affect people individually and collectively. These effects can occur before any local biotic or physical changes. Similarly, ef- fects on people can occur by changing people's perception of risk or reward, and hence their behavior. Also, people can adapt faster and to a greater degree than many other organ- isms. As result of those differences, social and economic assessments on Alaska's North Slope must include an analy- sis of prior and distant effects. There is no analogy between the analysis of those effects and the analysis of any physical or biotic effect. In addition, the harvesting of the wildlife resources that live or migrate through the region is of major cultural, nutri- tional, and economic value to North Slope residents. A1- though peoples in other rural areas traditionally hunt and fish for local wildlife, those activities are generally a supple- ment to other forms of subsistence activities such as garden- ing and timber harvest (Field and Burch 1991~. There is no agriculture or forestry on the North Slope, so the Native cul- 132 tural heritage there is based to a much greater degree on subsistence hunting and fishing than are subsistence cultures elsewhere. Energy-resource development on Alaska's North Slope differs from the boomtown experience in the continental United States (Kruse et al.1983~. The isolation of rural com- munities on the North Slope, particularly because of their lack of connection to a highway network, meant they did not become staging areas for development. Instead, virtually in- dependent infrastructures developed, centered on the termi- nus of the haul road that was built to support the Trans- Alaska Pipeline. The people hired to support the industrial development of the North Slope were not local or perma- nent, and in that way they are similar to the populations that support offshore petroleum development elsewhere (Gramling 1989, 1996~. Because of these differences, the two research traditions that have guided much social and economic impact assess- ment are not entirely applicable to the North Slope experi- ence. The first research approach flows from the National Environmental Policy Act (NEPA) of 1969, which requires that federal or federally funded agencies assess and mitigate the environmental effects of their actions. The NEPA led to the birth of a variety of assessment techniques, summarized by Burdge (1994) and condensed into guidelines by the Interorganizational Committee on Guide- lines and Principles for Social Impact Assessment (1994~. The focus is to predict and evaluate social and economic effects before activities occur. It is necessary to describe baseline conditions (how the basic social and economic environment functions beforehand), identify the full range of probable so- cial effects based on discussions with the affected parties, and project responses to the most likely effects. The approach iden- tifies alternatives to the action proposed, and it establishes procedures for monitoring and mitigation. The second tradition, which assesses the effects of de- velopment activities after it happens, has a long history, par-

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EFFECTS ON THE HUMAN ENVIRONMENT ticularly in rural sociology (Field and Birch 1988; see Landis 1938~. The focus sharpened in the early 1970s with research on the effects of the construction of coal-fired power plants in the rural western United States. The driving force of this "boomtown" model is population growth, which leads to a host of associated, frequently undesirable, societal effects. They include overcrowding; degradation of various munic- ipal services, with a subsequent loss of informal control of deviance and community support of its disadvantaged members (Freudenburg 1986~; and increases in substance abuse, divorce, homicide, and suicide (Albrecht 1978, Bates 1978, Cortese and Jones 1977, Gilmore 1976, Gramling and Brab ant 1986~. To allow assessment of social and economic conse- quences related to oil and gas development on the North Slope, the committee used the typology developed by Gramling and Freudenburg (1992a, Freudenburg and Gramling 1992) in its analyses. In this typology, effects are separated into opportunity and threat effects, which can oc- cur before any physical or biotic change; developmental ef- fects, which occur during and soon after development activi- ties occur; and adaptation and post-developmental effects, which generally occur after development is complete. Be- cause developmental effects those attributable to oil and gas exploration, development, and production have been far greater on the North Slope than opportunity and threat or adaptation and post-developmental effects, they are dis- cussed in the most detail. OPPORTUNITY AND THREAT In the human environment, real, measurable effects- opportunity and threat effects begin with changes in social conditions and so can start with a rumor or announcement about a proposed activity (Krannich and Albrecht 1995~. They result from the efforts of interested parties to define, and to respond to, the anticipated effects of development, either as an opportunity (for those who see the effects as positive) or as a threat (for those who see them as negative). Many effects on the human environment of the North Slope 133 nificant quantities of oil and natural gas at Prudhoe Bay. In July, ARCO estimated the find as 9.6 billion barrels (Berry 1975~. The announcement of the discovery, the largest in the western hemisphere, was a catalyst for changes that affected the human environment of the North Slope and that increas- ingly moved North Slope residents into the mainstream economy. With the discovery, North Slope lands and waters that were the traditional Inupiaq hunting and fishing grounds suddenly had new meaning and value to the industrialized world to the south. Although the concept of a pipeline to move oil from the North Slope to Valdez dates back to at least 1946 (Thomas 1946), the 1968 discoveries led engineers from British Petro- leum, Humble, and ARCO to undertake more extensive stud- ies. In 1969, those companies announced plans for a 1300 km (800 mi) long pipeline, at an estimated cost of $900 million. New companies joined the venture: Mobil, Phillips, Union of California, Amerada-Hess, and Home Oil. On June 6, 1969, they applied to the U.S. Department of the Interior for permis- sion to build the pipeline across public land in Alaska. In addition to opposition by environmental and com- mercial fishery groups there were two key legal impediments to the pipeline: long-standing Native claims to the land across which the pipeline would traverse and the then-new NEPA. The importance of the land rights issue encouraged the multinational oil companies to support settlement of Native claims. Once that support was forthcoming Congress acted fairly quickly to pass the Alaska Native Claims Settle- ment Act (ANCSA) in 1971, which can be seen as the first major social and economic effect of petroleum activities on the North Slope. The ANCSA fundamentally changed the relationship between North Slope Alaska Natives and the environment they had occupied for thousands of years. The effects of that change accumulate to the present. Congress chose a corporate model to address the issue of common "ownership" of Native lands. The ANCSA cre- ated 13 regional corporations, 12 in Alaska and 1 to repre- sent Alaska Natives living outside the state. Alaska Natives who enrolled were made shareholders. Approximately 200 village corporations also were created. Alaska Natives who began with the announcement in 1968 of the discovery of enrolled in their village corporations received shares of that oil reserves in Prudhoe Bay, and they were accomplished corporation. In general, Alaska Natives were allowed to en- facts or well on the way to becoming so even before Con- roll either in the region and village where they grew up and gross approved construction of the Trans-Alaska Pipeline in which they considered home, or in the region where they 1973. Two types of information have resulted in the accumu- lation of opportunity and threat effects for the residents of the North Slope Borough: information concerning the ini- tial find and information concerning various development scenarios. Discovery In January 1968, Atlantic-Richfield (ARCO) and Hum- ble (now Exxon/Mobil) announced that they had found sig- _ were living at the time the act was passed. The act also provided for the distribution of $962 mil- lion in compensation to the regional and village corpora- tions, essentially on a per capita basis. Of the funds, $462 million came from the federal government and $500 million came from state royalties on petroleum over a period of 11 years. Thus, approximately half of the original funds to es- tablish the regional and village corporations did not come directly from North Slope petroleum activities. One ANCSA provision requires that regional corpora- tions share 70% of their resource revenues (those derived

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134 from timber or subsurface mineral rights acquired as a result of the ANCSA) with the other regional corporations. How- ever, the Arctic Slope Regional Corporation (ASRC) would not be required to share resource revenues from its subsur- face inholdings in the Arctic National Wildlife Refuge, be- cause those lands were obtained in a land exchange (GAO 1989~. This provision was designed to ensure that resource- rich corporations shared with those that were resource-poor simply by accident of location. This provision has had major and continuing effects. Finally, under the ANCSA, 18 million ha (44 million acres) of land was conveyed to the regional and village cor- porations. Of that, 9 million ha (22 million acres) of surface estate went to village corporations, using a population-based formula. This land was generally located around villages and consisted of prime subsistence areas. The subsurface rights to this land, some 6.5 million ha (16 million acres), went to the regional corporations. However, under ANCSA, regional corporation selections for subsurface lands could not be made within existing national wildlife refuges. About 810,000 ha (2 million acres) was conveyed for specific uses, such as cemeteries, historical sites, and villages with fewer than 25 people, and another 1.6 million ha (4 million acres) went to reserves where the villages took land instead of land and money. The ANCSA also specified that if the secretary of the interior wanted to set aside a pipeline transportation and utility corridor, neither the State of Alaska nor Alaska Native groups could select lands within it. The ANCSA has been both praised and criticized, but its role in bringing per- manent and still accumulating change to the lives of Alaska Natives on the North Slope and elsewhere cannot be denied. The second major legal impediment to the pipeline, the NEPA, led to a bitter fight in Congress, primarily over a proposed alternative route through Canada and alternate sources of energy for the nation. The fight over the Trans- Alaska Pipeline concerned loss of wilderness, marine oil spills atValdez, earthquakes, end otherissues (Coates 1991~. The battle was finally settled, not by discussion or the NEPA process, but by the October 1973 oil embargo staged by the Arab members of OPEC. Shortly after the embargo began, opposition to the pipeline in Congress declined: the Trans- Alaskan Pipeline Authorization Act was passed November 12, 1973, and was signed by President Nixon on November 16. The act barred further review on the basis of the NEPA, and it restricted further legal action only to questions con- cerning the act's constitutionality (Gramling and Freuden- burg 1992b). A thirdimpedimentin 1970 through 1973 was a technical review process that indicated the pipeline, as designed (to be buried), was vulnerable to failure by thawing permafrost and to destruction by plausible earthquakes. It mandated redesign according to specific technical stipulations (DOI 1972b). The redesign, in which about half the pipeline is elevated, was completed during those three years. The estimated project cost rose from the original $900 million to $8 billion. CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS The haul road was completed in September 1974, and pipeline construction took the next three years. (For a con- cise description of the pipeline and associated facilities, see Coates 1991.) Oil first reached the Valdez terminal on July 31, 1977. On the North Slope, the initial discovery started a chain of effects. The Arctic Slope Regional Corporation (ASRC) was created to serve as the North Slope's regional corpora- tion; it is one of the major players on the North Slope. The North Slope Borough (NSB) was incorporated July 2, 1972. The North Slope Borough almost would certainly not exist except for North Slope petroleum, but if it did exist it would certainly not be the dominant social, economic, and political force that it is today. The initial discovery at Prudhoe Bay, the subsequent enactment of the ANCSA, establishment of the ASRC and the village corporations, and the founding of the NSB have been the primary factors in the growth, concentration, and development of the communities and populations on the North Slope. Without petroleum development on the North Slope, those communities and populations, and the condi- tions under which they live, would be vastly different. The initial announcement of the discovery at Prudhoe Bay re- suited in the restructuring of the social, economic, and po- litical life on the North Slope in a way that allowed large amounts (by North Slope standards) of capital to flow into the region. That capital resulted in major changes in North Slope communities. Specific Development Scenarios Information about two specific development scenarios has led to significant opportunity and threat effects: offshore development and development in the 1002 Area of the Arc- tic National Wildlife Refuge. Offshore Development The 1983 observation of Kruse and colleagues, that Native Alaskans' "fears that offshore development will in- evitably harm subsistence resources are both intense and widespread and themselves constitute an impact of develop- ment," is still true. The committee was repeatedly told that this is the issue for the Inupiat. The concerns fall into three categories, all involving the bowhead whale. The first is that the Inupiat do not believe anyone has demonstrated the ability to clean up oil spilled in a frozen sea or in broken ice. In fact, many have voiced the belief that large marine spills cannot be cleaned up in any situation, citing as evidence the Exxon Valdez spill and the failure of any large marine spill to be contained and cleaned up (see also ADEC 2000~. The Exxon Valdez oil spill was a sensitizing event on the North Slope, as it was around the world, in reinforcing the perceived consequence of a large marine spill. Along the coast, the first concern is that a spill

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EFFECTS ON THE HUMAN ENVIRONMENT during the migration of the bowhead will injure or kill sig- nificant numbers of whales. The Inupiat believe this would be especially critical during the spring migration when both spilled oil and whales would be concentrated in leads (cracks in the ice cover). The second concern is that a spill would cause the Inter- national Whaling Commission to judge the bowhead to be under greater threat than is currently perceived, causing that group to curtail or reduce quotas for the striking of whales. The final concern is that the noise associated with offshore exploration and production would alter the migration routes of the bowhead. This concern is based both on observations by Inupiat hunters and on recent scientific data that bow- heads will avoid seismic activity, moving as much as 20-30 km (13-19 mi) away from their normal migration routes (Richardson 1997, 1998, 1999~. When whales move farther from shore, the hunters must follow in their small boats to unpredictable seas, and tow killed animals farther, as well. Hunters are exposed to greater danger, and the amount of the harvest is reduced because of spoilage. It would be difficult to overstate the importance of bow- head hunting to the Inupiat. The subsistence harvest dates back several thousand years, but outside influences have brought about social changes, and so whale hunting has be- come a rallying point for the maintenance of Inupiaq cultural continuity in at least four important ways. First, the organi- zation of whaling crews and the preparation for the hunt is a continuous activity that creates and reinforces social and cultural bonds. Second, the hunt itself is an intensive experi- ence that involves crews camping out on the ice, near a lead, for up to a month. Third, the preparation and preservation of a successfully taken whale involves the entire community. Luton (1986) estimated that 70% of the entire population of Wainwright was directly involved after the successful tak- ing of a bowhead. Finally, sharing the whale is an integral part of Inupiaq culture that reinforces cultural continuity and that goes beyond social action to the way Inupiat are inter- twined with the world. For the Inupiat, the only way humans can take an animal as powerful as a bowhead whale is if the whale gives itself to the hunters. Whales will do this only if they are treated with respect. Sharing the whale is one way of showing respect, as are activities such as cleaning the ice cellar, the final resting place of the whale. Whales are shared in three ways. First, whales are shared by whaling crews according to a community formula (Luton 1986~. Second, as with other subsistence commodities, once a crew member has received his share, various portions of the whale are shared with relatives, friends, and elderly members of the community and others who cannot participate directly in the hunt. Finally, a large part of the successful captain's share of the whale goes to the Nalukataq, a festival and important community gathering that includes a blanket toss, dancing, and the sharing of food. Each successful captain holds a Nalukataq (usually the last two weeks in June), and friends, relatives, and former 135 community members travel to the community to visit and catch up on what has happened over the past year. No other shared pursuit involves as many members of the community, for as much time, and as intensively as the activities that surround hunting the bowhead. In Barrow, hundreds of thou- sands of person-hours are spent in those activities (R. Harcharek, NSB, unpublished material, 2001~. The same is true in other North Slope whaling communities. Finally, the size of bowheads makes them an extremely important food source. It is doubtful that any of the North Slope communities could survive in their present form with- out the harvest. Of the 74% of NSB households that re- sponded to a 1998 survey, 68.7% of Inupiaq households and 36.4% of non-Inupiaq households reported that at least one- half of their annual food came from subsistence activities. Hunting the bowhead has been the Inupiaq cultural an- chor as change has come to the North Slope. The ongoing, accumulating effects posed by offshore development, in the form of perceived threats, would be diminished only by clear evidence that the technology exists to mitigate large oil spills in broken ice. There is no evidence to date that such cleanups are possible. Current mechanical means of collecting spilled oil are not likely to be successful in the Beaufort and Chukchi seas (ADEC 2000~. Alternative methods, such as in-situ burning and chemical dispersion, still must be developed for use in ice-filled waters, incor- porated into response plans and practiced, and approved by regulatory agencies. Engaging in subsistence activities is not simply a matter of choice. Isolation from major transportation routes and the area's inability to produce agricultural products mean that the prices of goods and the cost of transporting them to the North Slope are considerably higher than in the rest of Alaska or in the continental United States. In 1998, the cost of a "typical market basket" in Anchorage was $122.19; in Bar- row it was $218.03 (NSB 1999~; it is substantially higher in outlying North Slope villages. Costs for vehicles, construc- tion materials, fuel, appliances, and tools are similarly in- flated in the North Slope. This does not mean that Barrow residents spend 178% of what residents in Anchorage spend; indeed they cannot. Because North Slope residents do not have greater per capita incomes than some of their counter- parts in Alaska or in the United States in general, they must have a lower standard of living, rely to a greater extent on subsistence harvest, or both. Accordingly, examination of any potential effects on subsistence resources is critical to the assessment of the accumulation of effects of energy de- velopment on the human environment. Development in the 1002 Area The Gwich'in Indians are traditionally a nomadic people who follow the migration of the Porcupine Caribou Herd. For thousands of years, their ancestors have relied on cari- bou to meet their nutritional, cultural, and spiritual needs

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136 (Gwich'in Niintsyaa 1988~. The Gwich'in Nation consists of 15 villages in northeastern Alaska and northwestern Canada (Arctic Village, Christian, Venetie, Beaver, Birch Creek, Fort Yukon, Stevens Village, Circle, Eagle Village, Chalkyitsik, Old Crow, Fort McPherson, Arctic Red River, Aklavik, and Inuvik), all of which are outside the North Slope. However, the coastal plain of the North Slope, primar- ily the 1002 Area of the Arctic National Wildlife Refuge, is the traditional calving ground for the Porcupine Caribou Herd. The Gwich'in believe that oil- and gas-related activi- ties there would affect the reproductive potential and migra- tion patterns of the Porcupine Caribou Herd and as a result threaten their way of life. As with the Inupiaq concerns about offshore development, the beliefs are intense and widespread and themselves constitute a continuing effect that is exacer- bated by the past and current political debate over develop- ment in the Arctic National Wildlife Refuge. As an indication of the strength of their concerns, in 1988, in response to initial attempts to open the refuge, the Gwich'in Nation met in Arctic Village to draft a resolution petitioning Congress and the president to preserve the right of the Gwich'in people to their lifestyle by prohibiting de- velopment in the calving ground of the Porcupine Caribou Herd and to designate the 1002 Area of the Arctic National Wildlife Refuge as wilderness. The residents of Kaktovik, who live on Barter Island at the northern edge of the Arctic National Wildlife Refuge coastal plain, are generally in favor of environmentally sen- sitive development there, which could bring significant eco- nomic resources to them. EFFECTS OF DEVELOPMENT Most research on effects on the human environment has focused on development effects those associated with the actual development, construction, and operation of a project or with the onset of a particular activity or process. Development activities also can alter physical systems in ways that affect humans, and they can alter cultural, social, political, economic, and psychological systems. Develop- ment effects have been studied the most and are the best understood of all socioeconomic consequences. A variety of effects can be observed on the North Slope, including those attributable to noise and disturbance, availability of money, and alterations to the physical environment, with indirect effects on people. Noise, Bowheacl Whales, and Subsistence Hunting Petroleum activities on the North Slope have affected, and have the potential to affect, subsistence activities in sev- eral ways. Direct effects have been documented in three ar- eas. First, traditional hunting areas within active oil fields are now closed to hunting. Second, offshore activity alters bowhead migration routes. Third, as noted in Chapter 8, calv- CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS ing caribou tend to avoid intensive oil-field activity, shifting to less disturbed areas. As activities expand on the North Slope those effects could expand as well. In addition, Alaska Native residents told the committee that there are subtle changes in species harvested by subsistence hunters, who have identified changes in the color, texture, and taste of the flesh and skin of several species. Inupiaq hunters in the coastal villages first expressed their concerns about seismic noise affecting fall-migrating bowheads in the 1980s (Ahmaogak 1985, 1986, 1989~. The hunters' contention was that seismic disturbances were forc- ing the bowhead offshore, making access to the whales more difficult and time making the whales more wary and there- fore more difficult to hunt. However, early scientific studies concluded that the bowheads did not react strongly to an approaching seismic vessel until it was within 7.5 km (4 mi) (Ljungblad et al. 1985, 1988~. Native hunters strongly disagreed with this as- sessment, and eventually two apparent problems with its methods were identified. First, the whales were approached by the boat, rather than the whales approaching the boat. Thus, what was measured was how close a seismic vessel needed to approach to force whales to move out of an area they were already in, rather than to what extent migrating whales would alter their paths to avoid a seismic vessel. Sec- ond, in three of the four experimental situations in the study there was already another seismic boat "booming" in the dis- tance before the test boat began. This compromised the con- trols. Those problems led scientists to conduct more care- fully controlled studies in the late l990s. Data from three years showed that nearly all fall-migrating bowheads stayed 20 km (12 mi) away from an operating seismic vessel, a finding that supported Native observations (Richardson 1997, 1998, 1999~. In addition to avoiding active seismic vessels, whales change their rate of calling as they approach seismic sources. Data from seismic monitoring in 1996 and 1997 show that call rates changed at least 45 km (27 mi) from an active seismic vessel (Richardson 1998), probably indicating detection of seismic activity. (Details of the ef- fects of noise on whales and other marine mammals are in Chapter 8.) In recent years, the Alaska Eskimo Whaling Commis- sion (AEWC) and seismic-exploration operators have reached an agreement that reduces the effects of seismic noise. The "oil-whaler agreement" restricts seismic vessel operations to the west of the Nuiqsut and Kaktovik hunting areas until the subsistence hunt has been completed. The agreement must be renegotiated annually because the areas of seismic operation vary each year. The National Marine Fisheries Service (NMFS) established the program and con- tinues to require operators to cooperate with the AEWC. Although the agreement is helpful, substantial expense of time and resources is required for AEWC negotiations each year in full consultation with its members in the affected villages.

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EFFECTS ON THE HUMAN ENVIRONMENT A whale is brought ashore in Barrow, amid much interest and cel- ebration in the community. September 1992. Photograph by David Policansky. The whale is hauled up the beach. September 1992. Photograph by David Policansky. Exploring the whale. September 1992. Photograph by David Policansky. 137 The butchering of the whale is about to begin. September 1992. Photograph by David Policansky. Butchered whale ready for distribution to whaling crew members and others in the community. Kaktovik, September 2001. Photo- graph by David Policansky. Alterations to the Lancl Alterations to the North Slope physical environment have had aesthetic, cultural, and spiritual effects on human populations. They come primarily from construction of roads, pipelines, buildings, and powerlines, and from offroad travel. Structures and Roacis Before the completion of the haul road in September 1974, the only regular, mechanized access to the North Slope

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138 Subsistence fishing for arctic cisco, Nuiqsut, October 1985. Photo- graph by Lawrence Moulton. CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS was by air, or by water during the late summer and early fall. Increases in settlement, agriculture, and forestry generally accompany road building in temperate and tropical areas, but for the North Slope the most relevant effect is the in- creased hunting pressure that accompanies roads (Box 9-1~. Currently, roads of the industrial development stretching from Kuparuk to Endicott are closed to public traffic, but should any of them be opened to public use, effects would increase. The Alaska Department of Transportation is con- sidering a new all-season road to connect the National Petro- leum Reserve-Alaska with the Dalton Highway (Petroleum News Alaska 2002b). Access by Nuiqsut caribou hunters to oil-field com- plexes has been reduced because hunting is prohibited within some, but not all, such areas. Physical barriers to use of all- terrain vehicles and snowmachines are posed by pipelines, and many hunters are reluctant to enter the oil fields for per- sonal or aesthetic reasons. The committee heard repeatedly from North Slope Inupiat residents that the imposition of a huge industrial complex on the Arctic landscape was offen- sive to the people and an affront to the spirit of the land.

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EFFECTS ON THE HUMAN ENVIRONMENT The roads and gravel pads are not likely to be removed because exploration and development leases do not gener- ally require rehabilitation. Rather: "[A]t the option of the state, all improvements such as roads, pads, and wells must either be abandoned and the sites rehabilitated by the lessee to the satisfaction of the state, or be left intact and the lessee absolved of all further responsibility as to their maintenance, repair, and eventual abandonment and rehabilitation" (ADNR 2002, emphasis added). It was the State of Alaska, not the oil companies, that pushed for public access to the Dalton Highway. Thus, the extent of permissible access to the infrastructure associated with current and future petro- leum production on the North Slope ultimately rests with the state government. Off-Roacl Travel The primary effects of off-road tundra travel are im- prints on the land that persist for varying amounts of time. Off-road travel does physical damage to the land and vegeta- tion, and the tracks laid down by various types of vehicles are aesthetically unpleasing. The recognition that imprints of human activity make a qualitative difference in a land- scape can be seen in the wording of the Wilderness Act of 1964 (PL 88-577~: "[A] wilderness, in contrast with those areas where man and his own works dominate the landscape, is hereby recognized as an area where the earth and its com- munity of life are untrammeled by man. . .". As with most questions of aesthetics, different people perhaps even en- tire cultures are affected differently by seeing, or just knowing about, changes to the environment caused by human activity. That the landscape is altered, however, is undeniable. Seismic exploration leaves an imprint on the landscape, particularly the more recent 3-D (three-dimensional) meth- ods that require receptor lines to be much closer together than earlier methods. Of the activities associated with seis- mic surveys, the camp trains (pulled by D-7 Caterpillar bull- dozers) appear to leave the most visible scars. It is not known how long the tracks left by seismic activity will remain on the tundra; however, some of the tracks left in the 1984- 1985 seismic surveys in the Arctic National Wildlife Refuge are still visible. Human-Health Effects During the committee's four meetings in Alaska, resi- dents offered individual perspectives on many subjects, and we heard testimony about both positive and negative effects from oil and gas development. Alaska Natives recognize that oil production in the region has given them money to spend on community facilities, schools, modern water and sewer systems, village clinics, child emergency shelters, and be- havioral outpatient and residential programs that provide mental health care and counseling for substance abuse and 139 domestic violence. North Slope residents reported that money has increased the quality and quantity of health care for elders, especially for those who need assisted-living ser- vices. Each individual receives a permanent fund dividend every year that is funded by investment of state money. Bar- row residents already enjoy low-cost natural gas heating for their homes, and other communities are expected to receive it soon. Some residents believe that the access to the Internet increasingly will provide people with education without the cost of travel or absence from the village. North Slope residents also reported that traditional sub- sistence hunting areas have been reduced, the behavior and migratory patterns of key subsistence species have changed, and that there is increased incidence of cancer and diabetes and disruption of traditional social systems. They also see vastly increased time, effort, and funding necessary to re- spond politically and administratively to the ever-multiply- ing number of projects proposed in their own back yards. Alaska Natives told the committee that anxiety over in- creasing offshore and onshore oil and gas activity is wide- spread in North Slope communities. Hunters worry about not being able to provide for their families or about the added risk and expense of doing so if game is more difficult to find. Elders who can no longer provide for themselves worry about the challenges facing younger hunters who will go to great lengths to provide them with essential and traditional foods. Families worry about the safety of hunters who must travel farther and more often if game is not easily accessible. Many adult residents already lead dual lives as wage earners and subsistence providers for their families. They also are faced with the need to attend industry-related meetings and hearings, and review documents, because they believe that decisions will be made that can significantly affect their daily lives and those of generations to come. They worry about contamination of the food they consume and know that their health will suffer if they are unable to eat as their ances- tors did. In addition to stress contributing to adverse health ef- fects, oil development has increased the smog and haze near some villages, which residents believe is causing an increase in asthma. The stress of integrating a new way of life with generations of traditional teachings has increased alcohol- ism, drug abuse, and child abuse. Higher consumption of nonsubsistence food, such as shortening, lard, butter, and bacon, and reduced consumption of traditional foods, such as fish and marine mammal products, have increased the in- cidence of diabetes (Ebbesson et al. 1999~. The NSB bears the costs of those social stresses. Vil- lages now provide substance abuse treatment, counseling, public assistance, crisis lines and shelters, and other social service programs. The borough provides the search and res- cue services that respond when hunters put themselves at risk in the pursuit of less accessible game. The revenue from oil development has funded a police force, which must re- spond to the situations that arise when people and their com-

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140 munities are subjected to long-term and persistent stress. The borough supports biologists, planners, and other specialists who review and offer recommendations on the volume of lease sale, exploration, and development project documents that are produced each year. It must also cover the ever- increasing expense of travel to Fairbanks, Anchorage, and Juneau, Alaska; Seattle, Washington and Washington, D.C., where agencies with authority over oil and gas leasing, ex- ploration, and development, and the subsistence resources they depend on, conduct most of their work and make most of their decisions. Although many public services would not have been possible without the revenue from oil develop- ment, many of those public services would not have been necessary if oil had not been found and extracted from the North Slope. Wilclerness and Wilcilancis The only legally designated wilderness areas under study by the committee are a portion of the 3.2 million hect- are (8 million acre) Mollie Beattie Wilderness that lies north of the Brooks Range within the Arctic National Wildlife Refuge and a small segment of Gates of the Arctic National Park north of Chandler Lake (Box 9-2) (NWPS 2002~. The Wilderness Act expressly prohibits the construction of roads and structures and the use of motor vehicles, motorized equipment, and motorboats, or aircraft and other mechanical transport, in formally designated wilderness [Sec. 4(c)~. However, the Alaska National Interest Lands Conservation Act (ANILCA) of 1980 subsequently authorized the use of motorized boats and snowmobiles, subsistence hunting and fishing, the construction of temporary structures, and the landing of airplanes and other activities in Alaska wilder- ness areas.1 In addition to formally designated wilderness, more than 300,000 ha (750,000 acres) of federal land in the 5.2 million ha (12.8 million acre) area between the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska has been collectively managed by the Bureau of Land Management (BLM) as a wilderness study area (R. Delaney, BLM, personal communication, 5/17/2001 and 1/30/2002~.2 BLM is required to maintain the wilderness character of this area. Although the amount of formally designated wilderness on the North Slope is small, a substantial portion of the slope outside the oil fields retains the characteristics of wildlands and is de facto wil- derness (TAPS Reapplication EIS). ~ Sections 811, 1110, 1316 of ANILCA arid 50 CFR Sec. 36.12. See 66 FR 3716 et seq. for a discussion of ANILCA exceptions to wilderness study area (WSA) prohibitions. 2 Due to transfers of some of this lard to the state arid native corpora- tions, this number is now less than 750,000. BLM does not have an accurate accounting of the current area managed as WSA in this area. CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS Wilderness The term "wilderness" carries many connotations, de- pending in part on the cultural and historical perspectives of the beholder. The definition provided by the Wilderness Act of 1964 is viewed with profound skepticism and resentment by many Alaska Natives, who have lived for generations in "wilderness" areas on Alaska's North Slope: None of this country is wilderness, nor has it ever been. It has been continuously used and occupied by us and by our ancestors for millennia. Since wilderness is defined as a place without people, we are deeply insulted by those who pro- claim any of this country wilderness, as if we were not con- sidered to be real people (From In This Place [Anonymous, unpublished, 2001]~. Although reconciling the various views is a task well beyond the committee's charge, some commonalities are worth noting. Some ideas embodied in the legislative vision of wilderness are also seen by Alaska Natives of the North Slope as essential elements of their history and culture: We told these [visitors] we liked the mountains and we liked the sea. We liked to spend as much time in these places as we could, the frozen sea, the snowy mountains, the summer sea, this gorgeous, ever changing, breath-taking country which is our homeland. Nowhere else is all of this possible, a sea full of great whales and seals and fish and polar bear and foxes and birds of every kind, from nearly every land, with moun-

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EFFECTS ON THE HUMAN ENVIRONMENT tains just nearby full of white sheep and wolves and wolver- ine and with great plains in between the mountains and the sea with muskoxen and caribou and river and lake fish and many more birds and a thousand other things, all inter- mingled with the spirits and memories and stories and leg- ends and graves and old houses of our people. This is the perfect place, the perfect place for us, which is why God probably put us here, these few of us, and made us tough enough to stay (From In This Place [Anonymous, unpub- lished, 2001]). The nature and intensity of human use, along with the persistence of evidence of such use, determine the extent to which an area retains its wild, "untrammeled" character. Land use by indigenous peoples on the North Slope has been for the most part nonintensive, leaving few traces on the landscape outside of established villages. In contrast, oil de- velopment has altered the landscape in ways that will persist long after oil and gas extraction ceases. Testimony provided to the committee in various communities on the North Slope repeatedly cited "scars on the land" that result from indus- trial development and that have altered both the physical and the spiritual elements of the landscape, and thus the very basis of Alaska Native culture on the North Slope. Many Alaska Natives argued, however, that a wilderness designa- tion can unfairly exclude them from their own ancestral land. However, the Gwich'in people support wilderness designa- tion of the 1002 Area as the appropriate legal tool to protect their subsistence way of life. Although acknowledging the existence of divergent views, the committee evaluated the effects of oil develop- ment on wilderness as the term is defined in the Wilderness Act. To avoid confusion, we use the word "wildlands" rather than wilderness except when discussing legally designated wilderness. A typology of wildland values is presented in Figure 9-1. Effects of Development on Wilcilancis Before oil development began in 1968, the area north of the Yukon River, including the North Slope, was considered the largest intact wildland area in the United States (DOI 1972a, FWS 1987~. Since that time, a large segment of this region has been transformed. The perimeter of the oil fields now extends over some 2,600 km2 (1,000 mi2) of the North Slope, an area roughly equivalent to the land area of Rhode Island. The oil fields constitute one of the world's largest industrial complexes, and they have substantially affected many of the wildland qualities of the region. The associated roads, pads, pipelines, seismic vehicle tracks, transmission lines, air, ground and vessel traffic, drilling activities, land- fills, housing, processing facilities, and other industrial in- frastructure have reduced opportunities for solitude; dis- placed animals; altered ecological processes; compromised scenic values; and resulted in noise and air emissions. Be- cause the landscape is open, the changed nature of the land- 141 scape the roads, pads, pipelines, other structures, alter- ations of the tundra from seismic activities is visible at a distance, particularly from the air. Similarly, changes in noise and air quality are perceptible far beyond points of emission. All of these effects have resulted in the erosion of wildland values over an area that is far larger than the area of direct effects. Most analyses of effects on the wilderness and wild- lands of the North Slope have been conducted in the context of environmental impact statements. And the analyses gen- erally are cursory and often out of date. None has used new techniques for measuring wilderness values; none has at- tempted to coordinate wilderness planning or assessment among different jurisdictions. The National Petroleum Reserve-Alaska Production Act of 1976, for example, required BLM to examine all resource values, including wilderness values, in the National Petro- leum Reserve-Alaska. This analysis (known as the 105(c) study) was completed in 1978, almost a quarter of a century ago. It is the only comprehensive wilderness evaluation that has been done for the entire National Petroleum Reserve- Alaska. In connection with the 1996 decision to open up the northeast portion of the reserve to leasing, BLM prepared an integrated activity plan/environmental impact statement (IAPIEIS). At the time, BLM was barred from recommend- ing wilderness designation (which would require an act of Congress) for any portion of the area under consideration under a directive issued in 1981 by then Interior Secretary James Watt. As a result, although the IAPIEIS for the north- east lease sale area contains scattered references to the wild- land values of the area (principally focused on recreation), there is little meaningful analysis of the consequences of development for the range of wildland values. Economic Benefits The cash economy of the North Slope Borough largely would not exist without oil and gas production. To supple- ment their subsistence activities, some residents would have earned income from U.S. government transfers such as so- cial security, medical and veterans' payments, or Bureau of Indian Affairs payments. Sport hunting, fishing, and other recreational activities would have generated some income. And although the ASRC has generated some earnings re- cently, without North Slope oil that corporation would not exist. Table 9-1 is a summary of total personal income data for residents in the NSB. After oil production began in the late 1970s there was a dramatic increase of total personal income. The NSB was established in 1972. Per capita in- come in 1999 was about $27,000. For comparison, per capita income in Arctic Village, not part of the NSB, was $10,761 in 2000. Personal income is not necessarily the best measure of effects, especially over the long term. Another, longer-term

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142 CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS Total Economic Value of WildIands ~~//~ ~ - ~ DIRECT USE COMMUNITY SCIENTIFIC OFF-SITE BIODIVERSITY ECOLOGICAL PASSIVE USE BENEFITS BENEFITS BENEFITS BENEFITS CONSERVATION SERVICES BENEFITS On e recreation Resew Dir1 use Human development Education Genetic Cultural-Heritage Management Intrinsic On-site hunting Commencal | Subsistence use Off-site hunting Non-recreation jobs Scenic viewsheds Retirement income Higher property values Watershed protection Recreation jobs Increased tax revenue Nutrient cycling Non-labor jobs Carbon storage Pest control 1 Pollu ~ Off-site consumption Option Bequest Existence of information in value value value books and magazines, 1 + and scenic beauty In ~ photos and videos Benefits from Future direct, indirect, knowledge of and off-line benefits ~ ~ continued existence Value of conserving wildlands for future generations 1 1 Habitat conservation Habitat Biodiversity conservation, Ecological services Endangered On-site recreation species, Wild Off-site hunting recreation Biodiversity On-site recreation Ecological services Archeological resources Decreasing "tangibility" of value to individuals FIGURE 9-1 SOURCE: Morton 1999. Reprinted with permission, copyright 1999, Denver Law Review. - - - - - -

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EFFECTS ON THE HUMAN ENVIRONMENT TABLE 9-1 Total Aggregate Personal Income for the Alaskan North Slope, 1970-1999 Year Total Personal Income (millions $) Barrow-North Slope Division North Slope Borough 970 975 980 985 990 995 999 12.4 42.4 82.1 33.6 145.6 200.6 205.8 SOURCE: BEA 2002. accumulating effect is the progressive exhaustion of oil and gas resources, because current and past cash income has been purchased at the cost of denying income to others in the future. An informative way to illuminate the accumulated ben- eficial aspect of oil and gas development is to measure net assets on the North Slope. Assets are a measure of the pri- vate and public wealth of an economy that, by their nature, represent the accumulation of value over time. In contrast, income represents value earned for a relatively brief period, such as a year. Table 9-2 summarizes the private and public assets on the North Slope as of 2000. More than 90% of the private property value on the North Slope, including oil deposits, is directly attributable to the oil sector. Most private property is taxed, and that revenue supports public services in the borough. A region that has a substantial tax base, such as private petroleum assets, can collect corporate taxes to pro- TABLE 9-2 Net Assets: North Slope Borough and Private Assets, 2000 Assets/Liabilities ($ millions) Total Private assets Petroleum Other private Exemptions North Slope Borough assets Cash arid investments Profits Physical improvement Other Borough liabilitiesb Net assets 0,528 334 745a 903 713 372 949 ,607 3,392 a Tax exempt value for 2001. b D. Packer, Of lice of the Mayor, North Slope Borough, personal communi- cadon, 2/27/2002. SOURCE: Comprehensive annual financial report of the North Slope Bor- ough, Alaska, 2000. pp.29,31,33,104-105, 108. 143 vice generous social services or to reduce its private citi- zens' tax liabilities. Over time, the NSB has used its income to create net public assets that stood at $1.8 billion in 2000. The public and private net assets that year amounted to $13.4 billion- more than $1.77 million per capita. It is hard to compare such figures with those for counties or for other small towns, because public assets generally are not recorded. Instead, a comparison is made with private assets. A sample of a dozen small towns in Washington state (population 5,000-10,000) reveals a private per capita taxable asset value owned by individuals, corporations, and other taxable sources averag- ing about $74,000; on the North Slope it is about $1.53 million. North Slope Borough The North Slope Borough is the dominant economic force in North Slope communities. Petroleum activities have been and continue to be the primary source of income on the North Slope. In addition to property tax revenue from petro- leum installations, income flows into NSB communities through royalties paid to the State of Alaska, which are re- turned to the NSB; through direct oil-field employment of NSB residents; and through the activities of the regional and village corporations. The property taxes underpin the current NSB economy. In the 1999-2000 fiscal year, revenues for the NSB were $240,105,567, of which $201,223,579 (83.8%) came from property taxes. Of that amount, $192,524,702 (95.4%) was paid by five petroleum companies. Fifty-two percent of all jobs reported in the NSB 1998 survey are funded by the bor- ough. Thus, petroleum activities have had massive develop- mental effects on the economy of the NSB and on the lives of its residents (Table 9-3~. Arctic Slope Regional Corporation The Arctic Slope Regional Corporation currently receives annual revenues of approximately $1 billion. Throughout its existence, it has distributed approximately $123 million in dividends to its shareholders, and it currently employs more than 500 of those shareholders (ASRC 2001~. In 2000, the ASRC distributed $8,841,000 through share- holder dividends, through distributions from its permanent fund, and through its Elders' Settlement Trust investment fund program. The ASRC subsidiaries were heavily involved in the construction and drilling of the Alpine field, which recently came on line, and the ASRC owns, with the state, the subsurface mineral rights to the Alpine field. The ASRC and the village corporations have been and continue to be dominant economic forces on the North Slope. ASRC sub- sidiaries employ the overwhelming majority of North Slope residents who work in the oil and gas sector on the North Slope (Alaska Petroleum Contractors Inc. and Houston Con-

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144 CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS TABLE 9-3 North Slope Borough Revenue, 1991-2000 (Thousands of U.S. dollars) General Sales/ Fiscal General Economic Impact Charge for Year Property Assistance Intergovernment Services Miscellaneous Total 1991 221,630 4,408 36,796 7,786 45,345 315,965 1993 235,928 5,009 30,209 8,663 51,337 331,146 1995 227,292 5,000 32,664 10,497 37,714 313,167 1997 223,923 4,900 32,240 11,643 43,018 315,724 1999 211,512 4,700 33,900 13,935 27,770 291,817 2000 201,224 4,600 37,088 9,493 30,213 282,618 tracting Co-Ak Lt. employed 50 of the 64 employees noted by Alaska Department of Labor and Workforce Develop- ment in 2001~. The ASRC owns the mineral rights to ap- proximately 2 million ha (5 million acres) of land on the North Slope, much of which has proven reserves of, or holds promise for, oil, gas, coal, and base metal sulfides. The ASRC and its subsidiaries constituted the largest local prop- erty tax payers on the North Slope in fiscal year 1999-2000 (NSB 2000~. State Royalties Returnecl Another useful economic measure of the accumulation of effects is the Alaska Permanent Fund. Royalties from oil sales, which have accumulated in this fund, amounted to more than $28 billion in 2000. Its size ranks in the top 100 funds in the world (Everest Consulting Association 2001~. Annual payments to every resident of Alaska, including chil- dren, have grown steadily from a few hundred dollars per year in the early 1980s to about $1,900 in 2000 and 2001 (Table 9-4~. North Slope oil is not the only source of fund revenue, but it constituted more than 95% of Alaska's oil production in 1999 and has been a major source of the fund' s revenue since inception. Thus, assuming the population of the North Slope is 7,500 this year, the Permanent Fund Divi- dend program will produce approximately $13.5 million for TABLE 9-4 Permanent Fund Dividends, 1982-2001 Year Amount 2001 2000 1998 1996 1994 1992 1990 1988 1986 1984 1983 1982 $1,850.28 $1,963.86 $1,540.88 $1,130.68 $983.90 $915.84 $952.63 $826.93 $556.26 $331.29 $386.15 $1,000.00 SOURCE: Alaska Permanent Fund 2001. the North Slope economy, much of that initially generated by past oil royalties. Economic Costs There have been no economic valuation studies of ef- fects on the physical, biotic, or human environment on the North Slope. That is, no research has translated positive and negative effects measured in physical units into how people value them in monetary terms. From the rich array of poten- tial economic effects of oil and gas activities a few can be used to illustrate methods and types of data needed for eco- nomic evaluations: air pollution; altered spatial distributions of caribou and bowhead whales; and effects of long-lasting structures, roads, and trails on landscapes. Air Pollution A sample of time series emission data coupled with a diffusion model would help to establish where and how much air pollution North Slope residents are exposed to. These data can then be related to observed rates of morbidity and mortality. The economic value of lost days of work and medical expenses can then be tied to the rates of morbidity specific to the identified pollution loads. Estimated rates of mortality can be combined with estimated valuers) of a life (EPA 1997, Freeman 1993, Viscusi 1992~. This cannot be done for the North Slope because records of emission are incomplete. Subsistence Hunting Oil exploration and development can alter the spatial dis- tribution of caribou and the migration paths of bowhead whales. No studies, to our knowledge, demonstrate quantita- tively whether spatial redistributions alter the sustainable equi- librium harvest or change the time it takes to harvest caribou or bowhead whales. The lack of data precludes estimating the dollar value of increased harvest time or of changed size of sustainable harvest. Other possible losses, such as the lowered quality of whale meat, are even more difficult to measure be- cause of the lack of market prices. Finally, this method does not capture the economic cost of the reported greater risk in-

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EFFECTS ON THE HUMAN ENVIRONMENT valved in hunting when bowhead whales move farther from shore in response to seismic activity. Passive Use Values Some values cannot readily be directly or indirectly tied to market prices. For example, the benefits of wildlands in- clude (Morton 2000) the scientific (protection of structure, composition and functioning of natural communities and en- tire landscapes as well as archeological and paleontological resources), the recreational, and the scenic. They also include protection of reservoirs of biological diversity, provision of ecological services, and spiritual (connection with "something beyond our modern society and its creations, something more timeless and universal" [66 FR 37291), psychological (soli- tude; respite from machines, steel and concrete, crowding), and cultural and historical benefits, and "passive use values," as enumerated here (see also Figure 9-1~: option value, maintaining for oneself or one's chil- dren the option of visiting wildlands, existence value, the value of knowing a place exists independent of ever going there, and bequest value, the value associated with bequeath- ing wilderness to future generations ("the hope of an undi- minished future [66 FR 37301"~. The value of those benefits tends to increase as large, relatively undisturbed landscapes become scarcer. In the ab- sence of markets for the goods and services illustrated above, people are studied using carefully designed surveys with methods developed by cognitive psychologists and market research specialist to elicit monetary values for quantitative changes in the qualitative features of an ecosystem (Cum- mings et. al.1986, Diamond and Hausman 1994, Hanemann 1994, Hausman 1993, Mitchell and Carson 1989, Portney 1994~. Many elements and values of wildlands can be roughly quantified, allowing those areas to be mapped ac- cording to the quantitative values they retain. Of these different types of costs, the direct measurable costs associated with environmental effects are the easiest to quantify and are the best understood. In contrast, the com- mittee could find no evidence of attempts to quantify the long-term future costs, passive-use values, or indirect costs of environmental effects. The information essential to as- sessing such effects is not even being collected. As a result, the full cost of oil development on Alaska' s North Slope has not been assessed, quantified, or incorporated into decisions that affect use of public land. The following section illus- trates a method for valuing passive-use values indirectly. Incorporating Economic Costs of Environmental Effects into Decision Making Incorporation of indirect, long-term, and passive use costs into an overall economic assessment of development 145 would alter projections of economically recoverable oil and gas on public land on the North Slope. For example, the U.S. Geological Survey (USGS) periodically estimates the amount of recoverable oil in various areas of federally owned land on the North Slope. In doing so, the USGS generally projects the amount of oil that is economically recoverable from these lands given a particular price of oil and given a set of costs associated with development and transportation. By not fully accounting for indirect, future, and passive-use costs in its projections, the USGS underestimates the cost of development, which in turn inflates the amount of oil con- sidered economically recoverable at a given market price. This problem is most acute in light of uncertain, but plausible, effects that are likely to be irreversible and the traditional economic prescription, "Invest when expected benefits exceed expected costs," does not hold. The follow- ing example illustrates this fact. For the necessary geo- graphic specificity, and because data are available, the Arc- tic National Wildlife Refuge is used as an example. The analysis can be applied to any undeveloped area. Develop- ment can include the construction of roads, pads, and other long-lived changes to the landscape. Before that, explora- tion creates seismic trails, of which about 15% are visible from the air after 15 years (Figure 7-7a). Many would regard seismic trails as having a negative effect on landscapes that accumulates as more trails are created. Given that about 4,000 km (2,500 mi) of lines or trails were surveyed during 1984-1985 in the Arctic National Wildlife Refuge, the ap- propriate setting is the value of further visual effects on the 600,000 ha (1.5 million acre) Arctic Coastal Plain. The USGS has estimated that Arctic National Wildlife Refuge oil development would not be feasible if the price of North Slope oil is $15 per barrel ($0.36 per gal) or lower (because costs could not be covered by revenues). But this estimated minimum does not include any environmental costs associated with development or decommissioning (K. Bird, USGS, personal communication, 2001~. At one point during the time this report was being prepared, the price of North Slope oil was around $17.50 per barrel ($0.42 per gallon) (Wall Street Journal, Jan. 24, 2002), and prices have fluctuated considerably before and since. Figure J-2 (Appendix J) illustrates a time series of crude oil prices whose level and fluctuations approximate North Slope oil pnces. Suppose, however, the expected price warranted devel- opment now, but that, in the future, the actual or expected price does not warrant further development and would not have justified the up-front exploration and development costs in the first place. Nevertheless, the environmental damage effects of seismic trails associated with the original explora- tion, together with the effects of roads and pads, persist. Appendix J works out empirically the (stochastic dy- namic programming) method (Arrow and Fisher 1974) used to analyze investment options under uncertainty with irreversibility.

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146 Oil development might not be warranted from a social perspective, even if privately profitable; that is, if the private net benefits of development are positive. From a social per- spective, expected private net benefits from oil development must be reduced by the accumulated environmental effects, including the loss of nonmarket values described in the sec- tion on wildland values in this chapter. The expected private value of oil development in the Arctic National Wildlife Refuge for alternative futures is calculated in Appendix J. A particular "future" is the chance that the price of oil will be a specific price above the break-even private cost of oil devel- opment. For any given future, there is an expected private net value of oil development. The important public-policy issue is whether the private net value for any given scenario is greater or less than the expected accumulated environ- mental costs of exploration and development. Because envi- ronmental costs have not been estimated in money terms, the analysis is done in terms of hurdles or thresholds. How large must the accumulated environmental costs be to offset the positive expected net private benefits of oil development? Equivalently, from a national perspective, if oil development in the Arctic National Wildlife Refuge (or elsewhere) should go forward, what is the highest value of accumulated envi- ronmental opportunities forgone that would not thwart this decision economically? a . ~ . . a. . . . . . ~ . . Employment A main effect of the expansion of services and the capi- tal improvement program by the NSB was the creation of borough jobs in the expanded educational system, in con- struction for the capital improvement program, and in busi- nesses that emerged of the growing economy. Two patterns characterize employment in the NSB (Table 9-5~. First, the NSB has a disproportionate concentra- tion of employment in government and government-funded activities. The borough government, school district, and capital improvement projects; Ilisagvik College; and the city, state, and federal governments together employ 61% of the workforce. A second pattern is the disproportionately low number of Inupiaq people employed in the oil and gas indus- try (although that is partly attributable to the larger percent- ages of Inupiaq young people: approximately 50% of North Slope Inupiat are under 20~. That few who live in the North Slope Borough are di- rectly employed by the oil and gas industry has been noted for almost two decades (Kruse et al. 1983) and is supported by findings of both the NSB survey (NSB 1999) and the Alaska Department of Labor (Alaska Department of Labor and Workforce Development 2001~. The NSB survey re- corded only 16 local people of the 2,418 people surveyed who worked for petroleum companies. The Alaska Depart- ment of Labor reported that, for companies that collected and reported residency, of the 7,432 people who reported working on the North Slope in 1999 in the oil and gas sector, CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS TABLE 9-5 North Slope Borough Residents' Employment by Sector and Ethnicity,a 1998 Employer Inupiat Other White Minority Total NSB government NSB school district Village corporation ASRC or subsidiary NSB capital improvement Service Ilisagvik College Private construction City government Transportation Federal government State government Trade Oil industry Communications Finance and insurance Other Total 509 134 225 90 82 28 21 44 43 14 17 9 14 10 171 1,411 217 108 33 26 23 36 36 14 17 11 19 9 4 1 68 634 151 47 17 16 7 19 12 8 6 12 11 7 12 2 1 45 373 877 289 275 132 112 83 69 66 57 43 39 35 35 16 284 2,418 a Includes only the 74% of the borough who responded to a survey (NSB 1999). only 64 lived in the state's Northern Region the Nome, North Slope, and Northwest Arctic boroughs (Alaska De- partment of Labor and Workforce Development 2001~. Most of that group (50) were employed by two companies that are subsidiaries of the ASRC. Kruse et al. (1983) reported a va- riety of factors that affected both male Inupiaq willingness to work in the oil fields and the desire of companies in Prudhoe Bay to hire them. An important factor is a desire to participate both in the cash economy and in the subsistence harvest. Borough jobs are preferable to oil industry jobs in part because they offer more flexibility, allowing time off for hunting. Those jobs also pay as well as the oil industry jobs do, and they are available locally instead of requiring extended periods of time away from home. In addition, Inupiat at Prudhoe Bay find they are a small minority in a primarily white workforce that can sometimes express hostility toward Alaska Natives. The jobs available to the Inupiat often are seen by them as menial or as token jobs. And employment by the oil compa- nies can threaten participation in the activity that provides the most status, hunting the bowhead whale. Another barrier is the lack of formal training and certifi- cation for skilled jobs. Industry employees need specific skills from employees and often are unwilling to train work- ers unless there is some certainty that trainees are committed to remaining employed. Frequently, hiring takes place not on the North Slope, but in Fairbanks, Anchorage, or at com- pany headquarters in the continental United States. Ac- knowledging that racism is difficult to document, Kruse et al. (1983, p. 138) recognized antagonism toward Inupiat

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EFFECTS ON THE HUMAN ENVIRONMENT among North Slope oil industry workers. Anecdotally, the committee heard from industry representatives that they hire Inupiat only to have them not come to work reliably, and from Inupiat that they experienced discrimination in hiring and promotion. Whatever the causes, a main vehicle for fun- neling cash generated on the North Slope to residents of the NSB is functioning only marginally. Several programs have attempted to address this issue, but with limited success. Because employment in the oil industry has been mini- mal, adaptation effects on North Slope residents are slight. However, if North Slope residents were to move increas- ingly into oil-field jobs there will be consequences (primar- ily on families) attributable to concentrated work scheduling (7 days on, 7 days off) (Forsyth and Gauthier 1991; Gramling 1989, 1996; Gramling and Forsyth 1987~. Although the de- sire to participate in subsistence hunting is perceived as a barrier to employment on the North Slope, in the Gulf of Mexico the same work schedule allows employees extended periods to engage in traditional activities, such as fishing and shrimping (Gramling 1989~. ADAPTATION EFFECTS Human systems are adaptable, even in extreme situa- tions (Bettelheim 1943~. The issue is not whether people will adapt to externally generated perturbations or to internally negotiated threats and opportunities but rather what conse- quences will accrue. As the various components of the hu- man environment adapt to a development activity, new skills, knowledge, tools, and resources become available to sun- port traditional activities. Two potentially problematic re- sults also can occur. First, the old patterns of behavior, economic activity, skills, and capital improvements might be lost (sometimes quickly, sometimes across generations) because they are no longer relevant. The losses occur as Alaska Natives are en- trained into a cash economy and increasingly need to use English as their primary language for communication about political, economic, and social changes. As they strive to become full partners in discussions about these changes, in- cluding those related to oil and gas development, it is diffi- cult for them not to lose fluency in their traditional language, with its embedded knowledge of adaptation to the physical environment and of traditional relationships with the biota. Cable television, common in North Slope households, accel- erates the cultural changes. Many North Slope residents re- ported to the committee their concerns about losing their traditional knowledge and practices and their way of life, despite their general reluctance to forgo the economic ad- vantages they enjoyed. Second, human and financial capital and nonrenewable resources can be, and usually are, actively committed to and consumed by the new development. If the new activity is not sustainable, when it declines or ceases communities or re- gions can be left less able to survive in their environment 147 than they were before the new development came along. Freudenburg and Gramling (1992) call this overadaptation. Oil and gas development has provided significant tax revenue to NSB residents. But the tax base is now declining, raising the question of whether the NSB can maintain its budget and its capital improvement program if oil and gas development diminish. Even in the short run as newer, more efficient types of development are adapted and as older methods are phased out the tax base for the NSB could decline more, leading to less support for the existing infra- structure and fewer borough jobs. Declines in borough revenue would require residents to pursue some mix of seek- ing oil industry jobs more aggressively, finding alternative sources of economic activity, relying more heavily on sub- sistence, migrating off the North Slope, or accepting a lower standard of living. Another effect could precede actual declines in produc- tion. Increasingly, petroleum production on the North Slope is using new technologies, such as directional drilling, that occupy much smaller surface areas. This brings obvious en- vironmental benefits, but also benefits the companies. Pro- ducing oil from a smaller space is cheaper because less gravel is mined and moved for pads and roads. Fewer shutdowns are needed to move the rigs and support equipment; there are fewer locations to deliver supplies to; fewer facilities to be built, heated, and maintained during production; and if reha- bilitation is required, much smaller areas to be rehabilitated. Highly concentrated sites, however, can have lower assessed values, relative to the size of the subsurface structure they exploit, than huge surface complexes like Prudhoe Bay. So as big facilities are shut down and new, smaller facilities such as Alpine open, property tax revenues could decline significantly even as production increases. The construction of a gas pipeline could forestall, at least for a time, the decline in tax revenue for the NSB. Commer- cial gas production would require the construction of new, taxable processing and transportation infrastructure, which presumably could remain operational in older fields even after they are no longer producing commercially feasible quantities of oil. At some point, however, North Slope oil and gas will no longer be economically viable to recover. The potential for overadaptation by the communities now depen- dent on funds generated by this resource is a real one. The current standard of living an economic benefit of oil and gas activity could be impossible to maintain once petroleum activities cease. The same trend toward smaller facilities and more envi- ronmentally friendly petroleum development is also likely to affect the ASRC, which is heavily invested in the oil- field-service industry. Smaller facilities will require less sup- port during drilling and production, reducing the need for equipment and services. As with the NSB, there also is the potential for building infrastructure private as opposed to publicly funded that will be difficult to maintain once pe- troleum activity ceases in the region. The ASRC's primary

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148 assets appear to be its heavy investments in the energy ser- vices sector and its potentially mineral-rich lands. Natchiq is a family of more than 20 diverse and strategically aligned companies and subsistence that operates in Alaska, Canada, the U.S. Gulf Coast and the rest of the continental states, and Russia to support the oil and gas industry. It offers explora- tion to development, construction to production, and main- tenance services, and the Natchiq companies employ nearly 4,000 people (ASRC 2001, p. 14~. As Freudenburg and Gramling (1998) have noted, however, in examining the pe- troleum support sector in the Gulf of Mexico, a support sec- tor that has fiscal linkages primarily to one sector (petroleum extraction and production) is likely to mirror the performance of that sector, both as it rises and as it falls. FINDINGS Without the North Slope petroleum discoveries and development, the North Slope Borough, the Alaska Native Claims Settlement Act, and the Arctic Slope Regional Corpo- ration would not exist. The emergence of those structures has caused major, significant, and probably unalterable changes to the way of life in North Slope communities. The primary vehicle of change is revenue that has flowed into communities from NSB property taxes on petroleum infrastructure. Oil de- velopment has resulted in assets for North Slope residents that exceed $1 million per capita. Asset value per capita, exclud- ing petroleum structures, exceeds $100,000. Many North Slope residents view the changes positively. However, social and cultural changes of this magnitude are not without costs in terms of social and individual pathology. Offshore exploration and development and the an- nouncement of offshore sales have resulted in perceived risks to Inupiaq culture that are widespread, intense, and them- selves are accumulating effects. The people of the North Slope have a centuries-old nutritional and cultural relation- ship with the bowhead whale, and most view offshore indus- trial activity as a threat to bowheads and thereby to their cultural survival. They have generally supported onshore development, however, subject to adequate environmental controls. Proposals to explore and develop oil resources in the Arctic National Wildlife Refuge have resulted in perceived risks to Gwich'in culture in Alaska and the Yukon Territory that are widespread, intense, and themselves are accumulat- ing effects. The Gwich'in have a centuries-old nutritional and cultural relationship with the Porcupine Caribou Herd and oppose new onshore petroleum development that they believe threatens the caribou. The current standard of living for North Slope resi- dents will be impossible to maintain unless significant exter- nal sources of local revenue are found. There has been little direct employment of North Slope residents by the petroleum industry. Several programs have addressed this issue, but their success has been limited. . CUMULATIVE EFFECTS OF ALASKA NORTH SLOPE OIL AND GAS Many activities associated with petroleum have changed the landscape in ways that have had aesthetic, cul- tural, and spiritual consequences; those consequences will increase as the use of these facilities and infrastructure declines. Wildland values over more than 2,600 km2 (1,000 mi2) of the North Slope have been compromised by oil de- velopment. The potential for further loss is at least as great as what has already occurred as development expands over the next 20-50 years, although the nature and degree will vary. Some effects will dissipate when oil activities end, but many structures now on the North Slope are likely to remain long after industrial activities cease, rendering their effects on wildlands essentially permanent. There is no integrated, North Slope-wide framework for wildland evaluation, mapping, ranking, planning, and analysis of effects. There has been a steady erosion of wild- land values over a vast area through a series of individual, project-by-project decisions by different state and federal government agencies. Environmental impact statements do not in general evaluate the individual or the accumulation of effects of development proposals on wildland values in a meaning- ful way. The common practice of describing the effects of particular projects in terms of the area directly disturbed by roads, pads, pipelines, and other facilities ignores the spread- ing character of oil development on the North Slope and the consequences of this to wildland values. All of these effects result in the erosion of wildland values over an area far ex- ceeding the area directly affected. The loss of wildland val- ues has not been assessed in terms of the total area affected. Although there are rigorous means of evaluating wil- derness values, academic and agency researchers have paid insufficient attention to developing meaningful, qualitative, and quantitative metrics for evaluating wildlands and incor- porating findings into the decision-making process. There is inadequate knowledge of the economic value of North Slope wildlands. Oil prices will depend primarily on circumstances far from the North Slope. The social cost of alterations to the landscape caused by oil and gas development that are long- lived or irreversible, such as seismic trails and gravel roads and pads, will continue long after the private returns from oil and gas extraction on the North Slope cease. Therefore, the social costs of development in new areas of public land should play a central role in determining whether explora- tion and extraction in previously undeveloped public lands are economically warranted. The full economic costs associated with environmen- tal effects of oil development on Alaska's North Slope have not been quantified. Human-health effects, including physical, psycho- logical, cultural, spiritual, and social, have not been ad- equately addressed or studied.

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EFFECTS ON THE HUMAN ENVIRONMENT A slope-wide, jurisdictionally coordinated frame- work for wildland evaluation, mapping, ranking, impact analysis, and planning would help decision-makers identify conflicts, set priorities, and make better-informed decisions. RECOMMENDATIONS Research should identify the specific benefits and threats that North Slope residents believe are posed to their ways of life by oil and gas development. This research should target how much oil and gas activities, as distinguished from other factors, are associated with rising levels of sociocul- tural change. Research on the North Slope, regardless of its subject matter, needs to occur as a cooperative endeavor with 149 local communities. Traditional and local knowledge and lan- guage involves rich, detailed information about the physical environment, the biota, and the human communities of the North Slope. That information should be incorporated into research from identification of topics and study design through interpretation and presentation of results. The research community should focus on developing ways to translate theoretical wildland concepts and values into concrete terms that can be used in environmental assess- ments and other contexts. Research should identify the specific human-health effects (physical, psychological, cultural, spiritual, social) that North Slope residents believe they experience as a result of oil and gas development.