Executive Summary

Federal responsibility for oil and gas development on the outer continental shelf1 (OCS) lies with the Minerals Management Service (MMS) of the U.S. Department of the Interior. The potential and realized value of the resource is large. From 1954 through 1990, the last year for which statistics have been published, OCS oil and gas accounted for more than 7.5% of total domestic oil production and about 14% of domestic natural gas. More than $97 billion in revenue went to the government in the form of cash bonuses, lease rental payments, and royalties on produced oil and gas. But the federal OCS leasing program has been controversial, especially since the Santa Barbara, California, oil spill in 1969. More recent accidents—although they have not involved OCS oil—have added tension to the debate.

The Minerals Management Service's Environmental Studies Program (ESP) is responsible for the conduct of environmental studies on the outer continental shelf and for collecting information used in environmental impact statements and to inform federal management decisions. The program began in 1973 as a project of the Bureau of Land Management to obtain ecological, physical oceanographic, and socioeconomics information. Approximately $540 million was spent through 1991 on a variety of studies, most of them performed by contractors. Studies labeled as ''socioeconomic'' have consumed about 5% of the ESP budget—on average, $1.4 million a year. The total expenditure for these studies through 1991 was $26.4 million. Some of those expenditures, however, have not been for the collection or analysis of social and economic information.

THIS REPORT

In 1986, MMS requested that the National Research Council (NRC) evaluate the adequacy and applicability of the ESP studies, review the general state of knowledge in the appropriate disciplines, and recommend future studies. Under the auspices of the NRC Board on Environmental Studies and Toxicology, the Committee to Review the Outer Continental Shelf Environmental Studies Program was formed to conduct the assignment. Three panels were established to review the ESP's work in ecology, physical oceanography, and socioeconomics. The Socioeconomics Panel investigated the main questions of the social and economic relevance of OCS oil and gas activities and the social and economic aspects of ESP. This report presents the findings and recommendations of the Socioeconomics Panel.

1  

The federal outer continental shelf extends from the seaward boundary of state jurisdiction, usually 3 miles, to 200 miles offshore.



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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Executive Summary Federal responsibility for oil and gas development on the outer continental shelf1 (OCS) lies with the Minerals Management Service (MMS) of the U.S. Department of the Interior. The potential and realized value of the resource is large. From 1954 through 1990, the last year for which statistics have been published, OCS oil and gas accounted for more than 7.5% of total domestic oil production and about 14% of domestic natural gas. More than $97 billion in revenue went to the government in the form of cash bonuses, lease rental payments, and royalties on produced oil and gas. But the federal OCS leasing program has been controversial, especially since the Santa Barbara, California, oil spill in 1969. More recent accidents—although they have not involved OCS oil—have added tension to the debate. The Minerals Management Service's Environmental Studies Program (ESP) is responsible for the conduct of environmental studies on the outer continental shelf and for collecting information used in environmental impact statements and to inform federal management decisions. The program began in 1973 as a project of the Bureau of Land Management to obtain ecological, physical oceanographic, and socioeconomics information. Approximately $540 million was spent through 1991 on a variety of studies, most of them performed by contractors. Studies labeled as ''socioeconomic'' have consumed about 5% of the ESP budget—on average, $1.4 million a year. The total expenditure for these studies through 1991 was $26.4 million. Some of those expenditures, however, have not been for the collection or analysis of social and economic information. THIS REPORT In 1986, MMS requested that the National Research Council (NRC) evaluate the adequacy and applicability of the ESP studies, review the general state of knowledge in the appropriate disciplines, and recommend future studies. Under the auspices of the NRC Board on Environmental Studies and Toxicology, the Committee to Review the Outer Continental Shelf Environmental Studies Program was formed to conduct the assignment. Three panels were established to review the ESP's work in ecology, physical oceanography, and socioeconomics. The Socioeconomics Panel investigated the main questions of the social and economic relevance of OCS oil and gas activities and the social and economic aspects of ESP. This report presents the findings and recommendations of the Socioeconomics Panel. 1   The federal outer continental shelf extends from the seaward boundary of state jurisdiction, usually 3 miles, to 200 miles offshore.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies The panel collected information from several sources. Presentations were given by the ESP staff members and independent scientists familiar with ESP's work. The panel also reviewed relevant scientific literature and documents that detail MMS's planning and implementation process for various lease sales. While this report was being prepared, the OCS committee and its panels interrupted their work in response to government requests to prepare two reports on the adequacy of environmental information for OCS decisions. The first report, requested by President Bush, deals with lease sales off the coasts of Florida and California; it was published in 1989. The second, requested by MMS, focuses on a North Atlantic lease sale; it was published in 1991. For this report, the panel reviewed documents that were available through mid-1991. The ESP continues to evolve, and MMS officials indicate that they are taking into account recommendations in the previous reports mentioned above. THE HUMAN ENVIRONMENT AND MMS MMS and other federal agencies charged with the management of the natural resources of the United States are increasingly being required by their enabling legislation and by other laws to assess the social, economic, and cultural effects of development and regulation. These are new tasks to MMS's scientific staff, which, outside of Alaska is made up mostly of engineers, biologists, and physical scientists. Developing a socioeconomics research program outside of Alaska has been problematic, but the Outer Continental Shelf Lands Act as amended in 1978 (OCSLA; U.S.C. 43 §§1331-1356, §§1801-1866) mandates the consideration of effects on the "human environment" in all decisions about the oil and gas leasing and development of offshore tracts. The act also requires monitoring of the effects on the human environment, which is defined in the act as "the physical, social, and economic components, conditions, and factors which interactively determine the state, condition, and quality of living conditions, employment, and health of those affected, directly or indirectly, by activities occurring on the outer Continental Shelf" (43 U.S.C. §1331 (i)). By this definition, the term includes not only those features of ecosystems as perceived by, related to, or modified by human populations, but the human populations themselves and their social, cultural, and economic systems. This simple characterization masks enormous complexity and requires some clarification before it can be used as the basis for evaluating—much less designing—a research program. The subject of the human environment is discussed in Chapter 2 and in Appendix B of the report. WHY MMS NEEDS SOCIOECONOMIC INFORMATION Compliance with OCSLA requires the government to have scientific information, including socioeconomic information. As an example of this need, we mention MMS's frequent statements that areas have been excluded from lease schedules because of their "environmental sensitivity." Although we are not aware of any case where it has been used, socioeconomic information is needed in the same way to evaluate whether an area should be excluded from lease schedules because of its socioeconomic sensitivity. For example, onshore development might threaten a unique or valuable cultural community or recreational value; the threat of spills might threaten a unique or valuable economic or cultural (including subsistence) activity; and so on. But without socioeconomic information, the necessary evaluations cannot be made. Socioeconomic information is also needed to condition the terms of OCS operations and manage the impacts of OCS activities (e.g., MMS's seasonal drilling restrictions in the Beaufort Sea

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies to avoid affecting migrations of bowhead whales). Without this information, it is impossible to influence the degree of impact that OCS activities might have on local and regional economies and social systems or provide credible rules to deal with such impacts. Finally, obtaining socioeconomic information includes learning what people's concerns, fears, and desires are with respect to OCS activity, and that information seems to be a prerequisite for successful operation of the OCS oil and gas program. Decisions about the use and allocation of public resources and risks seldom satisfy all members of the public. The panel is not suggesting that everyone can be satisfied with every decision about OCS activities. It is suggesting that the public's reactions to public decisions, in themselves, are socioeconomic impacts of the decisions and are a legitimate—indeed, essential—aspect of a socioeconomics studies program. In addition, a better understanding of these socioeconomic impacts could lead MMS to develop a decision-making process with fewer and smaller socioeconomic impacts than the current process. A FRAMEWORK FOR ORGANIZING SOCIOECONOMIC STUDIES What is the knowledge base on which MMS can predict and manage the effects of OCS activities on the human environment? The analytic problem of socioeconomic impact assessment is examined in Chapter 2. Following that, a framework for organizing OCS socioeconomic studies is presented in Chapter 3. Identifying and Understanding Socioeconomic Effects An effect, for the purposes of this report, is a change to existing conditions caused by a specific, identifiable action. This definition includes trend impacts. Socioeconomic effects include changes in the well-being of individuals from their perspective. What is actually or perceived to have changed varies widely, and what is threatened, put at risk, or improved by a proposal or by an action also varies widely. In the case of activities on the outer continental shelf, the risk could be as specific as an oil spill, or as general as the alteration of a way of life. Benefits can be as specific as the creation of jobs, or as intangible as "national security." A fundamental consideration is discussed in the first report in this series, on OCS gas and oil exploration and leasing in Florida and California: People conceive of possible impacts and perceive of their probabilities in terms of their environment as they experience it and not necessarily an environment constructed of features selected by an objective analyst. Because human socioeconomic systems are social and symbolic, people in different environments or milieus can have different views of those environments that are equally realistic. Because these views are real, they have real consequences (emphasis in original). In addition to providing information about existing conditions in particular human environments, a framework for evaluating impacts must at a minimum examine four additional elements: actions that can cause effects, the possible reactions to them (responses), the dimensions of the impacts, and the potential incidence and distribution of impacts caused by OCS activities throughout the human environment. These are discussed in detail in Chapter 3 and in Appendix B.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies What Information is Needed? Assessment of the possible socioeconomic effects of OCS activity differs from the assessment of biological and physical effects in that significant socioeconomic effects can occur before a lease sale. The assessments are similar in that site-specific information should be obtained before decisions are made about development and production. For all stages of the leasing process, information is needed on the human environment. What crucial aspects of people's lives do they perceive to be at risk? Basic information on the distribution and dimensions of effects also is needed. Because available data have usually been collected for purposes other than to assess the effects of OCS activities, they have three shortcomings for impact assessment: First, they are almost always collected for a political, economic, or socially delimited geographic unit, but unlike generalizations from these data sets, the effects of OCS activities and human activities generally do not conform to geographic boundaries. Second, the data are almost always collected for convenience; they are collected if people engage in activities that produce a record. Third, inasmuch as the data are organized for different purposes, it is difficult to link them. Socioeconomic data not collected specifically to assess the potential effects of OCS oil and gas leasing must be evaluated carefully to determine how useful they are. In addition to information needed during the prelease and exploration stages, information should be gathered on the development, production, and termination stages. It should be possible to obtain more site-specific information after exploration; this heightens the need to collect data specifically related to the potential effects of the proposed activity. At this stage, it is important to know whether the assessment considers all five stages of the OCS oil and gas process (prelease, exploration, development, production, and termination) and whether it covers the dimensions of the potential effects adequately. It is possible and important to know whether the information permits identification of the relevant social groups and systems that will be affected. The process of identifying the information needed for impact assessment and management is commonly called "scoping." In the scoping process, an agency receives many public comments on what is important. There is a tendency for agencies (and many other specialists) to dismiss public concerns as not being expert. This is probably appropriate in some cases; most members of the public are not expert on ocean currents, engineering, or population ecology. But everybody is an expert on her or his fears, desires, wants, needs, and values. And that is crucial when describing an approach to obtaining socioeconomic information. As in other disciplines, expert practitioners can provide expert advice, but unlike other disciplines, the public must be involved in setting the research agenda. REGIONAL PROGRAMS Atlantic Many Atlantic region studies classified by MMS as socioeconomic address important issues, but they are primarily of a natural science or engineering nature. Few of the studies within the socioeconomic program have included socioeconomic analysis of effects or focused solely or even primarily on socioeconomics. The socioeconomic content of these studies consists mostly of secondary data, i.e., compilation and analysis of data collected for other reasons. Although important, secondary data do not constitute a socioeconomics program, and little of the effort in the region (with a few notable exceptions) is placed on socioeconomic analysis.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Gulf of Mexico The panel found no systematic MMS program for identifying and analyzing important socioeconomic issues for study in the Gulf of Mexico region. With the exception of four projects, the socioeconomics studies in the Gulf consist of secondary-data collections. Collection of baseline data is an important first step in a socioeconomics program, but it does not constitute a program in itself. Furthermore, useful baseline studies must collect information needed to carry out socioeconomics analyses, including collection of primary data where appropriate, rather than being limited to data from secondary sources only. An additional study in the Gulf region used collected data to implement an input-output model. Although they have been extensively criticized, input-output models can provide useful information. However, the panel has not been able to identify any actual applications of the input-output models in the Gulf. Information on economic effects of oil spills, although of limited scope, also can be useful in a socioeconomics program. Again, however, it is not clear how the results of the study of oil spill costs have been incorporated into an integrated program. The northern Gulf of Mexico is the most heavily developed section of the outer continental shelf in the world, and a variety of social and economic effects of that development have been discussed in the literature. The most sweeping and readily identified effects of OCS activities in the United States have been in the social and economic arenas in the Gulf of Mexico. Certainly, there are significant lessons to be learned about OCS oil production from the Gulf of Mexico experience, including cumulative effects, some of which will transfer to other regions. Greater efforts should be made to learn from that experience. Pacific Although the panel did not find any systematic MMS program for identifying and analyzing important socioeconomic issues for study, the program in the Pacific goes beyond those in the Atlantic and the Gulf of Mexico in its attempts to apply socioeconomic analysis. However, modeling efforts in the Pacific region are small-scale computer analyses, rather than in-depth studies with primary data. The effort to incorporate actual primary data to calibrate or verify the models has been insufficient. Moreover, many of the studies have serious methodological problems. Alaska With the exceptions of the shortcomings noted below, MMS's Socioeconomic Study Program (SESP) in Alaska is extensive and substantive, consisting of 159 individual studies through FY 1992. Of the regions, only Alaska has what could be considered a true socioeconomics program. It has a systematic underlying conceptual structure, it gives a broad definition of the human environment, it has identified areas for further study, and it has integrated several studies to fulfill program requirements. The Alaska SESP is as good an example as any socioeconomics studies program found in a federal or state agency. There is no scientific basis for Alaska's program to be so much better than those in other regions, although some of the state's characteristics (its relatively small population, for example) make it easier to study than other regions. However, there are some shortcomings in the program: Its noneconomic studies focus almost exclusively on native Alaskans, and the economics studies focus almost exclusively on macroanalyses of employment, income, and demographics. The program should be expanded to include social

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies studies of nonnative Alaskans, and its economics component should provide social cost analyses of oil spills, information on the potential effects of OCS activities on recreation and other activities, and analyses of the economic effects of OCS development. The Alaska program would be strengthened if there were stronger linkages among its various studies. CONCLUSIONS The Alaska region—despite some shortcomings—has a credible and comprehensive socioeconomics studies program. It has an underlying conceptual structure, offers a broad definition of the human environment, identifies study needs, and integrates its projects to fulfill program requirements. There is no such comprehensive program in the other three regions. The perception of the human environment on which MMS studies outside Alaska have been based needs expansion. It seems to have been framed only in terms of economics, demography, and government. But adequate consideration of the human environment also must include sociology, culture (and anthropology), and psychology. Even the Alaska program, which surpasses those of the other regions by a large margin, needs a more comprehensive and integrated view of the human environment. Very little socioeconomics research has been done in the other three regions, even though all of the OCS oil and gas produced to date has come from the Gulf of Mexico and the Pacific regions. External factors have influenced the development of such striking asymmetry among the four programs. In Alaska, the importance of native populations and their cultures is clearly recognized by and reflected in federal and state law. The population of Alaska is extremely small compared with the resources available to study it and with the potential value of OCS oil and gas. Socioeconomic studies are needed outside of Alaska for two reasons in addition to the clear mandate of OCSLA. First, because so much OCS oil and gas activity has occurred off the coasts of Louisiana, Texas, and California, a great deal could be learned by studying those places. Second, the vociferous opposition to leasing in many coastal states makes clear that a great deal needs to be learned. The Alaska program cannot simply be copied to assess the affects of OCS activities in other regions, nor can the Tri-County Socioeconomic Monitoring Program—a county initiative in California—be copied to the Gulf of Mexico. The Alaska program evolved primarily to address questions that do not exist in the other regions. Activity in the Gulf of Mexico has passed the stage at which the monitoring of individual projects, as is done in southern California, is feasible. That region will require assessment and monitoring of cumulative effects. In most regions, MMS will have to develop a program from a very small base of information. As a result, the panel cannot detail appropriate studies because the basic outlines of a program are missing in most regions, as are fundamental appraisals of the situations and needs in each region. However, the panel can recommend basic goals for such a program, delineate fundamental properties for a program, and describe a program development process for MMS and the larger scientific community. RECOMMENDATIONS Goals To establish a national, comprehensive, credible socioeconomics studies program, MMS should begin with the following goals.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Create a socioeconomic research program that is national in scope and, as a result, that can generalize applicable findings from one region to another. At the same time the program must account for regional variations in study design and implementation. The program must have an established scientific integrity. Use the program to collect the information required by OCSLA and necessary to elucidate the implications of OCS activities at all stages, from prelease to termination. The schedules of the planning process described in Table 1-4 and the timing of studies should be compatible with each other. Scientific Personnel To accomplish its goals, MMS needs to strengthen its in-house expertise in socioeconomic disciplines, especially outside of Alaska. The scientific expertise of MMS's regional staff should match (at least approximately) the mix of studies funded in each region. Especially outside of Alaska, additional regional scientific staff will be needed to develop credible and useful studies of economics, sociology, and cultural anthropology, and political science. Developing credible socioeconomics programs outside of Alaska will require an increase in funding for socioeconomic studies. Process MMS should establish a process to identify, in general terms, the socioeconomics information it needs and a process to translate that description into a program of studies. The basics of one approach to this process are outlined below. The approach is similar to, although more extensive than, the one used to develop the Alaska SESP. Delineate the generic socioeconomic information needs of the agency. Start by holding workshops or meetings between MMS personnel and members of the scientific community. The focus should not be on whether there have been or will be specific effects as a result of OCS activities, but on what effects could be included for consideration in a research agenda and on what methods could to use to assess them. It is important to keep the agenda broad and not to discuss specific studies at this stage. Delineate regional variations to further define the research effort. With the broad considerations in hand, regional workshops or meetings between MMS personnel, members of the scientific community, and members of the public should narrow the focus of the regional research agenda and to help set priorities. Until the agenda is conceptualized, individual studies should not be considered except as examples. It is essential to involve the public at this stage. Although it will not set the research agenda directly, the public is in the best position to know its concerns, fears, hopes, expectations, and values. Translate the narrowed research agenda into specific studies in order of priority. A better understanding of the issues should result from the first two steps. Cooperation with the

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies scientific community is still desirable at this stage, when the use of workshops, conferences, and seminars, and the work of consultants would be useful. In this, as in all other stages of the process, MMS must take advantage of scientific committee and regional technical working groups. Revise standard MMS funding criteria and explore creative funding strategies for smaller studies. Social science research is less likely than other kinds of studies to be funded according to the budget criteria MMS uses. Those criteria are most responsive to potential litigation, and, outside of Alaska, effects on the human environment have seldom ended up in the courts. Recent social science research projects funded by MMS through university initiatives in the Gulf of Mexico and Pacific regions are examples to adopt for other projects. Although these projects are focused regionally, they might benefit by being opened to proposals from researchers from all parts of the country. Use the full range of social science methods to design specific studies. These options include empirical research, often involving surveys and questionnaires, with the attendant necessity of receiving approval from the Office of Management and Budget. Secondary data analyses and community studies that have characterized past MMS research also are valuable tools that should continue to be used. The most important aspect of the process outlined above is that a generic research agenda must be established, at least in some regions, before specific studies can be evaluated. Although Alaska's program was developed as the result of a workshop that involved the scientific community, it would also benefit from additional thoughtful participation from the scientific community and the public. The process described above will require time, patience, commitment, and some additional money to develop a viable research program. However, MMS has demonstrated by its actions in Alaska—and to some degree by aspects of its biological and physical studies elsewhere—that it is capable of success and that success need not take decades of require an enormous increase in its budget. To date, the alternatives have not worked very well.

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Assessment of the U.S. Outer Continental Shelf Environmental Studies Program: III. Social and Economic Studies Assessment of the U.S. Outer Continental Shelf Environmental Studies Program III. Social and Economic Studies

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