Tuesday, May 15, 2012

The New Natural Resource Economy and Rural Economic Development

By Susan Lurie (Oregon State University) and Michael Hibbard (University of Oregon)


Photo: Susan Lurie – 2012
A couple of years ago, while our research team was working on a project in Grant County in deep rural east-central Oregon (read our report or journal article), we had the opportunity to sit in on an “economic summit” for the county. The local extension agent pointed out that the two industries that formed the historic economic base of the county—timber and cattle—were both in long-term, permanent decline.

As a consequence, Grant County—like many resource dependent rural communities—is struggling with loss of jobs and local businesses and wealth, and generally declining community vitality. The problems are mainly due to forces beyond their control, such as globalization and economic restructuring, the dominance of the industrialized commodity production model, and changing societal demands for agricultural and natural resource products.

As we listened to the audience discussion of the presentation, we were struck by something. Everyone present had an abiding commitment to Grant County and was deeply worried about the future of the community. They also had a strong love for rural and small town life, especially as it related to making a living off the land.

A significant segment of the audience saw the only hope for the community in a return to traditional uses of natural resources. That last sentiment was not new to us, of course. What was new to the discussion was the significant fraction of the audience who were interested in considering alternative possibilities for natural resource management. They saw that there may be ways to make a living from natural resources based on emerging markets for products that reflect increasing societal expectations that natural capital should be managed and utilized in a more sustainable manner.

Photo: Country Natural Beef  
As researchers, we decided to look more closely into what this “new” natural resource economy (NNRE) comprises as a complement to traditional uses. We wondered whether it might help create a way for rural communities to think about economic development in response to contemporary economic and social realities.

Problems of Natural Resource-based Economies

The industrialized approach to agriculture and natural resource management—which includes specialization, standardization, and consolidation in pursuit of increased efficiency—has disconnected rural communities from the larger economy. At the same time, societal demands for protection and enhancement of rural communities’ key assets (their natural resources) has led to more stringent regulations affecting production.

Some rural communities with high amenity values have developed alternative economies as sites for tourism and retirement. For most communities, however, the decoupling from the larger economy has been an intractable socio-economic problem, and rural communities continue to lag behind urban areas.

How the New Natural Resource Economy (NNRE) is Different

The NNRE may offer a way out of the dilemma by reframing natural resources as assets to be managed for the long term. It emphasizes a multifunctional landscape that balances agricultural and natural resource production with amenities for recreation and cultural activities and protective natural services such as air and water purification, biodiversity, and flood and erosion control. Activities and businesses comprising the NNRE may not be new; what is new is accounting for them collectively as an emerging economic sector in its own right that can help diversify rural economies and increase local resilience and economic autonomy.

As we probed these ideas it quickly became apparent that the predicament is not limited to the U.S. Most developed countries are facing similar challenges and a variety of policy responses have emerged. To shed light on the U.S. situation, Oregon seemed a good place to start: many rural Oregon communities are struggling with economic change and the rural development grapevine gave us reason to believe there is quite a bit of NNRE activity at work, informally and without any overarching state or local strategy.

Preliminary Research

To get a sense of what types of enterprises currently comprise Oregon’s NNRE and what institutional challenges they face, we conducted a survey and three in-depth case studies of Oregon rural communities. Details of the study and policy issues identified can be found at the Rural Futures Lab website.

In summary, we found that some communities are engaged in NNRE economic development, although it is not typically identified as such. It was also clear that there is generally low or no understanding of how to define and develop a local or regional NNRE strategy in order to overcome existing barriers and foster institutional changes to help rural communities.

As research and action moves forward, it will be important to continue identifying institutional barriers that must be changed in order to encourage and nurture rural NNRE entrepreneurialism. We would like to search for answers to questions about the NNRE such as:
  • What other challenges are NNRE enterprises encountering, and what steps can be taken to remove those barriers?
  • What examples exist in different contexts that would help rural communities looking for innovative ways of building more sustainable futures?

As we continue to refine our understanding of the NNRE, comparative studies and examples of practicable NNRE economic development policies and programs will help create a framework that can be adapted to local circumstances in order to help the NNRE flourish and, with it, rural communities. 
Susan Lurie is a faculty research associate in the Policy Research Program at the Institute for Natural Resources, Oregon State University.

Michael Hibbard is Professor Emeritus, Department of Planning, Public Policy & Management, and Director, Institute for Policy Research & Innovation, at the University of Oregon.

Visit the RUPRI Rural Futures Lab here.

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