Abstract

Rural America has changed dramatically over the last century, from having over half the population living in rural settings to only 20 percent residing in a rural area today, and outmigration of younger populations from rural communities remains a constant issue for local governing officials. A declining tax base and concurrent rising costs for maintenance and repair of aging infrastructure add further challenges to policy decisions. Reduced enrollment has caused school closures or mergers. Farm consolidation and technical advances reduced the demand for local labor. On the positive side, however, record-high commodity prices have amplified farm income to new heights. The increased revenues can lead to farmers spending additional money within the local region, while at the same time increased transportation of products has impacted local infrastructure such as roads and bridges. Such dynamics present challenges for municipal leaders charged with promoting economic development and balanced spending, while at the same time maintaining the way of life and rural character that are so important to area residents.

The Prairie Pothole Region (PPR) of the United States covers much of the Northern Great Plains, including parts of North and South Dakota, Minnesota, Iowa, and a small part of Montana, and extends across a broad swath of Alberta and Saskatchewan. The region is defined largely by its rural character but has experienced extensive land conversion over the last century, with agricultural areas replacing native prairie habitat. Additional pressures arise from oil and gas development, global markets for agricultural production, and increased demands for biofuel feedstocks.

Record-high commodity prices increase pressure on the native prairie as farmers look for new cropland acres. The volatility of commodity prices has raised fears over the intensity of land conversion to row-crop agriculture, the economic health and resiliency of rural communities, and ultimately, population dynamics and outmigration of younger generations. Land-use pressures are increased by the exponential growth of oil and gas production in the region, where some 8,200 wells are now in production within the Williston Basin of North Dakota, accompanied by increased population pressures on housing and municipal services.

The U.S. Department of Agriculture’s Conservation Reserve Program (CRP)—a cropland retirement program with close to 4.8 million acres enrolled in the PPR—faces uncertainty in upcoming legislative actions, with a large majority of property enrollments scheduled to expire by 2017. The CRP historically has provided improved habitat conditions, reductions of soil damage through erosion and loss of nutrients, and sequestration of millions of tons of atmospheric carbon. In turn, wildlife-related recreation levels have increased in many parts of the PPR, with money spent in local communities. Contemporary resource-management and rural-development planning increasingly emphasize the need for diversification and integration of resource-extractive industries with nonmarket-based recreational and amenity values that tie into quality of life.

Ultimately, each community is unique in its environmental, social, economic, and fiscal endowments. One rural-development policy may work better in one community than another. In addition, rural-development issues such as migration, job growth, and taxes are diverse in themselves. The goal of this report is to qualitatively and quantitatively discuss the economic impacts of land-use decisions in rural areas, particularly in the PPR.

First posted July 2, 2013

Revised July 19, 2013