The Next Big Thing

With Michigan’s sagging economy tied to Detroit’s ailing auto industry, many are asking: What is the next big thing that will help to return economic prosperity to the state? To answer that question we can look to the state’s natural resources. Development of natural resources has been a major factor in this state’s economic success. Michigan’s abundant natural resources include extensive forests, oil and gas reserves, commercial mineral deposits and abundant water. The state, long a leader in strong conservation practices, has moved from a conservation ethic that promotes the responsible use of natural resource to a preservation stance that restricts the use of these resources.

The responsible use of natural resources should be encouraged by eliminating roadblocks placed in the way of companies seeking to invest and create jobs. Gov. Jennifer Granholm continues to throw millions of dollars in the form of grants and tax breaks at firms, encouraging them to locate in the state, while at the same time discouraging companies by not reforming a burdensome regulatory regime that makes it difficult — if not impossible — to obtain permits required by state law. The following are examples:

• Water Resources — Michigan is blessed with abundant water. The governor and the Legislature have limited this advantage by enacting groundwater regulations that make it increasingly difficult to use that water. One of Gov. Granholm's early legislative initiatives after being elected governor was to propose the Water Legacy Act, which would have made it difficult for bottled water companies to locate in the state by granting DEQ considerable discretion in permitting. The Legislature is equally to blame for enacting new water regulations. Recently introduced legislation would impose a 20-cent tax on drinking water bottled in the state.



• Mineral Resources — Michigan has large deposits of minerals including iron, copper and nickel. The Kennecott Minerals Eagle project would extract nickel and copper from a small underground mine by bringing the rock up to a surface facility where it would be crushed for size consistency, then transported to a processing facility where the minerals are removed for use in industry. This would not be an open pit or quarry-like mine with which many may associate mining, nor would it involve the injection of anything into the rock formation. Kennecott Mining Co. is attempting to obtain a permit at a site near Marquette, but they are finding Michigan a difficult place to do business. The DEQ, after a review of Kennecott’s application, proposed approval of the permit. Following an outcry from environmental groups, however, the DEQ withdrew its proposed decision after saying the state omitted crucial information from the public record regarding the project. The company is still awaiting further action on their permit.



• Forest Resources — Michigan has 3.9 million acres of state forest land managed for recreation and timber production. Timber harvesting and processing provides the jobs important to local economies in the northern part of the state. Unfortunately, the state is not taking full advantage of the economic opportunities of its considerable forest resources. In a 2005 study for the Department of Natural Resources titled "Michigan State Forest Timber Harvest Trends," Dr. Larry Pedersen said "Michigan’s timber growth is estimated to be increasing while timber harvests in the state are estimated to be fairly steady." He goes on to say, "This results in the State of Michigan having one of the greatest absolute amounts of timber net growth in excess of removals of any state."



• Oil and Gas — Michigan has historically developed its oil and gas resources in an environmentally responsible manner while allowing for other uses such as recreation. However, the Legislature reversed course in 2002 by banning directional drilling for oil and gas under the Great Lakes, even though the Michigan Environmental Science Board said it could be done without harm to the environment.

The state should stop throwing money at attempting to attract the "next big thing" that will turn around the state’s economy. The taxpayers of the state would be better served by a shift in attitude on the part of state officials that encourages, rather than discourages, the responsible use of existing natural resources, as well as privatizing those resources the state has demonstrated it cannot effectively manage.

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Russ Harding is senior environmental policy analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.