**REPORT TITLE:** Small Community Population Impact Model. Special
Report No. 4.

**STUDY TITLE:** Forecast and Analysis of Population Employment and the
Economy.

CONTRACT NUMBER(S): BLM: CT6-61; MMS: 14-12-0001-29002.

SPONSORING OCS REGION: Alaska.

APPLICABLE PLANNING AREA(S): Norton Basin.

FISCAL YEAR(S) OF PROJECT FUNDING: 1978.

COMPLETION DATE OF REPORT: June 1980.

COST(S): FY 1978: \$35,979; CUMULATIVE PROJECT COST: \$35,979.

PROJECT MANAGER(S): L. Huskey.

AFFILIATION: University of Alaska, Institute of Social and Economic
Research.

ADDRESS: 3211 Providence Drive, Anchorage, Alaska 99508.

PRINCIPAL INVESTIGATOR(S)\*: L. Huskey, J. Kerr.

KEY WORDS: Norton Basin; Alaska; model; human population; impacts;
development; Nome; scenarios; development scenarios; employment;
economics and demographics; Alaska Region.

**BACKGROUND:** In order to meet requirements of the National
Environmental Policy Act of 1969 regarding a determination of the
environmental and socioeconomic effects of outer continental shelf (OCS)
development, the U.S. Department of the Interior, Bureau of Land
Management (BLM, now the Minerals Management Service) initiated the
Alaska Socioeconomic Studies Program (SESP). The SESP objectives were to
predict and evaluate the effects of offshore oil and gas exploration and
development activities on the economic, physical, and social
environments within the State. Future offshore oil development in Alaska
could affect many small communities. Employment associated with this
development was expected to be large relative to community size. As part
of SESP, a model was developed to predict the impact associated with
OCS-related population growth on Alaskan communities or regions;
however, the model proved to be cumbersome and omitted predictions of
several required parameters. The present study effort was implemented to
make the necessary changes to the model, allowing its application to
small communities or regions within the State.

ACCESS NUMBER: 29002

**OBJECTIVES:** (1) To improve an existing model that predicted OCS
development impacts on population growth of small Alaskan communities or
regions; and (2) To use the new model, termed the Small Community Impact
Model (SCIMP), to predict OCS Norton Sound (i.e., Bering Sea)
development‑related effects on the city of Nome.

**DESCRIPTION:** SCIMP was an economic‑demographic interaction model
which stressed linkage between local labor supply and inmigration.
Changes from the original model made the baseline sector easier to
project and more accurately described population changes. This model
projected growth in four sectors: (1) baseline; (2) development; (3)
operations; and (4) secondary. In each sector, SCIMP separately
projected the three major demographic events (i.e., numbers of births,
deaths, and migrations). Population changes were determined for each
projection cycle by incorporating these demographic factors into
population estimates for each successive cycle. The study detailed the
rationale behind each of the parameters and multipliers in the model and
how they were interrelated.

In order to test the revised model, secondary information from the Nome
(Alaska) Census Division was used. Several of the data sources were
based on scenarios previously developed for the Bering‑Norton OCS. The
1980 population was estimated by extrapolating from the 1978 population
and incorporating rates of mean annual change between 1970 and 1978.
Age‑sex distributions were predicted utilizing a cohort‑survival
approach. Various assumptions were made regarding labor force changes.

**SIGNIFICANT CONCLUSIONS:** A revised, small community, population
impact model, termed SCIMP, was described which predicted population
changes resulting from OCS development. The structure of SCIMP was
thought to be consistent and theoretically correct. It was unbiased
since there were no built‑in preconceptions about parameter levels used.
SCIMP was designed to be used in conjunction with a detailed study of a
local economy. It was used to predict OCS‑related changes in population
and labor statistics of Nome, Alaska. By varying the values of various
parameters, model results changed in a logical way.

**STUDY RESULTS:** The revised SCIMP model was used to predict OCS
development effects on the Nome (Alaska) Census Division. In the base
case (i.e., no OCS activity and no impact), the revised SCIMP model
predicted a base population decrease of ‑1% per year. Under the base
case scenario, only minimal changes in employment were predicted.

OCS development was predicted to increase the population of Nome by
4,092 people by 1985. Under the OCS development scenario, the population
of Nome was expected to peak at 13,614 people and fall to 9,417 people
by the year 2000. Total employment as a result of OCS development was
projected to grow from 2,052 in 1985 to 4,712 by the year 2000. Peak
employment was expected in 1990 at 6,300. During this peak in 1990,
direct OCS employment was expected to account for 45% of the total
impact identified under the OCS development scenario. SCIMP projected
that over 50% of direct OCS-related employment was located in enclaves.
Total labor was predicted to stay relatively constant throughout the
period following the initial impact.

The demographic and economic effects of OCS employment were predicted to
be large. Between 1988 and 2000, population and total employment impacts
were estimated to be greater than baseline levels. OCS activities were
expected to profoundly affect all employment sectors.

A series of sensitivity tests were completed to determine how changes in
the labor supply and demand would affect model results. In the first
test, all labor coefficients were doubled. This resulted in a doubling
of total local labor employed. In the second test, local labor response
rate was reduced to zero. As a result, no significant changes occurred
to those already employed by OCS operations. In the third test, the
basic/nonbasic multipliers were doubled. This resulted in considerable
changes in the secondary impacts of OCS development. In the fourth test,
baseline migration rates were increased to 1.0. This change resulted in
the following: a population increase in the baseline, an increase in the
local labor supplied to OCS development, and an increase in the total
labor employed by OCS development. For the fifth test, the proportion of
workers living in enclaves was reduced from 0.5 to 0. This resulted in
an increase in secondary employment and in the total impact variables.
In the sixth test, the enclave proportion was increased to 1.0, with the
opposite effects of test 5. Results of these tests suggested that the
model responded in the correct manner to changes in parameters.

**STUDY PRODUCT(S):** Huskey, L. and J. Kerr. 1980. Small Community
Population Impact Model. Special Report No. 4. A final report by the
Institute of Social and Economic Research, University of Alaska for the
U.S. Department of the Interior, Bureau of Land Management Alaska OCS
Office, Anchorage, AK. Social and Economic Studies Program Special
Report No. 4. Contract No. 14-12-0001-29002. vii + 64 pp. + app.

\*P.I.\'s affiliation may be different than that listed for Project
Manager(s).