A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its 

Future in the Region 

FINAL REPORT 

March 27, 2001

Center for Business and Economic Research 

Gatton College of Business and Economics 

University of Kentucky 

Dr. Mark C. Berger, Director 

A Study on the Current Economic Impacts 

of the Appalachian Coal Industry 

and its Future in the Region 

Authors: 

Dr. Eric C. Thompson 

Dr. Mark C. Berger 

Steven N. Allen 

Jonathan M. Roenker 

The authors would like to thank Drs. Curt Harvey and Dan Black for their comments and contributions, 

as well as Arun Srinivasan and Alice Lookofsky for their excellent research assistance. This research was 

sponsored by the Appalachian Regional Commission under contract # CO-12884H. 

Center for Business and Economic Research 

Gatton College of Business and Economics 

335BA Gatton Building 

University of Kentucky 

Lexington, KY 40506-0034 

(859) 257-7675 (Voice) 

(859) 257-7671 (Fax) 

cber@pop.uky.edu 

http://gatton.uky.edu/CBER/cber.htm
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Table of Contents 

Table of Contents .......................................................................................................................... i 

List of Tables and Figures........................................................................................................... ii 

Executive Summary......................................................................................................................1 

Introduction .................................................................................................................................74 

Section 1: Economic Impact Analysis — The Current Role and Status of the Coal 

Industry in the Region’s Economy ......................................................................10 

 Part 1.1: Revalidation of List of Major Appalachian Coal-Producing Counties...................10 

 Part 1.2: Detailed Economic Profile of the Coal Industry’s Share of 

 Total Employment, Output, and Income in the Appalachian Region....................14 

 Part 1.3: Estimates of the Direct, Indirect, and Induced 

 Economic Effects Attributable to the Coal Industry .................................................46 

 Part 1.4: Estimates of Potential Tax Revenue Impacts 

 Related to Coal Production and Exports ....................................................................65 

 Part 1.5: Baseline Analysis of Other Potential Economic Impacts..........................................75 

 Part 1.6: Groupings of Appalachian Coal-Producing Counties Organized 

 by Sectors, Sub-State Areas, and Other Appropriate Approaches..........................88 

Section 2: Economic Forecast — The Future Role and Status 

 of the Coal Industry in the Region’s Economy..................................................91 

 Part 2.1: Economic Forecasts for the Appalachian Coal-producing Region 

 Using Baseline and Alternative Scenarios..................................................................91 

 Part 2.2: Estimates of the Future Direct, Indirect, and Induced Economic Effects 

 Attributable to the Coal Industry Using Economic Forecasts through 2010 .......121 

 Part 2.3: Estimates of Future Tax Revenue Impacts Related to Coal Production 

 and Exports Using Economic Forecasts through 2010............................................132 

 Part 2.4: Analysis of Demographic and Transfer Payment Impacts 

 Using Economic Forecasts through 2010..................................................................138 

Conclusion .................................................................................................................................153 

Appendix A: 118 Major Coal Producing Counties in the ARC Region ............................158 

Appendix B: Mathematical Derivation of IMPLAN Multipliers .......................................159 

Appendix C: Data Sources.......................................................................................................161 

Appendix D: References...........................................................................................................162 

Appendix E: Baseline Data by County ..................................................................................163
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List of Tables and Figures 

Figure 1.1.1: 118 Major Coal-Producing Counties in the ARC Region..................................13 

Table 1.2.1: Descriptive Statistics about the Coal Mining Industry 

 in the Entire ARC Region, 1997.............................................................................15 

Table 1.2.2: Descriptive Statistics about the Coal Mining industry 

 in the Entire ARC Region by State, 1997..............................................................18 

Figure 1.2.1: Total Coal Production by County in the ARC Region, 1997.............................20 

Figure 1.2.2: Total Coal Production by County in the Southern 

 ARC Region, 1997 ...................................................................................................21 

Figure 1.2.3: Total Coal Production by County in the Northern 

 ARC Region, 1997 ...................................................................................................22 

Figure 1.2.4: Total Coal Production by County in the Central 

 ARC Region, 1997 ...................................................................................................23 

Figure 1.2.5: 15 Counties in the ARC Coal Region with the Highest 

 Total Coal Production, 1997 ..................................................................................24 

Figure 1.2.6: Total Underground Coal Production by County in the 

 ARC Region, 1997 ...................................................................................................25 

Figure 1.2.7: Total Surface Coal Production by County in the ARC 

 Region, 1997 .............................................................................................................26 

Figure 1.2.8: Coal Mining Output by County in the ARC Region, 1997 .................................27 

Figure 1.2.9: Coal Mining Employment by County in the ARC Region, 1997 .....................29 

Table 1.2.3: Coal Mining Employment by County in the ARC Region, 1997 .....................30 

Figure 1.2.10: Coal Mining Earnings by County in the ARC Region, 1997.............................32 

Figure 1.2.11: Coal Mining Gross County Product by County in the 

 ARC Region, 1997 ...................................................................................................34 

Figure 1.2.12: Ratio of Coal Mining Employment to Total Employment 

 by County in the ARC Region, 1997.....................................................................36 
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Figure 1.2.13: Ratio of Coal Mining Employment to Total Employment 

 by County in the ARC Region (Enhanced), 1997 ...............................................37 

Figure 1.2.14: 15 Counties in the ARC Coal Region with the Highest Ratio 

 of Coal Mining Employment to Total Employment, 1997 ................................37 

Figure 1.2.15: Ratio of Coal Mining Earnings to Total Earnings by County 

 in the ARC Region, 1997 ........................................................................................39 

Figure 1.2.16: Ratio of Coal Mining Earnings to Total Earnings by County 

 in the ARC Region (Enhanced), 1997 ...................................................................40 

Figure 1.2.17: 15 Counties in the ARC Coal Region with the Highest Ratio of 

 Coal Mining Earnings to Total Earnings, 1997 ...................................................41 

Figure 1.2.18: Coal Mining Gross County Product as a Percentage of Total 

 Gross County Product, 1997..................................................................................43 

Figure 1.2.19: Ratio of Coal Mining Gross County Product to Total Gross County 

 Product by County in the ARC Region (Enhanced), 1997 ................................44 

Figure 1.2.20: 15 Counties in the ARC Coal Region with the Highest Ratio of Coal 

 Mining Gross County Product to Gross County Product, 1997.......................45 

Table 1.3.1: Direct and Total Economic Impact of the Coal Mining Industry 

 in the Appalachian Coal-Producing Counties, 1997..........................................50 

Table 1.3.2: Direct and Total Economic Impact of the Coal Mining Industry 

 in the Major Appalachian Coal-Producing Counties by State, 1997 ...............52 

Figure 1.3.1: Earnings Impact as a Share of the Local Economy by County in 

 the ARC Region.......................................................................................................54 

Figure 1.3.2: Employment Impact as a Share of the Local Economy by County 

 in the ARC Region ..................................................................................................55 

Figure 1.3.3: Value-Added Impact as a Share of the Local Economy by County 

 in the ARC Region ..................................................................................................56 

Figure 1.3.4: Total Earnings Impact by County in the ARC Region ......................................57 

Figure 1.3.5: Total Employment Impact by County in the ARC Region ...............................58 
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Figure 1.3.6: Total Value-Added Impact by County in the ARC Region ..............................59 

Table 1.3.3: The Total Economic Impact of the Coal Mining Industry as a Share 

 of Regional Economic Activity..............................................................................62 

Figure 1.3.7: Individual Output Multipliers for 118 Appalachian Coal- 

 Producing Counties ................................................................................................64 

Figure 1.4.1: Severance Tax Collection by County in the ARC Region .................................67 

Table 1.4.1: Severance Tax Revenues by State.........................................................................68 

Figure 1.4.2: Income Tax Collection by County in the ARC Region ......................................69 

Table 1.4.2: Income Tax Revenue Due to Coal Mining in Major Appalachian 

 Coal-Producing Counties by State........................................................................70 

Figure 1.4.3: Sales Tax Collection by County in the ARC Region ..........................................71 

Table 1.4.3: State and Local Sales Tax Revenue by State........................................................72 

Table 1.4.4: Severance, Income, and Sales Tax Revenue by State.........................................73 

Figure 1.4.4: Total Tax Collections by County in the ARC Region ........................................74 

Table 1.5.1: Change in Economic Indicator Resulting from a 10% Decline 

 in County Earnings (Resulting from a Loss of Steel or Coal 

 Industry Earnings) ..................................................................................................77 

Figure 1.5.1: Percent Population Change, 1990 – 1997, by County 

 in the ARC Region ..................................................................................................78 

Table 1.5.2: Regional Totals for Socioeconomic Conditions ..................................................79 

Figure 1.5.2: TANF Payments per Capita by County in the 

 ARC Region, 1997 ...................................................................................................80 

Figure 1.5.3: SSI Payments per Capita by County in the 

 ARC Region, 1997 ...................................................................................................81 

Figure 1.5.4: Food Stamp Payments per Capita by County in the 

 ARC Region, 1997 ...................................................................................................82 
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Figure 1.5.5: OASDI Payments per Capita by County in the 

 ARC Region, 1997 ...................................................................................................84 

Figure 1.5.6: Medical Payments per Capita by County in the 

 ARC Region, 1997 ...................................................................................................85 

Figure 1.5.7: UI Payments per Capita by County in the 

 ARC Region, 1977 ...................................................................................................86 

Figure 1.6.1: The Northern, Central, and Southern Regions of the 

 Appalachian Coal-Producing Area ......................................................................90 

Table 2.1.1: Macroeconomic and Kyoto Scenarios ..................................................................93 

Figure 2.1.1: Forecast Change in Coal Production Under Baseline 

 Scenario (Millions of Tons), 1997-2010.................................................................97 

Figure 2.1.2: Forecast Change in Coal Prices (Minemouth) Under 

 Baseline Scenario, 1997-2010..................................................................................98 

Figure 2.1.3: Forecast Change in Coal Output Under Baseline Scenario 

 (Billions of Dollars), 1997-2010..............................................................................100 

Figure 2.1.4: Forecast Change in Coal Employment Under Baseline Scenario, 

 1997-2010 ..................................................................................................................101

Figure 2.1.5: Forecast Change in Coal Earnings Under Baseline Scenario 

 (Billions of Dollars), 1997-2010..............................................................................103 

Figure 2.1.6: Lost Coal Earnings as a share of All Earnings Under 

 Baseline Scenario.....................................................................................................105 

Figure 2.1.7: Lost Coal Employment as a Share of All Employment 

 Under Baseline Scenario ........................................................................................106 

Table 2.1.2: Growth Rate in Appalachian Coal Production, 1997-2000, 

 by Macroeconomic and Kyoto Scenario ..............................................................110 

Table 2.1.3: Level of Growth in Appalachian Coal Production, 1997-2000, 

 by Macroeconomic and Kyoto Scenario (Thousands of Tons).........................112 

Table 2.1.4: 2010 Coal Production Relative to Baseline by Macroeconomic 

 and Kyoto Scenarios ...............................................................................................112 
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Table 2.1.5: Current and 2010 Coal Price (Minemouth) by Macroeconomic 

 and Kyoto Scenarios ...............................................................................................114 

Table 2.1.6: Level and Percentage of Growth in Appalachian Coal Industry 

 Output, 1997-2010, by Macroeconomic and Kyoto Scenarios 

 (Billions of 1997 Dollars) ........................................................................................116 

Table 2.1.7: Level and Percentage of Growth in Appalachian Coal Industry 

 Employment, 1997-2010, by Macroeconomic and Kyoto 

 Scenarios (Jobs)........................................................................................................118 

Table 2.1.8: Level and Percentage of Growth in Appalachian Coal Industry 

 Earnings, 1997-2010, by Macroeconomic and Kyoto Scenarios 

 (Billions of 1997 Dollars) ........................................................................................118 

Table 2.1.9: The Direct Effect of Coal Industry Changes: Loss in Coal Industry 

 Earnings as a Percentage of 1997 Regional Earnings by 

 Macroeconomic and Kyoto Scenarios (Billions of 1997 Dollars)......................120 

Table 2.1.10: The Direct Effect of Coal Industry Changes: Loss in Coal Industry 

 Employment as a Percentage of 1997 Regional Employment by 

 Macroeconomic and Kyoto Scenarios ..................................................................120 

Figure 2.2.1: Total Output Impact Under Baseline Scenario ...................................................123 

Figure 2.2.2: Forecast Total Earnings Impact Overall and as a Share of All 

 Earnings Under Baseline Scenario........................................................................124 

Figure 2.2.3: Forecast Total Employment Impact Overall and as a Share of 

 All Employment Under Baseline Scenario..........................................................125 

Table 2.2.1: The Total Effect of Coal Industry Changes: Loss in Coal 

 Industry Earnings Overall as a Percentage of 1997 Regional 

 Earnings by Macroeconomic and Kyoto Scenarios (Billions of 

 1997 Dollars) ............................................................................................................128 

Table 2.2.2: The Total Effect of Coal Industry Changes: Loss in Coal 

 Industry Employment Overall and as a Percentage of 1997 

 Regional Employment by Macroeconomic and Kyoto Scenarios....................128 

Figure 2.2.4: Distressed Counties in the ARC Coal-Producing Region.................................130 
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Table 2.3.1: Forecast Change in the Tax Revenue Impact of the Appalachian 

 Mining Industry Under the Baseline Scenario....................................................133 

Figure 2.3.1: Forecast Change in Tax Revenue Impact of the Appalachian 

 Coal Industry Under Baseline Scenario...............................................................134 

Table 2.3.2: Forecast Change in the Overall Tax Revenue Impact of the 

 Appalachian Coal Mining Industry, 1997-2010, by 

 Macroeconomic and Kyoto Scenarios (Millions of 1997 Dollars) ....................137 

Table 2.3.3: Forecast Change in Severance Tax Revenue Impact of the 

 Appalachian Coal Mining Industry, 1997-2010, by 

 Macroeconomic and Kyoto Scenarios (Millions of 1997 Dollars) ....................137 

Figure 2.4.1: Estimated Population Loss by Region Under Baseline Scenario .....................141 

Figure 2.4.2: Estimated Change in Per Capita Transfer Payments 

 by Region Under Baseline Scenario......................................................................142 

Figure 2.4.3: Estimated Change in Income in per Capita Unemployment Insurance, 

 Medical Transfers, and Social Security Payments by Region 

 Under Baseline Scenario ........................................................................................143 

Table 2.4.1: Forecast Change in Population, 1997-2010, Due to Forecast 

 Growth in the Appalachian Coal Mining Industry by 

 Macroeconomic and Kyoto Scenarios ..................................................................146 

Table 2.4.2: Forecast Change in per Capita TANF Program Payments, 

 1997-2010, Due to Forecast Growth in the Appalachian 

 Coal Mining Industry by Macroeconomic and Kyoto Scenarios .....................149 

Table 2.4.3: Forecast Change in per Capita SSI Payments, 1997-2010, 

 Due to Forecast Growth in the Appalachian Coal Mining 

 Industry by Macroeconomic and Kyoto Scenarios ............................................149 

Table 2.4.4: Forecast Change in per Capita Food Stamp Program 

 Payments, 1997-2010, Due to Forecast Growth in the 

 Appalachian Coal Mining Industry by Macroeconomic 

 and Kyoto Scenarios ...............................................................................................150 
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Table 2.4.5: Forecast Change in per Capita Unemployment Insurance 

 Program Payments, 1997-2010, Due to Forecast Growth in the 

 Appalachian Coal Mining Industry by Macroeconomic and 

 Kyoto Scenarios.......................................................................................................150 

Table 2.4.6: Forecast Change in per Capita Medical Transfer Program 

 Payments, 1997-2010, Due to Forecast Growth in the 

 Appalachian Coal Mining Industry by Macroeconomic 

 and Kyoto Scenarios ...............................................................................................151 

Table 2.4.7: Forecast Change in per Capita Social Security (OASDI) Program 

 Payments, 1997-2010, Due to Growth in the Appalachian Coal 

 Mining Industry by Macroeconomic and Kyoto Scenarios ..............................151 
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Executive Summary 

Few topics are capturing national attention more today than energy. The 

urgency of the issue in 2001 is nearly as great as it was in the mid-1970’s and early 

1980’s, and the awareness of its importance is likely to endure. Of the energy-supplying 

sectors in the United States, coal is surely the most volatile. Even though its 

contribution to energy supply has declined in recent years, it remains the only abundant 

domestically produced energy resource and represents the primary fuel used by a large 

segment of industry. In Appalchia, coal mining is a vital part of the economy. Because 

of this importance, the region’s economy and its residents remain vulnerable to changes 

in the industry’s fortunes. In some counties, coal mining represents such a significant 

part of the economy that even small changes in demand and output often have a 

dramatic impact on the well-being of the residents. In recent years, improvements in 

mining productivity, competition from Western U.S. coal, coal imports from abroad, 

and environmental legislation all have contributed to substantial job losses in 

Appalachia. They have also reduced local business opportunities and have generally 

undermined social well-being in the region. 

This report examines the current significance of the coal industry within 

Appalachia, and its prospects for the future. It was conducted by the University of 

Kentucky Center for Business and Economic Research (CBER) under contract with the 

Appalachian Regional Commission. The report identifies the areas within Appalachia 

where the coal industry is currently most active, and the local and regional economies 

where the industry has the largest impact on the overall economy. The report also 

addresses the expected future for the industry within Appalachia. How is the impact of 

the industry expected to change in the next decade? How would that change in impact 

vary under alternative macroeconomic scenarios for the economy, or under alternative 

environmental regulations? Which areas within Appalachia would be most affected by 

expected future changes in the coal mining industry? 

The study examines 1997 data from 118 major coal-producing counties within 

Appalachia. Coal production and price data are from the Department of Energy’s 

Energy Information Administration while employment and earnings data are from the 

Department of Commerce. The year 1997 was used as the “current” year due to lags in 

the data. The study also reports results for the industry within three regional groups: 

Northern Appalachia (PA, OH, MD, and Northern WV); Central Appalachia (KY, VA, 

and Southern WV); and Southern Appalachia (AL and TN). Forecast scenarios are 

based on the Energy Information Administration publications Annual Energy Outlook 

1999, and Impacts of the Kyoto Protocol on U.S. Energy Markets and Economic Activity. The 

forecast scenarios used in the report about the Kyoto Protocol include a baseline 

scenario as well as six scenarios where greenhouse gas emissions are a certain 

percentage of their 1999 levels. These include 24%, 14%, and 9% above the 1990 levels, 
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as well as 3% and 7% below the 1990 levels. The final scenario is one of stabilization at 

the 1990 level of emissions. 

The following are the main findings of the study: 

• Coal mining employment is concentrated in the region composed of the 

intersection of Kentucky, Virginia, and West Virginia. Additionally there 

is a small pocket of high employment in Alabama as well as several 

counties in Pennsylvania. Coal mining earnings in the ARC region follow 

a similar pattern with the highest concentration of earnings from coal 

mining occurring in the region of the intersection of Kentucky, Virginia 

and West Virginia. In 1997, Kentucky had five counties with coal mining 

earnings of more than $50 million, including Harlan, Knott, Leslie, Perry, 

and Pike; Virginia had two counties, including Buchanan and 

Wise/Norton; and West Virginia had eight counties, including Boone, 

Kanawha, Logan, Mingo, Raleigh, and Wyoming in the southwestern part 

of the state and Marion and Marshall in the northern part of the state. 

• The coal mining industry currently is a large share of the economy, 

measured in terms of the percentage of coal mining gross county product 

to total gross county product, in selected counties throughout the region, 

and in many counties in Central Appalachia. These counties include 

Knott County (54.0%) and Pike County (34.3%), Kentucky, Boone County 

(71.9%) and Mingo County (51.9%), West Virginia, and Buchanan County 

(39.4%), Virginia. 

• The total economic impact of the coal mining industry was $18.4 billion in 

output in 1997 in the 118 Appalachian coal-producing counties while the 

direct impact was approximately $12.4 billion. The total earnings impact 

was $6.2 billion per year, while the direct impact was approximately $4 

billion. The total employment impact was 135,000, while the direct impact 

was 60,000 jobs. The total annual impact on severance, income, and sales 

tax revenue was $559.5 million. The total impact of the coal mining 

industry accounted for 4.4% of 1997 employment and 5.1% of 1997 worker 

earnings in these 118 counties overall, but accounted for 29.9% of 

employment and 27.6% of earnings in the Central Appalachia region. 

• Regionally, the total economic impact accounted for 3.1% of 

employment, 3.4% of earnings, and 2.7% of value-added in the 

Northern Appalachian Region. In the Central Appalachian region, 

the total impact accounted for 29.9% of employment, 27.6% of 

earnings, and 29.8% of value-added. Finally, in the Southern 
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Appalachian region, the total impact accounted for 2.7% of 

employment, 3% of earnings, and 3.2% of value-added. 

• The study found that even under moderate baseline conditions for future 

growth in the economy, the impact of the coal mining industry can be 

expected to drop in the next decade, particularly with respect to 

employment and earnings. Coal industry earnings and employment are 

expected to drop by 25% to 30%. The tax impact of the coal mining 

industry, including coal severance taxes, income and payroll taxes, and 

retail sales taxes, is expected to decline by 20%. 

• Regionally, the expected decline in tax revenue is largest in the 

Southern Appalachian region (33.9%). Declines in the other regions 

are 16.6% in the Northern Appalachian region and 20.4% in the 

Central Appalachian region 

• Population, under the baseline scenario, is expected to decline the 

most in the Central region (1.34%). Declines of 0.21% and 0.12% are 

forecast for the Northern and Southern regions, respectively. 

• The relative size of the drop will be large in selected counties throughout 

the region, but many of these counties are located in Central Appalachia. 

The total economic impact of the coal mining industry will decline by the 

equivalent of 6.5% of regional employment and 6.1% of earnings in 

Central Appalachia under the baseline scenario. At the same time, 

transfer payments, including AFDC, SSI, Food Stamps, Unemployment 

Insurance, OASDI, and medical transfers (Medicare and Medicaid), for 

“income maintenance” programs would be expected to rise by between 

5% and 15% in Central Appalachia under the baseline scenario. 

• Increases in transfer payments are generally expected to be the 

largest in the Central Appalachian region with approximately 5% 

increases in TANF and SSI payments and an approximate 11% 

increase in Food Stamps payments. Increases are also forecast to be 

significant for UI payments (15.78%) and medical transfer 

payments (2.49%). 

• Increases in transfer payments are substantially less in the 

Northern and Southern regions where TANF and SSI payments are 

forecast to increase less than 1%. Food Stamps payments in these 

two regions are forecast to grow slightly more than 1.5%. Forecasts 

for growth in UI payments and Medical Transfer payments are 

substantially smaller than the forecasted growth for the Central 
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region. UI payments are forecast to grow around 2% and Medical 

Transfer payments less than 0.5%. 

• The forecast decline in the economic impact of the coal mining industry 

varies little between the baseline forecasts and four alternative 

macroeconomic scenarios. In the macroeconomic scenarios, the same 

regional pattern also is evident, with the largest percent losses in earnings 

and employment occurring in Central Appalachia, where the economy is 

most dependent on the coal mining industry. The loss of earnings in 

Appalachia overall is less than 1% in all macroeconomic scenarios, and the 

percent losses are roughly 0.5% in both Northern and Southern 

Appalachia. The following provides details behind the basic assumptions 

of some of the macroeconomic scenarios: 

• The baseline case reflects considerable optimism about the potential 

for worldwide supply. Production from countries outside OPEC is 

expected to show a steady increase, reaching almost 47 million 

barrels per day by the year 2000 and increasing gradually thereafter 

to more than 55 million barrels per day by 2010. The total U.S. 

gross oil imports increase from 10.2 million barrels per day in 1997 

to 14.1 million in 2010. 

• The high economic growth rate scenario includes higher growth 

rates for population, labor force, and labor productivity resulting in 

higher industrial output, lower inflation and lower interest rates. 

As a result, GDP increases at an average rate of 2.6 percent a year 

from 1997 to 2020, compared with a growth rate of 2.1 percent a 

year in the reference case. Total energy consumption in the high 

economic growth case is 129.4 quadrillion Btu in 2020, compared 

with 119.9 quadrillion Btu in the reference case. 

• The low economic growth case assumes lower growth rates for 

population, labor force, and productivity; resulting in higher prices, 

higher interest rates, and lower industrial output growth. In the 

low growth case, economic output increases by 1.5 percent per year 

from 1997 through 2020, and growth in GDP per capita slows to 0.9 

percent per year. With lower economic growth, energy 

consumption in 2020 is reduced from 119.9 quadrillion Btu to 110.5 

quadrillion Btu, and carbon emissions are 1,826 million metric tons, 

or 8 percent, lower than in the baseline case. 

• The decline in the economic impact may vary a great deal under the new 

Kyoto protocol environmental initiative to reduce the emission of 
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greenhouse gasses including carbon dioxide (CO2), nitrous oxide (N2O), 

methane, sulfur hexaflouride, perfluorocarbons, and hydrofluorocarbons. 

The percentage losses can be much higher than the baseline in several of 

the Kyoto scenarios 

• The Kyoto Protocol scenarios include scenarios of 24%, 14%, and 9% 

above the 1990 level of emissions, as well as 3% and 7% below the 1990 

level of emissions. The final scenario is one of stabilization at the 1990 

level of emissions. The scenarios reflect alternative assumptions about the 

level of emissions reduction that will be required. The exact impact of 

implementing the Kyoto Protocol on emissions reduction is unknown. 

Implementing the protocol could require emissions to fall to or below 1990 

levels in the United States, but smaller reductions may be possible if 

emissions trading or other innovative approaches are allowed. Although, 

larger emissions reductions may be required even in this case. The decline 

in the coal mine industry, and its economic impact, could be between two 

and three times greater if emissions must be reduced severely. However, 

none of these scenarios consider the possible mitigating effects of 

compensatory workforce and community adjustment programs on the 

employment and income repercussions associated with these scenarios. 

• Percent losses are much higher in the more restrictive Kyoto 

emissions reduction scenarios. The percent loss of earnings in the 

coal mining industry is near or above 2% in the Kyoto scenarios 

where emissions return to 1990 levels, or lower, while the 

employment loss is above 1%. In these same scenarios, the 

percentage losses are most substantial in Central Appalachia where 

industry losses account for near or above 8% of regional earnings 

and 5.5% to 6.1% of regional employment. The industry losses in 

these more restrictive emission scenarios also rise rapidly for 

Northern Appalachia, but never rise above 1.5% of earnings or 0.8% 

of employment. 

• Percent losses are less severe under the less restrictive Kyoto 

emissions reduction scenarios, particularly in Northern and 

Southern Appalachia. However, in Central Appalachia, the loss of 

earnings in the industry accounts for 6.0% of regional earnmings 

even under the scenario where emissions are able to rise to 14% 

above 1990 levels. Earnings and job losses are only somewhat 

higher than those of the baseline forecast in the scenario where 

emissions are able to rise 24% above 1990 levels. 
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Overall, the findings suggest that the coal mining industry remains a significant 

part of the Appalachian economy, and is a major part of the economy in selected 

counties and even whole regions within Appalachia. Significant losses in the industry 

have the potential to yield great changes to both the employment picture and aggregate 

socioeconomic indicators in those areas where the industry is most important. This 

said, however, it should be remembered that under all of these forecast scenarios, the 

reductions in employment, earnings, tax revenues, and population that are discussed, 

along with the increases in transfer payments, are forecast changes due to the coal mine 

industry alone, with other factors held equal. Once again, it should be noted that no 

special workforce or community economic adjustment programs are examined to 

determine how they might alter the estimated employment, income or transfer payment 

impacts. In addition, external factors, such as the growth in existing non-mining 

industries and the introduction of new ones, do change, which could have a substantial 

impact on the fortunes of these regions a decade from now. 
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Introduction 

The coal mining industry has long been a vital part of the economy of 

Appalachia. Many residents of the Appalachian region are employed in the coal 

mining industry or are employed in other industries that depend upon coal mining for 

their business. In some major coal-producing counties within Appalachia, the overall 

employment in coal mining and related businesses is large enough to account for a 

significant share of the total local employment and earnings. Coal industry activity also 

can make a significant contribution to the tax base of some Appalachian states, and can 

significantly influence the rate of population growth and poverty in coal-producing 

regions. Taken together, this suggests that the coal mining industry can have a large 

and widespread impact on the economy in coal-producing regions, particularly in areas 

where coal mining is the main industry. 

Many Appalachian residents benefit directly or indirectly from the significant 

coal mining industry in the region. The importance of the industry in the region, 

however, makes the region and its residents vulnerable to any changes in the industry 

that reduce local employment or business opportunities. Indeed, in recent years the 

industry has suffered some declines in employment as production technologies have 

changed and as demand for some types of Appalachian coal has decreased. Such 

changes should continue into the future, leading to additional reductions in earnings 

and employment opportunities in the industry within the region. In addition, there are 

new environmental regulations proposed for implementation over the next decade 

which could dramatically affect the coal mining industry, and therefore, the economies 

of many counties in the Appalachian region. 

All of this suggests the need for a detailed accounting of the significance of the 

coal industry within Appalachia, and its prospects for the future. Such an assessment 

should examine where the industry is currently most active within the Appalachian 

region, and in which local and regional economies the industry has the largest impact 

on the overall economy. The assessment also should examine the expected future for 

the industry within Appalachia. How is the impact of the industry expected to change 

in the next decade? How would that impact change under alternative macroeconomic 

scenarios for the economy, or under alternative environmental regulations? Which 

areas within Appalachia would be most affected by expected future changes in the coal 

mining industry? 

This study is a comprehensive economic impact analysis of the coal mining 

industry in the Appalachian region of the United States. The study examines both the 

existing impact of the coal mining industry within the Appalachian region, and the 

expected future impact of the industry in the year 2010 under a number of alternative 

scenarios for industry change over the next decade. The study was conducted by the 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 8 

Center for Business and Economic Research 

University of Kentucky Center for Business and Economic Research (CBER) under 

contract with the Appalachian Regional Commission. 

The study begins with an analysis of the current economic impact of the coal 

mining industry in the coal-producing counties of Appalachia. Given lags in the release 

of industry data, data from the year 1997 is used to described the “current” situation in 

the coal mining inudstry. In Section 1 of the report, we provide estimates of the coal 

industry’s share of total output, employment, and worker income as a part of each 

county’s overall economy. These estimates are used to generate indirect and induced 

economic impacts for various groups of counties. Indirect effects can best be described 

as those changes in inter-industry purchases in response to the new demands of the 

industries that are directly affected. Induced effects are effects that reflect the changes 

in household spending as income or popluation changes due to changes in production. 

These effects, also called “multiplier” effects, are combined with direct industry output, 

employment, and worker earnings to estimate both the total impact of the coal mining 

industry to the counties under study and its importance to other industries in the region 

as they are affected by activity in the coal mining industry. Moreover, we estimate 

potential tax revenue impacts that are attributable to the coal mining industry, 

including coal severance taxes, personal income taxes, and sales tax revenue. Changes 

in the coal mining industry can also dramatically affect other economic indicators such 

as participation in social welfare and disability programs and population growth. We 

provide a current description of these indicators in the coal-producing counties. 

Each aspect of the above analysis is provided for a list of 118 major Appalachian 

coal-producing counties. That list was developed based on a list of Appalachian 

Counties with coal production in the year 1997, but amended to exclude counties where 

production was being phased out and to include counties with significant production in 

earlier years but unmeasured production in 1997 due to exceptional reasons. Total or 

average results for all 118 counties also are presented, as are results in three regional 

groupings within Appalachia: Northern Appalachia, Central Appalachia, and Southern 

Appalachia. 

Section 2 of the report examines forecasts for the coal mining industry in the year 

2010. Coal industry change is examined for the 1997 to 2010 period for a number of 

measures of industry activity and economic impact. These measures mirror the types of 

information that was gathered in Section 1 of the report. The direct change in industry 

output, price, employment, earnings and value-added from 1997 to 2010 is examined, 

along with the change in the total impact of the industry over time on each of the 118 

counties, the counties in total, and in each of the three regional groupings. The report 

also examines how changes in industry activity over time are expected to change the 

impact of the industry on tax revenue in the region and on population growth and 

participation in social welfare programs. 
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 9 

Center for Business and Economic Research 

Change is examined under a baseline forecast for the economy as well as under 

10 alternative forecasts. This report utilizes Energy Information Administration 

forecasts for coal mining production, price, labor productivity, and wages for baseline 

and alternative scenarios. Forecast information is utilized to calculate information on 

the industry’s economic impact in the year 2010, using the same approach as in Section 

1 of the report. 

The baseline forecast reflects changes in the industry resulting from expected 

changes in demand growth for coal, industry labor productivity, and existing 

environmental regulations. Two sets of alternative economic forecasts are examined. 

The first set includes four alternative forecasts under alternative assumptions about the 

macroeconomic conditions in the economy through the year 2010. These alternative 

assumptions include a high economic growth and low economic growth assumption for 

the national and world economies as well as a high world oil price and low world oil 

price assumption. These alternative forecast scenarios are the same as those in the U.S. 

Department of Energy Energy Information Admininstration’s (EIA) Annual Energy 

Outlook 1999. 

The second set of alternative forecasts reflect alternative scenarios related to the 

Kyoto environmental protocol to reduce greenhouse gas emissions. The scenarios 

reflect alternative assumptions about the level of emissions reduction that will be 

required. Reductions may require emissions to fall to or below 1990 levels in the United 

States, but smaller reductions may be possible if emmisions trading or other innovative 

approaches are allowed. Although, larger emissions reductions may be required even 

in this case. The forecast for the Appalachian coal industry through 2010 is examined 

under 6 alternative emission scenarios, ranging from a requirement that emissions drop 

to 7 percent below 1990 levels by around 2010 to a requirement that emissions may 

average 24 percent above 1990 levels. These 6 alternative scenarios are the same as 

those examined in the EIA publication The Impacts of the Kyoto Protocol on U.S. Energy 

Markets and Economic Activity. No workforce or community economic adjustment 

programs are examined to determine how these might alter the estimated employment, 

income or transfer payment impacts of the six scenarios. 

All analyses contain comparisons between the baseline forecast and each of the 

10 alternative forecasts. The result is a detailed forecast of the changing impact of the 

coal mining industry in the coal-producing regions of Appalachia under the baseline 

scenario, alternative macroeconomic conditions, and under alternative implementation 

rules for the Kyoto environmental protocol. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 10 

Center for Business and Economic Research 

Section 1: Economic Impact Analysis — The Current Role and 

Status of the Coal Industry in the Region’s Economy 

Coal mining has always been an integral part of the Appalachian region and its 

economy. For many years, the coal industry has provided high-paying jobs to 

thousands of miners and other workers and has indirectly supported jobs at other 

businesses that are needed to supply the coal mining industry. Indeed, the coal mining 

industry represents a significant, and many times, majority, share of the economy for 

many counties in the Appalachian region. Moreover, the coal industry provides 

substantial tax revenue for many states in the form of coal severance taxes and 

indirectly through income taxes and sales taxes. In addition, because the coal mining 

industry represents such a significant share of the economy for many Appalachian 

counties, changes in the industry can drastically change many economic conditions in 

the county. For these reasons, it is important to analyze the economic impact of the coal 

mining industry on the Appalachian region. 

Section 1 of this project provides a comprehensive economic impact analysis of 

the current conditions of the coal mining industry in 118 major coal-producing counties 

in Appalachia. These counties fall within eight states within the boundaries of the 

Appalachian Regional Commission (ARC): West Virginia, Kentucky, Pennsylvania, 

Alabama, Virginia, Ohio, Maryland, and Tennessee. In Part 1.1, we revalidate a list of 

major Appalachian coal-producing counties using both federal and state data sources. 

In Part 1.2, we then construct economic profiles of the coal industry’s share of total 

employment, output, and income in the region. In Part 1.3, we provide estimates of the 

direct, indirect, and induced economic impacts that occur in the region. Part 1.4 

addresses the tax revenue impacts from the coal industry. In Part 1.5, we provide a 

baseline description of other economic indicators, such as population growth and 

participation in various transfer programs to show how changes in the coal mining 

industry may affect coal-producing counties in other ways beyond just output, 

employment, and income. In Part 1.6, we define the regional groupings of coalproducing counties which is utilized in the analysis. 

Part 1.1: Revalidation of List of Major Appalachian 

 Coal-Producing Counties 

 The first task of the study was to identify the coal-producing counties of the 

Appalachian region. These counties were identified in part using production data 

available from the Energy Information Administration (EIA) of the U.S. Department of 

Energy. This data was then supplemented with additional data sources such as coal 

industry employment information, and direct contact with state coal industry 

associations or appropriate state government agencies. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 11 

Center for Business and Economic Research 

 The starting point was an initial list of 120 coal-producing counties provided by 

the Appalachian Regional Commission. This list was composed of Appalachian 

counties that had coal production in 1997 according to the EIA publication Coal Program, 

1997, Annual Report. This initial list was then revalidated using data and information 

from a variety of sources. To begin with, mine and production data from a longer time 

period, from 1991 through 1997, was assembled from data available in the EIA’s Coal 

Industry Annual publications.1 1997 was the last year for which data was available at the 

time of the study. The first step was to identify whether the 120 coal-producing 

counties had experienced continuous production during the 1991 through 1997 period. 

Most of the 120 counties on the list exhibited substantial production in each of the seven 

years, illustrating a pattern of sustained production. This pattern of sustained 

production in the recent past was taken as an indication of counties that were likely to 

remain major Appalachian coal-producing counties both now and in the near future. 

 There was a further examination of counties where there were breaks in 

production from 1991 to 1997. In particular, we focused on those counties that had very 

low production (less than 10,000 tons) in 1997 as well as no production in one or more 

years during the 1991 to 1997 period.2 Such counties (Jackson County, KY, Morgan 

County, KY, Lawrence County, OH, and Snyder County PA) were considered as 

candidates to be dropped from the list. To make this decision, we gathered additional 

information about coal mining activity or the lack thereof, in these counties since 1997. 

For counties in Kentucky and Virginia, we utilized employment data from 1998 and the 

first quarter of 1999 to examine the scope of mining activity in these counties after 1997. 

For these two states, the Center for Business and Economic Research (CBER) has 

detailed county quarterly employment data from the ES202.3 There was no 

employment recorded for these counties during 1998 or 1999, and these counties were 

dropped from the list of major Appalachian coal-producing counties. For counties in 

other states, we made telephone calls to state coal organizations or agencies in those 

states to gather additional information about mining activity in those counties. We also 

decided to drop these counties from the list of coal-producing counties. Thus, 4 

counties were dropped from the list of major Appalachian coal-producing counties. 

 Several counties also were added to the list of coal-producing counties despite 

having no production in 1997. This is because it is possible that counties that normally 

have production may fail to produce in a year, such as 1997, due to reporting errors or 

temporary closures. To identify counties that should be added to the list, we examined 

 

1 These data are available at the website http://www.eia.doe.gov/cneaf/coal/page/database.html 

2 There also was one county that had continuous production from 1991 through 1997, but never had more 

than 2,500 tons of production in any given year (and only 97 tons of production in 1997). 3 The ES-202 data come from a Federal-State program run jointly by the Bureau of Labor Statistics and 

State Employment Security Agencies. Under this program, states are required to report employment and 

wage and compensation data. The data is required of all employers subject to state employment laws as 

well as workers covered by unemployment compensation for federal employees. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 12 

Center for Business and Economic Research 

annual production data during the entire 1991 to 1997 period. We identified a list of 

about 30 counties where there had been coal production in some years between 1991 

and 1997. We then focused on a handful of counties that had production during 1995 

(and in most case, 1996), and significant production (over 20,000 tons) from 1991 

through 1995. For those counties located in Kentucky or Virginia, we again used the 

ES202 source to check whether there was employment in the coal mining industry in 

these counties during 1998 and the first quarter of 1999. For counties of interest in other 

states, we utilized telephone calls to local and state officials to inquire whether 

production continued in these counties. After these efforts, we added two counties to 

the list that did not have production in 1997. These were Morgan County, Ohio and 

Carbon County, Pennsylvania. 

 We also conducted a general survey of state agencies and organizations, 

independent of production data, to try to identify counties to be added or dropped from 

the list. We asked these agencies and organizations to send us any lists they had of 

coal-producing counties. We also asked a series of questions regarding whether there 

were areas of the state were mines had been closed, or opened since the beginning of 

1998.4 Information from this part of the analysis did not yield any further counties to 

add or drop from the list, but it did help in deciding to add Morgan County, OH to the 

list. 

 Our examination of the list of 120 coal-producing counties provided by the EIA 

yielded only minor revisions to the list. Out of 120 counties, 116 were maintained on 

the list, while four were dropped. Another two counties not on the original list were 

added to the revalidated list. Thus, the revalidated list utilized in the remainder of this 

study had 118 counties, many of which were in Kentucky, Ohio, Pennsylvania, and 

West Virginia. These major coal-producing counties are illustrated in Figure 1.1.1. A 

list of the counties is provided in Appendix A. 

 

4 We asked four basic questions: 1) Do you know of any areas of your state where coal production has 

ceased since the beginning of 1998?; 2) Do you know of any areas of your state where coal production has 

been severely curtailed since the beginning of 1998?; 3) Do you know of any areas of your state where 

coal production has been initiated since the beginning of 1998?; and 4) Do you know of any areas of your 

state where coal production has substantially expanded since the beginning of 1998? 
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 13 

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Figure 1.1.1: 118 Major Coal-Producing Counties in the ARC Region



 

















 

































 



 

 





















 



 







 



























































  

















 



  











  

















  

























 







 








































































































A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 14 

Center for Business and Economic Research 

Part 1.2: Detailed Economic Profile of the Coal Industry’s Share of Total 

 Employment, Output, and Income in the Appalachian Region 

Introduction 

 For many counties in the Appalachian region, coal mining still occupies a 

significant position in their economies. Although the importance of coal mining to the 

region as a whole may be smaller than that of other industries, in some counties, the 

coal mining industry occupies as much or greater than 50 percent of their respective 

economies. Workers in the coal mining industry typically earn relatively high wages, 

and these high wages are important to some counties without substantial employment 

in other industries. 

 This section provides a comprehensive economic profile of the coal mining 

industry in the Appalachian coal-producing counties. This profile is presented by using 

four main measures: 1) coal production, 2) coal mining output, 3) coal mining 

employment, and 4) coal mining earnings. Appendix E provides these and other 

baseline data for the 118 major ARC coal-producing counties. It is important to look at 

a variety of measures to obtain a true understanding of the industry’s significance to the 

region. For example, only looking at employment in coal mining would overlook the 

relatively high wages paid to workers in the industry. 

Economic Profile for the Entire Region 

 In 1997, the coal mining industry in the Appalachian coal-producing region 

employed slightly more than 60,000 people.5 As Table 1.2.1 shows, however, this large 

number of employees only represents about two percent of the entire workforce in these 

counties. Likewise, earnings from the coal mining industry totaled $4.03 billion in 1997 

but represented only about 3.3 percent of total earnings across all industries.6 These 

figures illustrate that coal mining jobs have higher wages than the typical job in the 

economy. 

 As measured by output, the coal mining industry is also an important part of the 

region’s economy. Output is defined as the “value” of the mined coal, which can be 

calculated using data on coal production and the minemouth price of coal for each 

county. Table 1.2.1 shows that in 1997, total coal production in the Appalachian coalproducing region was about 467 million tons. Of this figure, about 308 million tons, or 

 

5 When referring to the “coal mining industry” here and throughout the report, we are using the Coal 

Mining Standard Industrial Classification (SIC) code and definition. This definition includes all 

establishments primarily engaged in producing bituminous coal, anthracite, and lignite. Included are 

mining operations and preparation plants (also known as cleaning plants and washeries), whether or not 

such plants are operated in conjunction with mine sites. 

6 Earnings include the following components: wage and salary disbursements, other labor income 

(primarily employee benefits), and proprietors’ income. 
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University of Kentucky 15 

Center for Business and Economic Research 

approximately two-thirds of total production, was underground coal production while 

the remaining one-third, or about 159 million tons, was coal from surface production. 

In addition, the average minemouth price of coal for the entire region was 

approximately $26.50 per ton. This translates into a total output value from coal of 

about $12.4 billion for the entire Appalachian coal-producing region. 

TABLE 1.2.1: Descriptive Statistics about the Coal Mining Industry in the Entire ARC Region, 1997 

Total Coal Production (tons) 467.2 million 

 Underground Coal Production 308.4 million 

 Surface Coal Production 158.9 million 

Coal Mining Employment 60,099 

 Coal Mining/Total Employment 1.96 % 

Coal Mining Earnings $4,028.3 million 

 Coal Mining/Total Earnings 3.29 % 

Total Coal Output $12,374.5 million 

Source: Energy Information Administration, Coal Industry Annual and authors’ calculations 

Economic Profile for Individual States 

 The relative significance of the coal mining industry varies widely across the 

Appalachian coal-producing region. Some states with large coal reserves have higher 

coal production and consequently, higher output, employment, and earnings from the 

coal mining industry. But as shown below, the coal mining industry in some states and 

counties with substantial coal production occupies a smaller portion of the entire 

economy because of the presence of other industries. Examining the coal mining 

industry through the ratios of coal employment and earnings to total employment and 

earnings, therefore, provides a more accurate description of the relative importance of 

the industry to these regions. 

 Table 1.2.2 shows the levels and ratios for coal mining employment, earnings, 

production, and output for 1997 for the eight coal-producing states in the Appalachian 

region: Alabama, Kentucky, Maryland, Ohio, Pennsylvania, Tennessee, Virginia, and 

West Virginia.7 As presented in the table, there is considerable variation among the 

eight states in terms of the size of the coal mining industry. Some states have relatively 

small coal production, employment, and earnings, such as Maryland and Tennessee; 

some have a moderately sized coal industry, such as Alabama, Ohio, and Virginia; and 

 

7 The coal-producing counties in western Kentucky are not included in this analysis because the 

Appalachian Regional Commission (ARC) geographic boundaries do not extend to that area. 
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University of Kentucky 16 

Center for Business and Economic Research 

some have relatively high values for coal production, employment, and earnings, such 

as Kentucky, Pennsylvania, and West Virginia. 

 Coal production figures for 1997 are shown in the first part of Table 1.2.2. These 

range from a low of 3.3 million tons in Tennessee to a high of almost 175 million tons in 

West Virginia. Kentucky, with 121 million tons, also has substantial coal production, as 

does Pennsylvania with 76 million tons. Alabama, Ohio, and Virginia had more 

moderate production of 25 million, 29 million, and 36 million tons, respectively. 

Finally, similar to Tennessee, Maryland had coal production of only 4.2 million tons. 

 For all states except Tennessee, underground coal production exceeded surface 

coal production. As mentioned above, about two-thirds of all coal in the region comes 

from underground production, but there are some differences among individual states. 

For example, in Alabama and Virginia, about 75 percent of total production came from 

underground mines and about 72 percent from underground mines in Pennsylvania. 

By far, West Virginia had the highest level of underground production at 117 million 

tons, with Kentucky ranking second at 70 million tons. This represents about 67 percent 

of all production for West Virginia and about 58 percent of all production for Kentucky. 

 Similarly, the value of total output from coal varied across these states. In 

addition to production differences, the minemouth price of coal varies by county, 

depending upon the type and quality of the coal. In fact, the price of coal for the entire 

region ranges from about $15.58 per ton to $42.03 per ton. The total value of the output 

ranges from a low of $104 million in Tennessee to a high of about $4.53 billion in West 

Virginia. Kentucky ranked second in coal output, with almost $2.98 billion in 1997, and 

Pennsylvania ranked third with about $2.03 billion. All other states had about $1 billion 

in output or less, with Virginia having slightly over $1.0 billion, Alabama having about 

$967 million, Ohio having $636 million, and Maryland having $114 million. 

 These differences among states generally hold for employment in the coal 

mining industry. West Virginia had almost 19,000 workers in coal mining in 1997, with 

Kentucky having about 13,000 and Pennsylvania having about 10,400. Virginia had 

about 7,150 employees in coal mining, Alabama had about 5,300 employees, and Ohio 

had almost 4,000 employees. Finally, Maryland and Tennessee had much smaller 

employment figures, with about 550 coal mining workers in Maryland and about 740 in 

Tennessee. 

 When we examine the relative importance of coal mining employment to these 

states, however, a somewhat different description emerges. For example, although 

Pennsylvania had a larger number of workers in coal mining (10,409), this represents 

only 0.6 percent of the total employment in those coal-producing counties, which are 

located in western Pennsylvania and are more populous and have more types of 

industries than in some other Appalachian coal-producing counties. In contrast, 
A Study on the Current Economic Impacts 

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University of Kentucky 17 

Center for Business and Economic Research 

Virginia’s coal-producing counties had about 7,150 total workers in the industry, but 

this represent 16.4 percent of total employment. These counties are not as populous as 

those in Pennsylvania and do not support a wide array of industries with substantial 

employment. Similarly, Kentucky had 13,081 workers in the coal mining industry in 

1997, which represented 13.7 percent of total employment in those counties. The coalproducing counties in West Virginia, with the highest coal mining employment at 

almost 19,000 workers, saw about 6.1 percent of its workforce represented by the coal 

mining industry. This figure is still considerably higher than that of other states. In 

Ohio’s coal-producing counties, about 1.8 percent of total employment was in coal 

mining. Likewise, in Maryland, 1.7 percent was in coal mining; in Tennessee, 1.1 

percent; and in Alabama, only 0.95 percent of total employment was in coal mining. 

 In contrast to only looking at employment figures, examining the worker 

earnings from coal mining can give a more comprehensive description of the industry 

since these figures account for the higher wages seen in coal mining and for differences 

in wages across states. Again, West Virginia has the highest earnings from the coal 

mining industry at $1.25 billion in 1997, followed by Pennsylvania at $1.03 billion, and 

Kentucky at $720 million. These figures show that although Pennsylvania has lower 

production and employment than Kentucky, its workers earn higher wages. Alabama 

had about $397 million in coal mining earnings in 1997, and Virginia had about $360 

million. Both Maryland and Tennessee had much smaller figures, with Maryland at $26 

million and Tennessee at $34 million. 

 The differences highlighted in the relative coal mining employment above for 

Virginia and Kentucky are even more striking when we examine relative earnings in the 

coal industry. In 1997, the Appalachian coal-producing counties in both Kentucky and 

Virginia had almost 20 percent of total earnings come from the coal mining industry, 

with Kentucky at 19.1 percent and Virginia at 19.7 percent. No other state had over 10 

percent of total earnings come from the coal mining industry in coal-producing 

counties. West Virginia had about 9.8 percent of total earnings in coal mining, but all 

other states had much lower percentages: Ohio, 2.8 percent; Maryland, 2.1 percent; 

Alabama, 1.8 percent; Pennsylvania, 1.5 percent; and Tennessee, 1.3 percent. 
A Study on the Current Economic Impacts 

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University of Kentucky 18 Center for Business and Economic Research 

TABLE 1.2.2: Descriptive Statistics about the Coal Mining Industry in the Entire ARC Region by State, 1997  Alabama Kentucky Maryland Ohio Pennsylvania Tennessee Virginia Total Coal Production (tons) 24.5 million 120.9 million 4.2 million 28.6 million 76.2 million 3.3 million 35.8 million 1

 Underground Coal 

Production 18.5 million 69.9 million 3.3 million 16.9 million 54.8 million 1.4 million 26.9 million 1

 Surface Coal Production 6.0 million 60.0 million 0.9 million 11.7 million 21.4 million 1.9 million 8.9 million 5

Coal Mining Employment 5,297 13,061 549 3,958 10,409 739 7,149 

 Coal Mining/Total 

Employment 

0.95% 13.7% 1.7% 1.8% 0.6% 1.1% 16.4% 

Coal Mining Earnings $396.9 million $719.6 million $26.4 million $218.4 million $1,025.7 million $34.1 million $360 million  Coal Mining/Total 

Earnings 1.8% 19.1% 2.1% 2.8% 1.5% 1.3% 19.7% 

Total Coal Output $966.9 million $2,979.5 million $113.7 million $635.6 million $2,033.1 million $103.5 million $1,012.3 million 

Source: Energy Information Administration, Coal Industry Annual 
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 19 

Center for Business and Economic Research 

Economic Profile at the County Level 

 Perhaps the best way in which to present the economic profile of the 

Appalachian coal-producing region is by looking at individual counties. Because 

counties can differ widely in their size and in their coal production, there can be wide 

variation in the relative significance of the coal mining industry to these counties. This 

section will look at the various measures for the coal mining industry at the county 

level and, where appropriate, examine values for specific counties. Much of the profile 

will be presented using a series of maps that shows these values for coal production, 

output, employment, and earnings at the county level. 

Coal Production 

 Coal production varies widely across the Appalachian region. In general, there 

are three major sub-regions of coal production, as can be seen in Figure 1.2.1. One subregion occurs in central Alabama with additional light production in Tennessee. The 

largest concentration of coal production occurs at the intersection of Kentucky, Virginia, 

and West Virginia, along with southern Ohio, an area which has the greatest 

concentration of counties with the highest coal production amounts for 1997. Finally, 

the third sub-region consists of Maryland, eastern Ohio, Pennsylvania, and northern 

West Virginia. 

 The counties in these sub-regions and their associated production values are 

shown in Figures 1.2.2 through 1.2.4. Figure 1.2.2 shows the Alabama/Tennessee 

region, Figure 1.2.3 shows the Maryland, eastern Ohio, Pennsylvania, and northern 

West Virginia, and Figure 1.2.4 shows the Kentucky, southern Ohio, Virginia, and 

southern West Virginia region. As is evident from these maps, the central Appalachian 

region has the greatest concentration of coal production, with 11 of the 14 counties that 

had over 10 million tons of total coal production in 1997. Figure 1.2.5 gives the 15 

counties in the Appalachian coal region with the highest total coal production for 1997. 

Although Greene County, Pennsylvania, had the greatest overall coal production of 35.4 

million tons in 1997, Pike County, Kentucky, was very close with 35.0 million tons. In 

addition to Green County, Pennsylvania, only Jefferson County, Alabama, and Marshall 

County, West Virginia were high production counties not located at or near the 

intersection of Kentucky, Virginia, and West Virginia. Other counties with very high 

production figures include Boone, Mingo, and Logan Counties in West Virginia, with 

30.6 million, 22.4 million, and 20.5 million tons of total coal production in 1997. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

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Center for Business and Economic Research 

FIGURE 1.2.1: Total Coal Production by County in the ARC Region, 1997 

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

10 million - 50 million tons
A Study on the Current Economic Impacts 

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FIGURE 1.2.2: Total Coal Production by County in the Southern ARC Region, 1997 





          

   



 



 





  

 



 



 





 





 



  

 



 





 





 







 



 



 







 









 



 



 



 





 





 





 





 







 





  

 





  

 





 





 





 





 



 





  

 



 





 





 





 







 





 





 





 





 





 



 

































  

















 



 



 





 





 





 





 





 





 





 





 



 

































































































































































































































































































































Marion

Fayette

Walker

Winston Cullman

Blount

Jefferson

Shelby

Bibb

Tuscaloosa

Jackson

Marion

Sequatchie

Morgan Anderson

Georgia

South Carolina

North Carolina

Tennessee

Kentucky Whitley

Knox

Bell

Harlan

Lee

Tennessee

Fentress

Scott Campbell

Claiborne

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

More than 10 million tons
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 22 

Center for Business and Economic Research 

FIGURE 1.2.3: Total Coal Production by County in the Northern ARC Region, 1997 









 

 































































































































































































































































































































 





 







      



 



 



 





 





 



 



 



 



 







 







 







 



 





 





 



 



 



 



 



 







 







 





 





 







 







 





 





 







 



 



 



 





 







 







 







 







 







 







 



 









 









 









 







 























































































































































 



























































































































































































Lackawanna

Luzerne

Carbon

Schuylkill

Columbia

Lycoming

Sullivan

Northumberland

Clearfield Centre

Elk

Jefferson

Clarion

Cambria

Indiana

Westmoreland

Fayette

Venango

Mercer

Lawrence

Beaver

Butler

Allegheny

Blair

Somerset

Greene

Washington

Perry Morgan

Coshocton

Holmes

Tuscarawas

Carroll

Columbiana

Jefferson

Guernsey Belmont

Noble Monroe

Armstrong

Garrett

Allegany

Mineral

Grant

Barbour

Preston

Monongalia

Marion

Harrison Tucker

Pennsylvania

D

Marshall

Kanawha

Clay

Webster

nton

kson

Gallia

Nicholas

Upshur Randolph

Braxton

Gilmer

Maryland

West Virginia

Muskingum

Brooke Harrison

Meigs

Virginia

New York

Ohio

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

More than 10 million tons
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FIGURE 1.2.4: Total Coal Production by County in the Central ARC Region, 1997 



 

  

 

 



 



 



 





 







 



 







 



  

 



 



 





 



 





 







 



 





  

 





 





 











 





 





 







 



 





 







 







 





 









 











 















































































































































































 









          

              

          

 



             

            

        





































































































    

                 





               

















































































































































































  























 





 





 



 



 







 



 



 







 





 









  

 





 





  

 



  

 



 





 





 





 





 





 



 







  

  

 



 





 





  

 



 



 









 











































     

 



 



 







































































































































































































































































































































































Westmoreland

Fayette

Allegheny

Somerset

Greene

Washington

Perry Morgan

Coshocton

Holmes

Tuscarawas

Carroll

Jefferson

Guernsey Belmont

Noble Monroe

Garrett

Allegany

Mineral

Grant

Barbour

Preston

Monongalia

Marion

Harrison Tucker

Pennsylvania

Marshall

Whitley

Knox

Bell

Clay Leslie

Harlan

Lee

Wise

Letcher

Perry

Knott

Breathitt

Magoffin

Johnson Martin

Buchanan

Pike

Russell

Tazewell

Wyoming

Wayne

Mingo

Logan

Boone

Raleigh

Kanawha

Clay

Webster

Vinton

Jackson

Gallia

Fayette

Nicholas

Greenbrier

Upshur Randolph

Braxton

Lawrence

Lincoln

Gilmer

Ohio

North Carolina

Virginia

Kentucky

Mary

West Virginia

Tennessee

Muskingum

Dickenson

McDowell Floyd

Brooke Harrison

Owsley

Meigs

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

More than 10 million tons
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Center for Business and Economic Research 

FIGURE 1.2.5: 15 Counties in the ARC Coal Region with the Highest Total Coal Production, 1997 

 Although most of the analysis here focuses on total coal production, it is possible 

to distinguish between underground and surface coal production. Underground and 

surface coal will likely have different production methods, which could affect the 

economic impacts on their respective counties. For example, underground coal mining 

would likely require more labor than surface coal mining, where excavation equipment 

can extract large amounts of the coal. 

 As shown in Table 1.2.1, underground coal production totaled about 308 million 

tons in 1997, or about two-thirds of all coal production. Surface coal production totaled 

about 159 million tons, or about one-third of all coal production. Figure 1.2.6 shows 

counties in the Appalachian region that had underground coal production in 1997 while 

Figure 1.2.7 shows the same information for surface coal production. Overall, surface 

production is more common in the region, with 103 of the 118 total coal counties having 

surface production while only 74 counties had underground coal production. As seen 

from the maps, the region centered on the intersection of Kentucky, Virginia, and West 

Virginia contains the greatest concentration of both surface and underground 

production. This sub-region has three counties with surface production over 10 million 

tons in 1997 (Pike, Kentucky; Boone and Logan, West Virginia) and five counties with 

underground production over 10 million tons in 1997 (Pike, Kentucky; Buchanan, 

Virginia; Boone, Mingo, and Raleigh, West Virginia). In fact, both Pike County, 

Kentucky, and Boone County, West Virginia, had both surface and underground 

production of over 10 million tons each in 1997. Another pattern that emerges is that 

both Pennsylvania and Ohio are more reliant on surface production than underground 

9.9

10.1

10.4

10.6

11.5

12.1

12.5

13.9

14.0

14.4

20.5

22.4

30.6

35.0

35.4

0 10 20 30 40 50

Millions of Tons

Leslie, Kentucky

Marshall, West Virginia

Jefferson, Alabama

Harlan, Kentucky

Perry, Kentucky

Knott, Kentucky

Martin, Kentucky

Raleigh, West Virginia

Wise/Norton, Virginia

Buchanan, Virginia

Logan, West Virginia

Mingo, West Virginia

Boone, West Virginia

Pike, Kentucky

Greene, Pennsylvania
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Center for Business and Economic Research 

production. As seen in Figure 1.2.7, there are many more counties in both states with 

surface production in 1997. 

FIGURE 1.2.6: Total Underground Coal Production by County in the ARC Region, 1997 

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

More than 10 million tons
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University of Kentucky 26 

Center for Business and Economic Research 

FIGURE 1.2.7: Total Surface Coal Production by County in the ARC Region, 1997 

Less than 250,000 tons

250,000 - 1 million tons

1 million - 5 million tons

5 million - 10 million tons

More than 10 million tons
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University of Kentucky 27 

Center for Business and Economic Research 

Coal Mining Output 

Coal mining output is defined as the minemouth price of coal multiplied by the 

coal production value. Output is thus a measure of the dollar value of coal mined in a 

particular county. Naturally, coal mining output is concentrated in the areas where coal 

production is highest. However, output figures are also dependent on price, which can 

be a reflection of the quality of the coal being mined in the county. 

 Figure 1.2.8 below shows the breakdown of coal mining output by county 

throughout the Appalachian region using five categories of output, less than $25 

million, $25 - $100 million, $100 - $250 million, $250 - $500 million, and more than $500 

million. In total there were four counties with output figures greater than $500 million 

in 1997 including Pike County, Kentucky, Boone and Mingo County, West Virginia, and 

Greene County, Pennsylvania. The area of greatest concentration of high coal mining 

output is centered on the intersection of the Kentucky, Virginia, and West Virginia 

borders. 

Figure 1.2.8: Coal Mining Output by County in the ARC Region, 1997 

More than $500 million

$250 million - $500 million

$100 million - $250 million

$25 million - $100 million

Less than $25 million
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Coal Mining Employment 

 Employment in the coal mining industry is perhaps one of the simplest methods 

by which to examine the extent of coal mining in individual or groups of counties. 

Overall, employment is concentrated in those counties with the highest coal production, 

with the greatest concentration of employment again in the Kentucky-Virginia-West 

Virginia intersection. In addition, several counties in Pennsylvania have large numbers 

of workers in the coal mining industry, and there is a small pocket of concentrated 

employment in coal mining in Alabama as well. 

 Figure 1.2.9 shows the breakdown of employment in the coal mining industry 

throughout the Appalachian region using five categories of employment: 0 - 100 

employees, 101 - 250, 251 - 500, 501 - 1,000, and more than 1,000 employees. The data 

are also displayed by county in Table 1.2.3. Examining the area of greatest 

employment, Kentucky has four counties with employment of greater than 1,000 

workers, namely, Floyd, Harlan, Perry, and Pike. Virginia has two counties, Buchanan 

and Wise/Norton, with greater than 1,000 workers in coal mining. And West Virginia 

has the greatest number of counties with more than 1,000 workers in coal mining, 

including Boone, 
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FIGURE 1.2.9: Coal Mining Employment by County in the ARC Region, 1997 

0 - 100 employees

101 - 250 employees

251 - 500 employees

501 - 1,000 employees

More than 1,000 employees
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University of Kentucky 30 Center for Business and Economic Research 

Table 1.2.3: Coal Mining Employment by County in the ARC Region, 1997 

State County Coal 

Employment 

State County Coal 

Employment 

State County Coal 

Employment

State 

AL Bibb 49 OH Coshocton 240 PA Lawrence 60 WV GAL Blount 49 OH Gallia 60 PA Luzerne 154 WV AL Cullman 38 OH Guernsey 347 PA Lycoming 60 WV AL Fayette 375 OH Harrison 175 PA Mercer 4 WV AL Jackson 53 OH Holmes 60 PA Northumberland 52 WV AL Jefferson 2052 OH Jackson 146 PA Schuylkill 1024 WV MAL Marion 43 OH Jefferson 63 PA Somerset 781 WV AL Shelby 87 OH Meigs 750 PA Sullivan 2 WV AL Tuscaloosa 1750 OH Monroe 375 PA Venango 9 WV AL Walker 750 OH Morgan 203 PA Washington 1566 WV AL Winston 53 OH Muskingum 60 PA Westmoreland 96 WV M

KY Bell 750 OH Noble 60 TN Anderson 175 WV KY Breathitt 10 OH Perry 49 TN Campbell 60 WV KY Clay 10 OH Tuscarawas 434 TN Claiborne 100 WV KY Floyd 1553 OH Vinton 175 TN Fentress 59 WV RKY Harlan 1086 PA Allegheny 175 TN Marion 28 WV KY Johnson 162 PA Armstrong 762 TN Morgan 53 WV KY Knott 976 PA Armstrong 762 TN Scott 148 WV KY Knox 175 PA Beaver 79 TN Sequatchie 117 WV KY Lawrence 10 PA Blair 10 VA Buchanan 2991 WV WKY Leslie 255 PA Butler 60 VA Dickenson 360 KY Letcher 998 PA Cambria 361 VA Lee 270 KY Magoffin 175 PA Carbon 53 VA Russell 686 KY Martin 750 PA Centre 159 VA Tazewell 617 KY Owsley 12 PA Clarion 158 VA Wise & Norton 2225 KY Perry 1750 PA Clearfield 750 WV Barbour 175 KY Pike 4241 PA Columbia 123 WV Boone 2904 KY Whitley 152 PA Elk 86 WV Braxton 45 

MD Allegany 175 PA Fayette 299 WV Brooke 168 MD Garrett 375 PA Greene 2183 WV Clay 375 

OH Belmont 622 PA Indiana 1105 WV Fayette 1604 OH Carroll 10 PA Jefferson 237 WV Gilmer 9 OH Columbiana 133 PA Lackawanna 4 WV Grant 375 

Source: 1997 County Business Patterns
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Coal Mining Earnings 

 Earnings from the coal mining industry will be closely related to employment in 

the industry. Differences in the relative magnitude of employment versus earnings will 

primarily reflect any differences in the wages that employees earn in one county or 

region versus another county or region. Although coal mining workers can expect to 

earn similar wages, differences in the type of coal mining (underground/surface) or 

local labor market conditions could raise or lower wages and change the breakdown of 

county-level earnings. 

 As with employment, earnings in the coal mining industry in 1997 is broken 

down into five categories, as shown in Figure 1.2.10. The five categories used are 

earnings of less than $5 million, $5 million - $10 million, $10 million - $25 million, $25 

million - $50 million, and more than $50 million. Again, the distribution of coal mining 

earnings looks similar to the distribution of coal mining employment, with several 

exceptions. The Kentucky-Virginia-West Virginia area again has the largest 

concentration of counties with the highest coal mining earnings. In 1997, Kentucky had 

five counties with coal mining earnings of more than $50 million, including Harlan, 

Knott, Leslie, Perry, and Pike; Virginia had two counties, including Buchanan and 

Wise/Norton; and West Virginia had eight counties, including Boone, Kanawha, Logan, 

Mingo, Raleigh, and Wyoming in the southwestern part of the state and Marion and 

Marshall in the northern part of the state. 

 Counties in other states with high earnings from coal mining include Meigs in 

Ohio and Jefferson, Tuscaloosa, and Walker in Alabama. It is interesting to note that 

seven counties in Pennsylvania have coal mining earnings of more than $50 million. 

Recall that Pennsylvania only had four counties with employment in the highest 

category (more than 1,000 workers), so the fact that it has seven counties in the highest 

earnings category could reflect the fact that Pennsylvania workers in the coal mining 

industry receive relatively higher wages than coal mining workers in other states. 

These seven counties are Allegheny, Cambria, Greene, Indiana, Schulykill, Somerset, 

and Washington. 
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FIGURE 1.2.10: Coal Mining Earnings by County in the ARC Region, 1997 

Less than $5 million

$5 million - $10 million

$10 million - $25 million

$25 million - $50 million

More than $50 million
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Coal Mining Gross County Product 

 The final criteria by which to examine coal mining by counties or groups of 

counties is by determining the amount of gross county product that is attributable to 

coal mining activities. Gross county product is the total value of goods and services 

produced by labor and property in the county.8 The portion of gross county product 

that is attributable to coal mining is thus called coal mining gross county product. 

 As with employment and earnings, coal mining gross county product is broken 

down into five categories as shown in Figure 1.2.11. These five categories are less than 

$25 million, $25 million - $50 million, $50 million - $100 million, $100 million - $250 

million, and greater than $250 million. As before, Figure 1.2.11 indicates that the 

highest levels of gross county product attributable to coal mining are generally located 

at the intersection of Kentucky, Virginia and West Virginia. 

 

8 CBER estimated gross county product data for each county. For each 1-digit SIC grouping, a statewide 

ratio of gross state product to earnings was developed using the Bureau of Economic Analysis 

publications Gross Product by Industry for the United States and States, and the Regional Economic Information 

System 1969 to 1997 (REIS). County earnings data was also gathered from the REIS. Statewide ratios of 

gross state product to earnings were applied to county earnings data to estimate gross county product in 

each 1-digit SIC group in each county. Industry values were summed to estimate total gross county 

product for each county. The 1-digit industry groupings were farming, agricultural services, mining, 

construction, manufacturing, transportation, communications, and public utilities (TCPU), wholesales 

trade, retail trade, finance, insurance, and real estate (FIRE), services, and government. 
A Study on the Current Economic Impacts 

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Center for Business and Economic Research 

FIGURE 1.2.11: Coal Mining Gross County Product by County in the ARC Region, 1997 

Less than $25 million

$25 million - $50 million

$50 million - $100 million

$100 million - $250 million

More than $250 million
A Study on the Current Economic Impacts 

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University of Kentucky 35 

Center for Business and Economic Research 

Coal Mining Employment as a Percentage of Total Employment 

 The previous three sections discussed the levels of employment, earnings, and 

gross county product from the coal mining industry in the Appalachian region. While 

these are important measures in which to examine the overall economic activity, 

perhaps it is more instructive to look at these measures relative to the total levels of 

employment, earnings, and gross county product in all industries. Looking at these 

relative shares can show which county economies are most closely tied to the coal 

mining industry and which counties, even some with high absolute coal mining 

employment or earnings, are not as closely linked to the coal mining industry. 

 Figures 1.2.12, 1.2.15, and 1.2.18 show employment, earnings, and gross county 

product for coal mining as a percentage of total employment, earnings, and gross 

county product in each county in the Appalachian region. These figures show that 

some counties are much more dependent upon the coal mining industry than other 

counties, even for some counties that have relatively high employment, earnings, or 

gross county product from coal mining. 

 Looking first at employment in Figure 1.2.12, it is evident that several pockets of 

high relative employment from coal mining are present throughout the region. 

Alabama, Pennsylvania, and Tennessee each has only one county where the relative 

percentage of coal mining employment exceeds 5%, indicating that while the coal 

mining industry is important in many areas, there are many other types of industries 

that employ a greater share of each county’s workforce. 

 But the most concentrated area of coal mining employment occurs in the 

Kentucky-Virginia-West Virginia intersection, with some concentration evident in 

southern and eastern Ohio. Figure 1.2.13 shows a magnified map of this area and 

highlights those counties with employment from coal mining totaling 10% or more of 

total employment. Figure 1.2.14 lists the 15 counties in the entire Appalachian region 

with the highest ratio of coal mining employment to total employment. As can be seen 

from these two figures, the overwhelming majority of counties with high relative 

employment are located in eastern Kentucky, western Virginia, and southwestern West 

Virginia. Boone County, West Virginia, has the highest ratio, with 48.1% of all 

employment in the county coming from the coal mining industry. Knott County, 

Kentucky, is next with 41.1% of all employment in coal mining, following by Wyoming 

County, West Virginia, at 39.3%; Buchanan County, Virginia, at 38.7%; and Martin 

County, Kentucky, at 31.4%. 
A Study on the Current Economic Impacts 

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Center for Business and Economic Research 

FIGURE 1.2.12: Ratio of Coal Mining Employment to Total Employment 

by County in the ARC Region, 1997 

Less than 1%

1% - 5%

5% - 10%

10% - 25%

Greater than 25%
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Center for Business and Economic Research 

FIGURE 1.2.13: Ratio of Coal Mining Employment to Total Employment 

by County in the ARC Region (Enhanced), 1997 

FIGURE 1.2.14: 15 Counties in the ARC Coal Region with the Highest Ratio of Coal Mining 

Employment to Total Employment, 1997 

18.9%

19.6%

21.0%

21.3%

21.6%

22.7%

23.6%

26.0%

28.2%

29.0%

31.4%

38.7%

39.3%

41.1%

48.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

McDowell, West Virginia

Perry, Kentucky

Letcher, Kentucky

Meigs, Ohio

Pike, Kentucky

Mingo, West Virginia

Wise/Norton, Virginia

Greene, Pennsylvania

Webster, West Virginia

Clay, West Virginia

Martin, Kentucky

Buchanan, Virginia

Wyoming, West Virginia

Knott, Kentucky

Boone, West Virginia

Martin

44.4% Wyoming

38.6%

Buchanan

41.9%

Knott

41.1%

Boone

63.4%

Clay

34.8%

Webster

36.1%

Greene

39.5%

Harlan

18.6%

Leslie

18.3%

Perry

19.6%

Letcher

21.0%Wise/Norton

23.6%

Dickenson

17.7%

Pike

21.6%

Floyd

15.6%

Mingo

22.7%

Logan

12.9%

McDowell

18.9%

Fayette

15.7%

Meigs

21.3%

Vinton

10.3%

Grant

10.7%

Less than 1%

1% - 5%

5% - 10%

10% - 25%

Greater than 25%
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University of Kentucky 38 

Center for Business and Economic Research 

Coal Mining Earnings as a Percentage of Total Earnings 

 This concentration is reinforced more strongly when we look at the earnings 

from coal mining relative to earnings from all industries in each county in the region. 

Because workers in the coal mining industry earn relatively higher wages and salaries 

than workers in many other industries, they will tend to have overall higher earnings 

and represent a higher share of total earnings than indicated by just employment. As a 

result, the percentage of total earnings from coal mining will tend to be higher than the 

percentage of total employment from coal mining in these counties. For example, the 

county with the highest ratio of coal mining to total employment was Boone County, 

West Virginia, where 48.1% of all employment was in the coal mining industry. In 

contrast, Boone County had 63.4% of total earnings come from the coal mining industry, 

which demonstrates the relatively high wages earned by workers in this industry. 

 Figure 1.2.15 shows coal mining earnings as a percentage of total earnings for 

each county in the Appalachian coal-producing region for 1997. The darkest of the five 

shades shows counties in which coal mining earnings account for more than 25 percent 

of that county’s total earnings. As can be seen, Kentucky and West Virginia have the 

highest concentration of earnings from coal mining, with each state having six counties 

with a ratio of coal mining to total earnings of more than 25 percent. Both Pennsylvania 

and Virginia each have one county with this high concentration of coal mining earnings. 

Pockets of smaller concentration also exist in other areas in the region, including central 

Alabama, eastern Ohio, and western Pennsylvania. 

 The concentration evident in the Kentucky-Virginia-West Virginia area is better 

seen in Figure 1.2.16, which shows a magnified view of the counties in this area, and 

Figure 1.2.17, which shows the 15 counties in the Appalachian coal-producing region 

with the highest percentage of total earnings from the coal mining industry. As seen by 

these figures, some counties in the region are heavily dependent on the earnings from 

the coal mining industry, with two counties receiving over one-half of their total 

earnings from the industry. Boone County, West Virginia, has the highest 

concentration, with 63.4% of total earnings from coal mining, followed by Knott 

County, Kentucky, at 48.3% of total earnings from coal mining. Other counties with 

high concentrations of over 40 percent include Mingo County, West Virginia (46.5%); 

Martin County, Kentucky (44.4%); Buchanan County, Virginia (41.9%); and Clay 

County, West Virginia (40.7%). 
A Study on the Current Economic Impacts 

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Center for Business and Economic Research 

FIGURE 1.2.15: Ratio of Coal Mining Earnings to Total Earnings 

by County in the ARC Region, 1997 

Less than 1%

5% - 10%

10% - 25%

More than 25%

1% - 5%
A Study on the Current Economic Impacts 

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Center for Business and Economic Research 

FIGURE 1.2.16: Ratio of Coal Mining Earnings to Total Earnings 

by County in the ARC Region (Enhanced), 1997 

Less than 1%

1% - 5%

5% - 10%

10% - 25%

More than 25%

Pike

29.8%

Lee

14.1%

Indiana

14.4%

Somerset

10.8%

Bell

14.2%

Grant

10.3%

Raleigh

11.4%

Wise

22.2%

Boone

63.4%

Greene

39.5%

Nicholas

16.3%

Harlan

26.9%

Floyd

11.1%

Logan

26.0%

Meigs

31.5%

Knott

48.3%

Russell

11.3%

McDowell

20.6%

Wyoming

38.6%

Marion

12.1%

Mingo

46.5%

Leslie

9.8%

Webster

36.1%

Monroe

10.3%

Buchanan

41.9%

Letcher

25.3%

Barbour

16.0%

Martin

44.4%

Marshall

13.9%

Magoffin

14.9%

Dickenson

23.7%

Harrison

14.3%

Perry

15.5%

Clay

40.7%
A Study on the Current Economic Impacts 

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Center for Business and Economic Research 

FIGURE 1.2.17: 15 Counties in the ARC Coal Region with the Highest Ratio of Coal Mining Earnings 

to Total Earnings, 1997

23.7%

25.3%

26.0%

26.9%

29.8%

31.5%

36.1%

38.6%

39.5%

40.7%

41.9%

44.4%

46.5%

48.3%

63.4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Dickenson, Virginia

Letcher, Kentucky

Logan, West Virginia

Harlan, Kentucky

Pike, Kentucky

Meigs, Ohio

Webster, West Virginia

Wyoming, West Virginia

Greene, Pennsylvania

Clay, West Virginia

Buchanan, Virginia

Martin, Kentucky

Mingo, West Virginia

Knott, Kentucky

Boone, West Virginia
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Coal Mining Gross County Product as a Percentage of Total Gross County Product 

 Finally, Figure 1.2.18 shows the percentage of total gross county product (GCP) 

that is attributable to the coal mining industry for the Appalachian coal-producing 

counties in 1997. This figure reinforces the results of the previous analysis of 

employment and earnings and shows a high concentration of GCP from coal in the 

Kentucky-Virginia-West Virginia region. 

 The concentration evident in the Kentucky-Virginia-West Virginia area is better 

seen in the magnified view of this area presented in Figure 1.2.19. In addition, Figure 

1.2.20 presents a ranking of the top 15 counties in the Appalachian coal-producing 

counties with the highest ratio of coal mining gross county product to total gross county 

product. Boone County, West Virginia, has the highest concentration with 71.9% of 

gross county product from coal mining, followed by Knott County, Kentucky at 54.0% 

of gross count product from coal mining. Other counties with high concentrations of 

over 50 percent include Mingo County, West Virginia (52.0%) and Clay County, West 

Virginia (50.0). 

 These large shares for the coal mining industry reflect the significant 

contribution of the coal industry to incomes in the region. Gross county product, like 

gross domestic product (GDP), represents the returns to the various factors of 

production, including labor and capital, as well as other factors such as tax payments. 

The earnings of labor are typically the largest component of total gross county product. 

Therefore, it is not surprising that the coal mining industry would account for a large 

share of gross county product in counties where it accounted for a large share of worker 

earnings. The coal mining industry also would be expected to make a large 

contribution to the capital consumption component of gross county product since it is 

such a capital-intensive industry. 
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FIGURE 1.2.18: Coal Mining Gross County Product as a Percentage of Total Gross County Product, 

1997 

Less than 1%

1% - 5%

5% - 10%

10% - 25%

More than 25%
A Study on the Current Economic Impacts 

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Figure 1.2.19: Ratio of Coal Mining Gross County Product to Total Gross County Product by County 

in the ARC Region (Enhanced), 1997 

Less than 1%

1% - 5%

5% - 10%

10% - 25%

More than 25%

Lee

13.2%

Bell

16.6%

Grant

12.1%

Raleigh

14.9%

Wise/Norton

21.1%

Boone

71.9%

Greene

33.6%

Nicholas

20.7%

Harlan

31.3%

Floyd

13.5%

Logan

32.6%

Meigs

33.8%

Knott

54.0%

Russell

10.2%

McDowell

24.7%

Wyoming

45.4%

Mingo

51.9%

Leslie

10.7%

Webster

42.8%

Monroe

10.5%

Buchanan

39.4%

Letcher

30.3%

Barbour

21.3%

Martin

47.1%

Marshall

16.7%

Magoffin

17.4%

Dickenson

22.5%

Indiana

11.1%

Harrison

14.8%

Clay

50.0%

Fayette

12.3%

Perry

18.5%

Marion

15.2%

Wayne

11.6%

Pike

34.3%
A Study on the Current Economic Impacts 

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FIGURE 1.2.20: 15 Counties in the ARC Coal Region with the Highest Ratio of Coal Mining Gross 

County Product to Gross County Product, 1997 

24.7%

30.3%

31.3%

32.6%

33.6%

33.8%

34.3%

39.4%

42.8%

45.4%

47.1%

50.0%

52.0%

54.0%

71.9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

M cDowell, West V irginia

Letcher, Kentucky

Harlan, Ken tu cky

Lo gan , West V irginia

Greene, Pennsylvania

M eigs, Ohio

P ike, Kentucky

Buchanan, Virginia

Webster, West V irginia

Wyom ing, West V irginia

M artin, Kentucky

Clay, West V irginia

M in go , West V irginia

Kno tt, Ken tu cky

Boone, West V irginia
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Part 1.3: Estimates of the Direct, Indirect, and Induced 

 Economic Effects Attributable to the Coal Industry 

Introduction 

While there are a number of Appalachian coal-producing counties where coal 

mining accounts for only a modest share of the local economy, there also are many 

counties where the industry dominates the local economy, as was demonstrated in the 

previous section. In 37 of the 118 counties we studied, the industry accounted for more 

than 10% of value-added (gross county product) in the county economy, while the 

industry accounted for more than 5% of value-added in 52 counties. Similar 

percentages could be provided for other economic indicators such as employment or 

worker earnings. 

The overall impact of the coal mining industry on these local economies actually 

exceeds the figures discussed in the previous section. This is because the coal mining 

industry supports economic activity throughout the economies of many of the major 

Appalachian coal-producing counties. Coal companies often support the activities of 

their suppliers in the manufacturing, machine shop, construction, and business services 

industry. The wages earned by coal miners supports their spending for a range of retail 

goods and services throughout the economy. These sorts of additional spending point 

to a larger economic impact for the coal mining industry than was discussed in the 

previous section. 

The purpose of this section is to consider the total economic impact of the coal 

mining industry on the local economies of major Appalachian coal-producing counties. 

The section will consider the direct economic activity occurring in the coal mining 

industry that was discussed in the last section, but will also examine the “multiplier 

effect” that occurs as coal companies spend locally on supplies, and coal industry 

employees spend on the goods and services required by households. This total 

economic impact on output, employment, and worker earnings will be significantly 

greater than the direct impacts discussed previously. 

Measuring the Multiplier Effect 

The concept of economic impact encompasses the overall impact that an industry 

has on an economy, including both the direct activity of that industry, and the 

additional economic activity that it supports. The economic impact of a particular 

industry is typically separated into three different impacts: direct, indirect, and 

induced. These three impacts together form the total economic impact associated with a 

particular industry. The following is a description of the three different types of 

economic effects, with specific examples relating to the coal industry. 
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• Direct Effects 

Direct effects are those which result immediately from spending 

associated with a particular business or industry. For example, the direct 

employment effects for coal mining would be the number of coal miners 

and other workers directly involved in producing coal for sale to end 

users. A measure of the value of output produced from coal mining is 

needed to estimate the direct effects. 

• Indirect Effects 

Indirect effects, along with induced effects, are commonly referred to as 

“multiplier” effects. These are the economic impacts that occur as the 

direct spending is made throughout the economy. Specifically, indirect 

effects represent the impact on output, employment, and income that 

occur as a business or industry purchases goods or supplies from other 

businesses that are needed for their operation. For example, a coal mining 

operation needs a large amount of mining equipment to operate and these 

purchases would represent indirect effects. Moreover, these businesses 

that supplied the mining equipment also need goods and services to 

operate and their purchases from other businesses would be indirect 

effects as well. These indirect effects continue from business to business 

until the spending “leaks” from the particular region under analysis and 

no longer has any additional economic impacts on the region. The “leaks” 

occur when money leaks out of the region through purchases made from 

producers out of the region or locality. 

• Induced Effects 

Induced effects are also termed “multiplier” effects. They represent the 

economic impacts on output, employment, and income that occur from 

spending by households in the region that results from additional income 

created by the direct and indirect effects. Workers at businesses with both 

direct and indirect effects all earn incomes that they spend on items such 

as housing, food, clothing, transportation, entertainment, and many other 

items that are part of their daily lives. For example, a miner employed at a 

coal mining operation would receive income that he could then spend to 

pay a home mortgage or to purchase an automobile. Similarly, an 

employee of the mining equipment business mentioned above would also 

earn income and have an induced effect on the economy as she spends 

money on these items of daily living. These induced effects continue as 

this money is recirculated throughout the economy many times until it 

eventually “leaks” outside the region under analysis and no longer has 

any additional economic impacts on that region. 
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The preceding section dealt extensively with the direct impact of the coal mining 

industry on county employment, earnings, or value-added. The current section will 

examine the additional indirect and induced impacts of the coal mining industry, and 

sum the direct, indirect, and induced impacts to estimate the total economic impact of 

the coal mining industry. 

Economic multipliers will be used to estimate the indirect and induced impacts 

of the coal mining industry in the counties. These multipliers indicate the amount of 

indirect or induced economic activity in terms of employment, wages, value-added, or 

output that are generated for each unit of direct activity. These multipliers can be 

calculated for each county in the United States, or for county groups, using the Micro 

IMPLAN model. This is possible because the Micro IMPLAN model can take a national 

model of spending linkages between industries and consumer spending patterns (the 

national input-output model) and customize to a particular county or county grouping 

using information about the employment structure, income pattern, and other 

information about this local area. 

Calculations of the indirect, induced, and total impact of the coal mining 

industry are based on the direct impacts calculated in the last section, particularly the 

direct output of the industry. Recall that this output was calculated for each county by 

multiplying total 1997 county coal production in tons by the average price per ton. 

Thus, this output figure needed to be estimated in some cases because average price 

data for 1997 was suppressed in some counties in the Federal data, due to the privacy 

concerns of specific mines. The method for estimating price data in cases where it was 

not reported, and the characteristics of those counties where it was not reported, are 

discussed in the following section. Afterwards, findings are presented for the indirect, 

induced, and total economic impact of the coal mining industry in major Appalachian 

coal-producing counties. 

Price Data 

The average price of coal in each Appalachian coal county is an important 

variable in the analysis. In particular, it is a key component for calculating coal output 

in counties, given that coal mining industry output is the product of county production 

and average price. Due to the importance of the average price variable, average 

minemouth price data were gathered or, where necessary, estimated for each of the 118 

Appalachian coal counties consider in our analysis. 

County average minemouth price data were available from the Energy 

Information Administration of the U.S. Department of Energy. However, for a number 

of counties, average prices were suppressed in order to protect the confidentiality of 

particular mining companies. When data were suppressed in this way in a county, 

average price was estimated. Average price was estimated using data on average price 
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from a previous year in which price was not suppressed, or using price data from 

surrounding counties, which often operate on similar coal seams, and thus, presumably 

have similar production costs and coal quality. Sometimes a combination of both types 

of data was used. Finally, when no average price data were available from a previous 

year, or from surrounding counties, than the state average price was used. 

Of the 118 major Appalachian coal-producing counties, 1997 average price data 

was reported in 58 of these counties, but was suppressed in the remaining 60 counties. 

The 58 counties were the average price was reported were typically among the larger 

coal-producing counties. This outcome is logical since it is easier to report data in a 

large coal-producing county with many mines without revealing any confidential 

information about any particular mine. In particular, the 58 counties were average price 

was reported accounted for 80.9% of 1997 production in the major Appalachian coalproducing counties. Therefore, output estimates are based on actual, rather than 

estimated prices, for the vast majority of coal mining production. The need to estimate 

average prices should not substantially effect aggregate output estimates, or output 

estimates for the largest counties, even if average prices are estimated for roughly half 

of the counties. The remaining 19.1% of 1997 production occurred in counties where 

average price information was suppressed.9 About two-thirds of this remaining 

production (12.8%) was in counties where the average price was estimated based on 

county price data from a previous year, 1997 price data from a surrounding county, or 

both. One-third of remaining production (6.4%) was in counties where the state 

average price needed to be used as the estimate for the county average price. 

 

9 For 22 of 60 counties where price was not reported, price data was available from both a previous year, 

and for surrounding counties (in the current year). These 22 counties accounted for 9.8% of 1997 

production in the major Appalachian coal-producing counties. In these counties, both the data on average 

price in a previous year and average price in surrounding counties was used to estimate the average 

county price in 1997. The county average price was estimated using a weighted average of the county 

price from a previous year, or the average price in surrounding counties. The weights were chosen based 

on a regression using data from counties where average prices were reported. These regressions 

predicted average price in these counties based on prices from a previous year and the 1997 price in 

surrounding counties (there was no intercept term in the regression). Regression results indicated the 

weight to place on the county price from a previous year and the 1997 price in surrounding counties. The 

regression was re-run for each previous year (i.e., one regression based on 1996 county price and 1997 

surrounding county data, another based on 1995 county price and 1997 surrounding county data, etc. 

back to 1990 price data). The weight assigned to the 1997 price in surrounding counties varied from near 

0% when paired with the 1996 county price, to 45% when paired with a county price from an earlier year. 

In 8 of 60 counties where price was suppressed, average price was available for the county in a previous 

year, but there was no information on 1997 average prices in surrounding counties. These 8 counties 

accounted for 2.0% of 1997 production in the major Appalachian coal-producing counties. In 13 of 60 

counties, there was information on 1997 prices in surrounding counties, but no price information from the 

county itself in a previous year. These 13 counties accounted for 1.0% of 1997 production in the major 

Appalachian coal-producing counties. For 17 of the 60 counties, there was no price data from a previous 

year or a surrounding county, so the state average price was utilized as the price estimate. These 17 

counties accounted for 6.4% of 1997 production. 
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Findings

The total economic impact of the coal mining industry on coal-producing 

counties in Appalachia is substantially larger than the direct impact of the coal mining 

industry itself. The additional impact due to the induced and indirect effects varies by 

state or groups of counties, but generally speaking is roughly 50% to 150% as large as 

the direct effect of the coal industry. The additional impact is typically 50% to 75% 

larger for value-added and income, but from 100% to 150% larger for employment. 

This difference again arises from the relatively high wages paid in the coal mining 

industry. 

Given these additional impacts, the total impact of the coal mining industry on 

regional economies is substantially larger than what was reported in the last section, 

particularly for employment. This can be seen in Table 1.3.1. The direct output value of 

coal production was $12.4 billion in the 118 major Appalachian coal-producing 

counties, but the total impact throughout the economy was $18.5 billion, or about 50% 

larger. Direct earnings by workers in the coal mining industry was $4.0 billion in 1997, 

but the total impact on earnings was $6.5 billion, or about 60% larger. Direct industry 

employment in major Appalachian coal-producing counties was around 60,000, but the 

total employment impact was 143,000, or about 140% larger. 

TABLE 1.3.1: Direct and Total Economic Impact of the Coal Mining Industry in the Appalachian 

Coal-Producing Counties, 1997 

Direct Impact 

($1997) 

Indirect and 

Induced Impacts 

($1997) 

Total Impact 

($1997) 

 

Output $12.4 billion $6.1 billion $18.5 billion 

 

Worker Earnings $4.0 billion $2.5 billion $6.5 billion 

 

Employment 60,000 jobs 73,000 jobs 143,000 jobs 

 Sources: Energy Information Administration and authors’ calculations 

The impact of the industry on major coal-producing counties in Appalachia is 

larger once these indirect economic impacts are considered. The coal mining industry’s 

total impact on earnings of $6.5 billion accounts for 5.3% of total earnings in 

Appalachian coal-producing counties. The industry’s total impact on employment 

accounts for 4.7% of all employment in these counties. These percentages are much 

larger in some county groupings in the major Appalachian coal-producing region, as is 

discussed below. 
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Economic Impact for Entire States 

 Coal mining’s share of the economy in major Appalachian coal-producing 

counties varies throughout the region, and varies substantially among states. This is 

true of the total economic impact of the coal mining industry as well as the direct 

impact of the industry. The impact on individual states is summarized in Table 1.3.2. 
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TABLE 1.3.2: Direct and Total Economic Impact of the Coal Mining Industry in Major Appalachian Coal-Producing Co Alabama Kentucky Maryland Ohio Pennsylvania TennesseTotal Coal Production (tons) 24.5 million 120.5 million 4.2 million 28.6 million 76.2 million 3.3 millio

Total Employment Impact (jobs) 13,200 30,300 1,300 9,200 27,100 1,700 

 Share of Total Employment 2.4% 31.9% 3.9% 4.2% 1.6% 2.4% 

Total Earnings Impact $645.7 million $1,280.3 million $43.6 million $318.5 million $1,625.7 million $49.0 million 

 Share of Total Earnings 2.9% 34.0% 3.5% 4.2% 2.3% 1.9% 

Total Output Impact $1.5 billion $4.4 billion $0.1 billion $1.0 billion $2.9 billion $0.1 billio

Sources: Energy Information Administration and authors’ calculations
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 The total impact followed the same pattern as the direct impact, as pictured in 

Table 1.2.2. The largest total impact in terms of output, earnings and jobs occurred in 

West Virginia, Kentucky, and Pennsylvania. The smallest impacts occurred in 

Maryland and Tennessee. 

 Table 1.3.2 also lists the relative size of the economic impact of the coal mining 

industry among major Appalachian coal-producing counties in each state. These 

percentages show the importance of the coal mining industry, and its total economic 

impact to the relevant local economies in these states. These results show the total 

economic impact of coal mining is most important in Kentucky and Virginia. The total 

economic impact of coal mining accounts for nearly 40% of jobs and 32% of worker 

earnings in major coal-producing counties in Virginia, and for 32% of jobs and 34% of 

earnings in coal-producing counties in Appalachian Kentucky. In other words, the coal 

mining industry accounts for roughly a third of the economic activity in these counties. 

 The total economic impact from coal mining also accounts for a substantial share 

of employment and earnings in West Virginia (approximately 15%) coal-producing 

counties. The share of the economy is less than 5% in the other Appalachian states of 

Alabama, Maryland, Ohio, Pennsylvania, and Tennessee. Coal-producing counties in 

these states overall tended to have more diversified economies less dependent on coal 

mining, at least on average. This was true even of Pennsylvania which had the 3rd

highest level of coal production within Appalachia of the 8 states listed in Table 1.3.2. 

 It should be remembered, however, that these aggregate figures for these states 

represent totals for all counties in a state. Sometimes the aggregate figures include 

counties with large metropolitan areas like Pittsburgh, PA or Charleston, WV. 

Therefore, even in states with a moderate or low overall share, there may be individual 

counties where the overall impact of the coal mining industry accounts for a very large 

share of the local economy. This is clearly the case for some counties in Pennsylvania 

and West Virginia, as is discussed in the next section. 

Economic Impact for Counties and Multi-County Regions 

 The coal industry’s largest economic impacts are found in a number of West 

Virginia, Pennsylvania and Alabama counties, as well as in counties in Virginia and 

Kentucky. This can be seen in Figures 1.3.1 through 1.3.3. In Pennsylvania, the total 

economic impact of coal mining in Greene County was $1.3 billion in output and over 

$270 million in earnings, and nearly 5,400 jobs. The total employment impact of the 

industry topped 3,000 in nearby Indiana County, 4,000 in Washington County and 

nearly reached 2,000 in Armstrong and Clearfield Counties. There were also two 

Alabama counties where the coal mining industry had a very large economic impact. In 

both Jefferson and Tuscaloosa Counties, the total economic impact in terms of jobs was 

approximately 5,000. 
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Figure 1.3.1: Earnings Impact as a Share of the Local Economy by County in the ARC Region 

Less than 1%

1% - 5%

5% - 20%

20% - 50%

Greater than 50%
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Figure 1.3.2: Employment Impact as a Share of the Local Economy by County in the ARC Region 

Less than 1%

1% - 5%

5% - 20%

20% - 50%

Greater than 50%
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Figure 1.3.3: Value-Added Impact as a Share of the Local Economy by County in the ARC Region 

Less than 1%

1% - 5%

5% - 20%

20% - 50%

Greater than 50%
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As was found with the direct economic impact, the total county economic 

impacts are largest at the border region where Kentucky, West Virginia and Virginia 

intersect and are visible in Figures 1.3.4 through 1.3.6. In this region, the largest 

economic impact occurred in Pike County, Kentucky, where the total output impact 

was $1.4 billion, the total earnings impact was $420 million, and the employment 

impact was over 10,000 jobs. There also was a very large economic impact in adjacent 

Mingo County, West Virginia, where the total output impact was $0.9 billion, the 

earnings impact was $270 thousand, and the employment impact was 3,600 jobs. There 

was a similarly large total economic impact in nearby Logan, Boone, and Raleigh 

Counties in West Virginia. There also was a large economic impact in Virginia Counties 

bordering Pike County, Kentucky. The total employment impact in Buchanan County, 

Virginia reached nearly 7,000 jobs, while the total impact reached 5,500 jobs in 

Wise/Norton County, Virginia. 

Figure 1.3.4: Total Earnings Impact by County in the ARC Region 

Less than $20 million

$20 million - $50 million

$50 million - $100 million

$100 million - $200 million

Greater than $200 million
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Figure 1.3.5: Total Employment Impact by County in the ARC Region 

Less than 100

100 - 299

300 - 999

1000 - 2999

Greater than 3000
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Figure 1.3.6: Total Value-Added Impact by County in the ARC Region 

Less than $10 million

$10 million - $50 million

$50 million - $100 million

$100 million - $300 million

Greater than $300 million
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These large impacts from the coal mining industry often accounted for a very 

large portion of the economy in this mostly rural or small-city region where Kentucky, 

Virginia, and West Virginia intersect. The total impact of the coal mining industry 

accounts for roughly 50% of the employment and earnings in Pike County, Kentucky, 

even though this is a larger, diversified county with a population of over 70,000, and 

substantial health care and retail industries. The total impact of coal mining is an even 

larger percentage of the economy in some of the smaller, more rural counties in this 

region. It accounts for 70% of earnings and about 50% of employment in Mingo 

County, West Virginia and over 90% of employment and earnings in Boone County, 

West Virginia. The industry also accounts for a large share of the economy in some 

smaller counties where the absolute magnitude of coal mining activity was not as large 

as in the major production counties such as Mingo County, West Virginia. The total 

impact of the industry accounted for 60% of earnings and 80% of employment in 

Wyoming County, West Virginia, and roughly 35% of employment and earnings in 

McDowell County. 

 In Virginia, the total impact of the coal mining industry accounts for about 70% 

of earnings and more than 80% of employment in Buchanan County. The industry 

impact accounts for about 40% of earnings and 60% of employment in Wise/Norton 

County. The total industry impact is a large share of the economy even in counties with 

more modest levels of coal production than those found in Buchanan and Wise/Norton 

Counties. The industry accounts for 35% of employment and earnings in Dickenson 

County, and roughly 20% of employment and earnings in both Russell and Lee 

Counties. 

 In Kentucky, in addition to accounting for about half of the employment and 

earnings in Pike County, the total impact of the coal mining industry accounted for 60% 

of employment and earnings in Martin County, and roughly 40% of employment and 

earnings in both Floyd and Letcher Counties. The total impact of the coal mining 

industry accounts for 70% of employment and earnings in Knott County, Kentucky, 

45% of employment and earnings in Harlan, and large shares in Perry and Leslie 

Counties. These individual county shares go to demonstrate the central role of the coal 

mining industry within the local economies of the Kentucky, Virginia, and West 

Virginia border region. 

 The importance of the industry is more modest in some of the other large 

production counties identified earlier. For example, in Alabama, there were large 

production levels in Jefferson and Tuscaloosa counties. However, the total impact of 

the coal mining industry accounted for only about 1.5% of earnings and employment in 

Jefferson County, Alabama, and just less than 10% of employment and earnings in 

Tuscaloosa County. The smaller share was due to the larger, more diversified nature of 

the local economies where coal production was centered in the Southern Appalachian 

coal producing regions of Alabama. However, it should be noted that the total impact 
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of the industry did account for 10% to 25% of employment and earnings in Fayette and 

Walker Counties in Alabama, and about 10% in Sequatchie County, Tennessee. 

 More modest shares also were found in the northern Appalachian production 

region, although the shares were larger than in the Southern Appalachian region. 

Typically, the total impact of the coal mining industry accounted for about 20% or less 

of employment and earnings, even in counties with high levels of production. Among 

the highest production counties in northern Appalachia, the total impact did account 

for about 60% of employment and earnings in Greene County, Pennsylvania, but only 

about 20% in Indiana County, just over 10% in Armstrong County, and around 7% in 

Clearfield and Washington Counties in Pennsylvania. The total impact of the industry 

accounted for around 15% to 25% of employment and earnings in Marshall County and 

Harrison Counties in West Virginia, and 10% or less in Monongalia and Harrison 

Counties. The total impact of the industry was about 10% of earnings and employment 

in Garrett County, Maryland. In Ohio, the total impact of the industry is between 10% 

to 20% of employment and earnings in Monroe, Belmont and Harrison Counties 

The results for the total impact of the coal mining industry in individual counties 

suggests that there are counties throughout Appalachia where that impact accounts for 

a substantial share of local economic activity. As noted previously, these more coaldependent counties tended to be relatively concentrated in Central Appalachia, 

particularly along the Kentucky, Virginia, and West Virginia border area. This suggests 

that it would be of interest to examine the total economic impact of the coal mining 

industry on a regional level, as was done in the previous section for the direct economic 

impact of the industry. 

 Such an economic impact would be based on regional economic multipliers for 

the coal mining industry, rather than the county economic multipliers used in the 

previous analysis. Regional multipliers are most appropriate for analyzing the impact 

in this larger geographic region. In particular, regional multipliers would more fully 

capture the supply linkages for coal mines throughout their region, rather than just 

within the same county.10 As a result, the regional multipliers tend to be larger than 

local multipliers. 

 Table 1.3.3 shows the total economic impact of the coal mining industry as a 

percentage of the overall economy of Northern, Central, and Southern Appalachia. The 

results show that the total impact of the coal mining industry is significant in Northern 

and Southern Appalachia, but is enormous in Central Appalachia. The total economic 

impact of the coal mining industry accounts for nearly 30% of employment, earnings 

and value-added in the Central Appalachia region. These high percentages reflect the 

central role that coal mining plays in the economy of many counties within this region. 

 

10 Regional multipliers also would better capture the regional shopping behavior of coal mine employees, 

rather than only reflecting local shopping patterns. 
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There are also counties in other parts of Appalachia where the coal mining industry is 

just as central a part of the economy. However, for Northern and Southern Appalachia 

overall, the total economic impact of the coal mining industry accounts for roughly 3% 

of employment, earnings, and value-added. While estimates of gross county product 

are more a measure of output (production times price) in the region, the total economic 

impact accounts for the effect of the coal industry on earnings, as well as employment 

and value-added. 

Table 1.3.3: The Total Economic Impact of the Coal Mining Industry as a 

Share of Regional Economic Activity 

Share of Economic Activity 

Region Employment Earnings Value-Added 

Northern Appalachia 3.1% 3.4% 2.7% 

Central Appalachia 29.9% 27.6% 29.8% 

Southern Appalachia 2.7% 3.0% 3.2% 

Sources: Authors’ calculations 

Linkages 

The multiplier effects examined in this section in part are the result of industrial 

linkages between coal mines and their suppliers. In particular, the indirect effect 

reflects how the spending of coal mine businesses on supplies sets off a chain of 

demand for the goods and services of local businesses. To begin with, these indirect 

effects reflect the purchase of supplies by coal mines from local business such as 

machine shops or construction firms, but also include the local supply purchases of 

these machine shops and construction firms themselves. Thus, the indirect multipliers 

reflect both the supply linkages between coal mines and their local suppliers, and other 

supply linkages in the economy. But, the local supply linkages of coal mines are the 

first and primary component of an indirect multiplier. 

 This section will examine the strength of local supply linkages for the coal 

mining industry throughout the Appalachian coal-producing region. The analysis 

examines in which parts of the region these local supply linkages are strongest. The 

areas will be the places that may benefit the most from current coal production in 

Appalachia, but may be most effected if coal activity is reduced in the future. 

 

The first approach to identify areas with the strongest local linkages will be to 

examine the indirect output multipliers for each of the 118 counties and in the three 

regions of Northern, Central, and Southern Appalachia. In addition to examining these 

multipliers, analysis will focus more directly on the key suppliers for the coal mining 

industry, by examining the extent to which each of the 118 coal-producing counties 

contain key supply businesses. Four industries will be examined: explosives; screw 

machine products and bolts; mining machinery except oil field; and conveyors and 
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conveying equipment. These industries were identified using the IMPLAN model for 

Kentucky as the industries with the greatest linkages in terms of dollars of product 

purchased to the coal mining industry. Several other industries which had large sales 

to coal mines were not consider since these industries sell to many industries, so there 

presence in a county would not necessarily mean a linkage to coal mining. Trucking, 

wood products and logging, railroads, and water transportation are examples of these 

industries. 

Figure 1.3.7 shows the indirect output multipliers for each of the 118 major coalproducing counties. The indirect multiplier simply shows the output in other county 

businesses per dollar of output in coal mining businesses that goes to meet the demand 

of business customers (i.e., not purchases by individuals). Results in the map show that 

there are both high and low county multiplier values spread throughout the 

Appalachian region. However, the high multiplier values tend to be concentrated in the 

Central Appalachian region, and to a lesser extent, in a portion of Northern Appalachia 

where Pennsylvania borders West Virginia. The results suggest that these are regions 

where the linkages between coal mining and local industry is greatest. The last column 

of Appendix E gives county level values of the indirect multipliers. 

Turning to the linked industries, we examine the number of businesses in the 

four industries of explosives; screw machine products and bolts; mining machinery; 

and conveyors.11 Looking at Southern Appalachia, there were 22 businesses in the four 

industries examined in the coal-producing counties of Alabama and Tennessee. In 

Central Appalachian states, there were 57 businesses in these industries in Kentucky, 

Virginia, and Southern West Virginia. In Northern Appalachia, there were 98 

businesses from these linked industries in Pennsylvania, Ohio, Maryland, and Northern 

West Virginia, including 70 in Pennsylvania alone. These data show that the direct 

linkages, like the multipliers, tend to be greatest in Central Appalachia, and in the 

Pennsylvania portion of Northern Appalachia. 

Both types of multiplier analysis indicate that inter-industry linkages to the coal 

mining industry are greatest in the very counties or regions where the industry is 

concentrated. This further suggests that the fortunes of the economy in these areas will 

be closely tied to the fortunes of the coal mining industry. 

 

11 Businesses in three major cities in the Appalachian coal-producing region are excluded in this analysis 

since it is much more likely that businesses in these cities would not primarily serve the coal mining 

industry. These cities are Pittsburgh, PA, Charleston, WV, and Birmingham, AL. This is done since it is 

more difficult to assume that businesses from these industries that are located in larger, more diversified 

economies would necessarily be suppliers to the coal mining industry.
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Figure 1.3.7: Individual Output Multipliers for 118 Appalachian Coal Producing Counties 

Less than 0.15

0.15 - 0.199

0.2 - 0.249

0.25 - 0.299

Greater than 0.3
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Part 1.4: Estimates of Potential Tax Revenue Impacts 

 Related to Coal Production and Exports 

Introduction 

Coal production generates substantial revenues for state and local governments 

through coal severance taxes. Such coal tax revenues are the most obvious types of tax 

revenue generated by the coal mining industry. But, the tax revenues generated due to 

the industry are not limited to coal severance taxes. The aggregate economic impact of 

the coal industry generates many types of tax revenues. For example, the increase in 

worker earnings leads to additional income and payroll tax revenues, while the 

“multiplier” effect leading to sales at local retail outlets can yield sales tax revenues. 

These tax revenue impacts are an important part of the overall impact of the coal 

mining industry since the taxes help support local and state government services in the 

major Appalachian coal-producing regions. Such revenues are important for 

maintaining the quality of life, school funding, or funding for public infrastructure. The 

tax revenue also is important for meeting some of the additional public costs associated 

with an active local coal industry, such as additional costs for road maintenance, and 

perhaps, maintaining water quality or other environmental needs. 

This report focuses on three main sources of tax revenue: coal severance taxes, 

income taxes, and sales taxes. These taxes naturally account for a substantial share of 

revenue in Appalachian states. There are additional revenues supported by other types 

of taxes and fees garnered because a local coal industry makes Appalachian coal 

counties larger. However, it is beyond the scope of this study to model these given 

separate taxes in 8 different states and over 100 counties. 

Coal severance tax revenues are estimated first, based on direct coal production 

in counties and states. Income taxes are estimated next based on the total earnings 

impact of the coal mining industry within the major Appalachian coal-producing 

counties. Sales taxes are estimated last, while the final section aggregates coal 

severance, income, and sales taxes. 

Severance Taxes 

Severance taxes are a group of taxes that are specifically levied on natural 

resource extraction industries but generally are not levied on non-resource industries. 

Severance taxes are levied on coal and other natural resources as they are mined, or 

“severed”, from the ground. In the case of coal, taxes typically are assigned either on a 

per ton basis, or on a percentage of the value of coal mined. Taxes typically are 

collected by state revenue agencies, with most revenue remaining in the state and a 

portion of the revenue returning to counties where the coal is mined. 
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The state and local severance taxes generated by the coal industry are directly 

related to the coal production in specific counties or regions in each state. These 

revenues therefore can be directly estimated based on the production and value of 

output figures from Task 2. Such estimates were prepared for each of the 118 major 

Appalachian coal-producing counties. For estimating severance tax revenues, the 

appropriate tax rate in each state or county should be applied to the production or 

value of output presented in Task 2. 

This simple process, however, is complicated somewhat by the fact that the 

severance tax regime varies substantially among the 8 states where these 118 coalproducing counties are located. Some states do not have a severance tax, and the tax 

rate varies among those states with a tax. Each state with the tax has a different 

mechanism for sharing revenue with counties, and some states even allow direct county 

taxation. We utilized Internet web sites and direct communications with state tax 

revenue departments to identify the severance tax regime in each state, and then used 

the tax rate information to estimate severance tax revenues for each state. 

Our finding was that Maryland and Pennsylvania did not have special severance 

taxes while Alabama, Ohio, Tennessee, Kentucky, Virginia, and West Virginia did have 

such a tax. The Alabama, Tennessee and Ohio taxes were assessed per ton with 

Alabama and Tennessee taxing at $.20 per ton and Ohio at $.09 per ton. Alabama 

severance taxes were returned to counties and localities. Kentucky, Virginia, and West 

Virginia severance tax regimes were based on the value of coal as it is mined, where 

value of output is simply production multiplied by the minemouth price of coal. This 

value of output was estimated in Task 2. A county severance tax rate of 2% is assessed 

in Virginia where there is no state severance tax. The base severance tax rate is 4.5% of 

value of production in Kentucky and 5% in West Virginia. In West Virginia, there are 

special lower tax rates for new mines operating in narrow coal seams so the effective tax 

rate is lower statewide. We calculated the statewide effective severance tax rate to be 

3.86% during fiscal year 1997. This tax rate includes a 0.35% severance tax rate for West 

Virginia counties. 

These tax rates were utilized to produce estimates of severance tax revenue in 

each state that are presented in Table 1.4.1 below. The table also illustrates whether 

severance taxes accrue to state or local governments. The total estimate of severance tax 

revenue across the 8 states is $339.8 million per year. State government would retain 

roughly three-quarters of this revenue, while the rest would go to county and local 

governments or programs. The greatest revenues were collected in states with the 

largest production including Kentucky, West Virginia, and, to a lesser extent, Virginia. 

These three states alone account for 98% of severance tax collection, since Pennsylvania 

does not have a severance tax on coal. 
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With no severance tax in Pennsylvania, and the highest severance tax rates in 

Kentucky, West Virginia, and Virginia, the result is that coal severance taxes are heavily 

concentrated in the central Appalachian region. As is illustrated in Figure 1.4.1 below, 

severance tax collection is heavily concentrated in the border region of Kentucky, 

Virginia, and West Virginia. 

Figure 1.4.1: Severance Tax Collection by County in the ARC Region 

Less than $100 thousand

$100 thousand - $1 million

$1 million - $5 million

$5 million - $10 million

Greater than $10 million
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Table 1.4.1: Severance Tax Revenues by State 

Severance Tax Revenue 

 Total State Government County and Local 

Government 

State 

Alabama $4.9 million $0 million $4.9 million 

Kentucky $134.0 million $93.8 million $40.2 million 

Maryland $0 million $0 million $0 million 

Ohio $2.7 million $2.7 million $0 million 

Pennsylvania $0 million $0 million $0 million 

Tennessee $0.7 million $0.7 million $0 million 

Virginia $20.2 million $0 million $20.2 million 

West Virginia $177.3 million $161.2 million $16.1 million 

Total $339.8 million $258.4 million $81.4 million 

Source: Authors’ calculations 

Income Tax 

As discussed in Task 3, one aspect of the economic impact of the coal mining 

industry is a substantial impact on worker earnings. This earnings impact quite 

naturally can lead to tax revenues through the income taxes in various Appalachian 

states. The level of revenue depends on the income tax rates in each state, as well as the 

size of the economic impact. 

Typically, there is no set, specific income tax rate in states. Taxpayers have 

minimum deductions, other personal deductions, and in many states, pay a graduated 

tax rate. This uncertainty about what tax rate to apply to the earnings of each particular 

person creates a need for a common tax rate that could be applied to all earnings, that 

is, an effective tax rate. This rate then could be applied to the earnings impact of the 

coal mining industry to estimate the resulting income tax revenue, without needing to 

worry about who earns that income, whether they have other income sources, the level 

of deductions for which they are eligible, etc. 

Table 1.4.2 lists the effective state income tax rate for each of the 8 states with 

major Appalachian coal-producing counties. These effective tax rates were calculated 

by dividing the total personal income tax collected in each state from 1996 through 1998 

by the total personal income earned in each state from 1996 through 1998.12 The 

effective income tax rates are therefore the effective rate over three recent years, rather 

than the rate in any particular single year. The effective state income tax rate in most 

states falls within the range of 1.88% to 2.86%, with the exception of Tennessee. In 

Tennessee, where there is only a selective income tax, the effective rate is just 0.11%. 

 

12 Sources: 1996, 1997, and 1998 State Personal Income, U.S. Bureau of Census, Bureau of Economic 

Analysis, www.bea.doc.gov/bea/regional/spi/pi.htm and 1996, 1997, and 1998 Income Tax Paid, U.S. 

Bureau of Census, www.census.gov/govs/www/state.html. 
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Figure 1.4.2: Income Tax Collection by County in the ARC Region 

These effective tax rates can be applied to the estimated total earnings impact of 

coal-production in order to estimate the total income tax impact of the coal mining 

industry. The income tax revenue impact due to coal mine production in the major 

Appalachian coal-producing counties is summarized for each state below in Table 1.4.2. 

The total income tax revenue generated due to coal mining in the major Appalachian 

coal-producing counties is $145.9 million annually. This is just above 40% of the 

revenues generated by severance taxes on coal. Since the effective tax rates are similar, 

with the exception of Tennessee, the distribution of tax revenues among states follows 

the pattern of the economic impact. Among the states, the impact is largest in West 

Virginia, where just over one-third of the impact tax impact is generated. Among the 

counties, the largest impact is in the Kentucky, Virginia, West Virginia border area, with 

concentrated impact in selected Pennsylvania counties, and in a portion of Alabama. 

This pattern is evident in Figure 1.4.2, which shows the tax revenue generated due to 

Less than $100 thousand

$100 thousand - $500 thousand

$500 thousand - $1 million

$1 million - $2 million

Greater than $2 million
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the worker earnings impact of the coal industry in each of the 118 coal-producing 

counties. 

Table 1.4.2: Income Tax Revenue Due to Coal Mining in Major Appalachian Coal-Producing 

Counties by State

 Total Earnings Impact Effective Income Tax 

Rate 

Total Income Tax 

Revenue 

State 

Alabama $595.3 million 1.91% $11.4 million 

Kentucky $1,219.6 million 2.86% $34.9 million 

Maryland $42.3 million 2.69% $1.1 million 

Ohio $317.6 million 2.40% $7.6 million 

Pennsylvania $1,488.3 million 1.88% $27.9 million 

Tennessee $47.0 million 0.11% $53,000 

Virginia $546.6 million 2.80% $15.3 million 

West Virginia $1,988.4 million 2.39% $47.6 million 

Total $6,245.0 million $145.9 million 

Source: Authors’ calculations 

Sales Tax 

 The economic impact of the coal industry generates additional sales tax revenue, 

just as it generated income tax revenue. Sales are generated throughout the economy 

due to the multiplier effect, i.e., indirect and induced effect. A substantial portion of 

those sales occurs for products or services that are subject to state and local sales tax. 

Specific sales tax laws in the eight states where the 118 major Appalachian coalproducing counties are located determine the sales tax revenue generated due to the 

coal mining industry. There also are local sales taxes in some of those counties. The 

state and local tax laws were examined in order to document the relevant tax rates and 

estimate the percentage of sales that are subject to sales tax in four categories of 

industries: restaurants, retail industries, lodging, and utilities. The result was a 

conservative estimate of sales tax coverage in each state, but not an exact modeling of 

the complex state and local tax systems.13 

 

13 Sales tax was modeled for the industries where most sales tax is collected, such as retail industries. 

However, there may have been additional industries, particularly service industries, that pay sales tax 

but were not modeled such as movie theatres. This is why the results presented are considered to be 

conservative. 
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Figure 1.4.3: Sales Tax Collection by County in the ARC Region 

In order to estimate the sales tax impact, these tax rates and coverages were then 

applied to estimates of the indirect and induced sales impact. Due to the detail of the 

Micro IMPLAN multiplier model, these sales impacts were available by detailed 

industry.14 The relevant sales in each industry were multiplied by the tax coverage and 

the tax rate in order to create the estimate. 

Table 1.4.3 includes an estimate of the state and local sales taxes generated in 

each state due to the economic impact of the coal mining industry. Table 1.4.3 also lists 

the total sales tax impact, including both state and local taxes. The total sales tax 

collected is $73.8 million. This is about one-fifth of the tax collected due to severance 

taxes, but about half the revenue generated by the income tax. Most sales tax revenue is 

 

14 Retail margins were factored in for retail industries where industry output does not equal sales due to 

the wholesale cost of goods. 

Les than $50 thousand

$50 thousand - $150 thousand

$150 thousand - $500 thousand

$500 thousand - $1 million

Greater than $1 million
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the result of state sales taxes rather than local taxes. About one-third of the sales tax 

was generated in West Virginia, but there was significant sales tax revenue in Kentucky 

as well. Among the counties, the largest impact is in the Kentucky, Virginia, West 

Virginia border area, with concentrated impact in selected Pennsylvania counties, and 

in a portion of Alabama. Although, the sales tax impact in Virginia is not as large due 

to the lower sales taxes in that state. These patterns are evident in Figure 1.4.3, which 

shows the sales tax revenue generated in each of the 118 coal-producing counties. 

Total of Severance, Income, and Sales Taxes 

 Table 1.4.4 below again shows the severance, income, and sales taxes estimated 

to be generated in each state due to the coal mining industry, along with the sum of all 

three taxes. Data in Table 1.4.4 show three of the major types of taxes generated due to 

the economic impact of the coal mining industry. However, not all types of taxes are 

included. In particular, the total economic impact of the coal mining industry likely 

makes additional and large contributions to the local tax base through property tax 

impacts, and other miscellaneous local taxes. However, the level of these taxes could 

not be estimated due to the complexity of modeling these local tax rates and coverage in 

all of 118 major coal-producing counties. As a result, it should be kept in mind that the 

total tax impact in Table 1.4.4, while substantial, represents an underestimate of the 

total tax impact of the coal mining industry in Appalachia. 

Table 1.4.3: State and Local Sales Tax Revenue by State 

Sales Tax Revenue 

State Total State Government Local Government 

Alabama $8.5 million $5.5 million $3.0 million 

Kentucky $18.0 million $18.0 million $0.0 million 

Maryland $0.6 million $0.6 million $0.0 million 

Ohio $4.0 million $3.8 million $0.2 million 

Pennsylvania $10.2 million $10.2 million $0.0 million 

Tennessee $0.6 million $0.5 million $0.2 million 

Virginia $4.3 million $3.4 million $1.0 million 

West Virginia $27.5 million $27.5 million $0.0million 

Total $73.8 million $69.5 million $4.3 million 

Source: Authors’ calculations 

 Data in Table 1.4.4 show that the total tax impact of the coal mining industry due 

to severance, income, and sales taxes is quite large. The total annual impact is over $550 

million per year. Several interesting patterns also are relevant in Table 1.4.4. Note that 

while severance taxes on coal production are an important part of the tax impact, 

general taxes that fall on many industries and households also account for a substantial 

portion of the industry’s overall tax impact. Even with the omissions mentioned above, 
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severance taxes accounted for only about 60% of the overall tax impact across the 8 

states. In states with a modest severance tax, such as Alabama or Virginia, the 

severance tax accounted for half or less of the total tax impact. 

The tax impact also tended to be concentrated in certain states and industries. 

The largest impacts occurred in West Virginia and in Kentucky, which had substantial 

coal production, significant severance tax rates, and average to high sales and income 

tax rates. West Virginia accounted for almost 45% of total tax revenues, while Kentucky 

accounted for 33%. Pennsylvania and Virginia each accounted for 7%. Finally, as noted 

in Figures 1.4.1 through 1.4.4, the largest regional impact occurred in the Kentucky, 

Virginia, West Virginia border area. It is this region, and the states of West Virginia and 

Kentucky more generally, which gain the most from tax revenues generated due to the 

coal mining industry. 

Table 1.4.4: Severance, Income, and Sales Tax Revenue by State 

State Total Severance Income Sales 

Alabama $24.7 million $4.9 million $11.4 million $8.5 million 

Kentucky $186.9 million $134.0 million $34.9 million $18.0 million 

Maryland $1.7 million $0.0 million $1.1 million $0.6 million 

Ohio $14.3 million $2.7 million $7.6 million $4.0 million 

Pennsylvania $38.1 million $0.0 million $27.9 million $10.2 million 

Tennessee $1.3 million $0.7 million $53,000 $0.6 million 

Virginia $39.9 million $20.2 million $15.3 million $4.3 million 

West Virginia $252.4 million $177.3 million $47.6 million $27.5 million 

Total $559.5 million $339.8 million $145.9 million $73.8 million 

Source: Authors’ calculations
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Figure 1.4.4: Total Tax Collections by County in the ARC Region 

Less than $1 million

$1 million - $5 million

$5 million - $10 million

$10 million - $20 million

Greater than $20 million
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Part 1.5: Baseline Analysis of Demographic and Transfer Payment Impacts 

Previous sections of this report have focused on the economic impact of the coal 

mining industry on a number of aggregate economic indicators such as total 

employment, income, and output, as well as tax revenue. These types of indicators are 

typically the focus of economic impact and fiscal impact studies, and certainly are 

important and appropriate measures of how a particular industry contributes to a 

region’s economic performance. But, these are just some of the important aggregate 

indicators of a regions economic situtation. Other key indicators would include 

population change, labor force participation, unemployment, and social welfare 

dependency. Economic impact studies do not always discuss how the growth or 

decline of a particular business or industry might effect these fundamental indicators of 

regional economic health, in part because one sector often does not have a large enough 

effect on the local economy to dramatically change these indicators. However, when a 

particular industry represents a large share of that region’s economy, factors such as the 

direction of population growth, or the rate of social welfare dependency can be 

signficiantly influenced by growth trends of that industry. This certainly may be the 

case for the coal mining industry in many of the major coal-producing counties in 

Appalachia. 

The extent of the link between the performance of major local industries and 

changes in key local socioeconomic indicators such as population growth, labor force 

participation, or social welfare dependency has been a subject of recent research. 

Research by Dr. Dan A. Black and others has shown a direct link between the 

performance of the coal industry and these economic measures. These links emerge in 

part due to the nature of coal industry jobs and because the industry has a major impact 

on the overall economy. Coal industry jobs often offer relatively high pay to workers 

with relatively low general skill levels, although these workers clearly have developed 

substantial industry-specific skills for use in coal mining. Thus, losses in coal mining 

employment represent lost earnings opportunities that may not only lead to 

outmigration from the region in some cases but also to increased poverty and 

dependence on social welfare among workers who are unwilling to move outside the 

region or who face few well-paying opportunities outside of the coal mining industry. 

Of course, when the coal mining industry experiences growth, just the opposite occurs. 

More high-paying jobs in coal mining will likely be accompanied by a decline in 

participation in social welfare programs and less outmigration from the region and 

perhaps even inmigration to the Appalachian regions. 

This section of the report will discuss this relevant research in more detail, and 

point out the link between the coal mining industry, as well as other heavy industries 

such as steel, and key indicators of regional socioeconomic health. This information 

will make it possible to predict how these socioeconomic factors may be expected to 

change in these counties in the future in reaction to anticipated changes in the local coal 
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mining industry. This section also will present information on the current 

socioeconomic situation in the major Appalachian coal-producing counties. As will be 

demonstrated, many of these counties under current conditions already perform poorly 

according to a number of socioeconomic measurements such as populaton growth, 

poverty, labor force participation, and dependence on social welfare programs. 

Review of Literature 

Dr. Dan Black and a number of colleagues have conducted a group of research 

studies examining how growth and decline in key industries can effect aggregate 

economic outcomes in local economies such as population change, or dependence on 

social programs (Black, McKinnish, and Sanders, 1999; Black, Daniel, and Sanders, 

1996)15. Much of this research has focused on the effects of growth or decline shocks to 

the coal industry, but their work also has focused on the steel industry, another heavy 

industry where generally low-skill workers earn high wages due to strong industryspecific skills. As discussed above, the argument in this research is that some industries 

such as coal or steel might be expected to have an especially broad impact on the local 

economy when these industries are a larger part of the local economy, and they 

experience significant shocks, that is, substantial growth or decline. In line with this 

argument, Black and his co-authors did find that large and permanent changes in 

employment in the coal or steel industries have a major effect on aggregate 

socioeconomic indicators, and a larger effect than changes in total employment. Black, 

McKinnish, and Sanders (1999) argue that this is because changes in employment in the 

coal and steel industries directly affects the high wage employment opportunities of 

low skill workers. 

Looking at some of the specific findings of this research, the authors found that a 

permanent (or at least long-term) 10% change in earnings in coal or steel counties was 

associated with a 9 to 10% change in AFDC program expenditures in that county (Black, 

McKinnish, and Sanders, 1999). Naturally, this relationship worked in the opposite 

direction, so that earnings losses lead to rising AFDC expenditures, and vice-versa. 

Another paper (Black, Daniel, and Sanders, 1996) focused exclusively on the impact of 

the coal boom and bust during the 1970s and 1980s, and examined its effect on a widevariety of social-economic indicators such as poverty rates, SSI spending, Food Stamp 

payments, unemployment insurance payments, medical transfers (medicare and 

medicaid), and social security. That paper found that a 10% decrease in county 

 

15 The estimation method in Black et. al. (1996; 1999) utilized a time series, cross-sectional county database. 

Each outcome measure (population growth, TANF payments, etc.) is a function of county earnings. Due 

to the endogeneity of county earnings and the outcome measures, a two-stage least squares framework is 

employed. County coal price is the exogenous variable in the model. County earnings is estimated based 

on coal prices in the first stage, and then estimated earnings is utilized in the second stage of the 

regression. 
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earnings lead to a 2.4% increase in the number of people living in poverty, but a 2.2% 

decrease in population. Focusing on transfer programs, a 10% decrease in county 

earnings lead to a 7.9% increase in SSI benefit payments, an 18.7% increse in Food 

Stamp payments, a 26.0% increase in unemployment insurance payments, a 4.1% 

increase in medicare and medicaid payments, and a 1.5% increase in social security 

(OASDI) payments. Note that these are absolute increases that occurred at the same 

time that county population was declining. These responses, commonly called 

elasticities, relating the change in earnings to the change in these various socioeconomic 

indicators are summarized in Table 1.5.1.16 

Table 1.5.1: Change in Economic Indicator Resulting from a 10% Decline in County Earnings 

(Resulting from a Loss of Steel or Coal Industry Earnings) 

Economic Indicator Percent Change Due to 

10% Decline in County 

Earnings 

Source 

Population 2.2% Black, Daniel, and Sanders (1996) 

Poverty 2.4% Black, Daniel, and Sanders (1996) 

AFDC 9 - 10% Black,McKinnish and Sanders (1999) 

SSI 7.9% Black, Daniel, and Sanders (1996) 

Food Stamps 18.7% Black, Daniel, and Sanders (1996) 

Unemployment Insurance 26.0% Black, Daniel, and Sanders (1996) 

Medical Transfers (Medicare 

and Medicaid) 

4.1% Black, Daniel, and Sanders (1996) 

Social Security (OASDI) 1.5% Black, Daniel, and Sanders (1996) 

Current Situation and Maps 

The elastic relationships in Table 1.5.1 between earnings and county 

socioeconomic indicators will help illustrate how these indicators may react to future 

changes in the coal mining industry. In particular, the data in Table 1.5.1 may indicate 

how population growth and transfer payments in major coal-producing counties may 

be affected under alternative scenarios for the macro-economy and environmental 

regulations under the Kyoto Protocol. 

 

16 The term elasticity refers to a measure of responsiveness. In this case, measuring the change of the 

economic indicator in response to a given change in earnings. 
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These reactions will be considered in Section II of this report, which discusses the 

future of the Appalachian coal industry under these alternative scenarios. This section 

will consider the current conditions in the coal-producing regions of Appalachia, 

identified in the baseline analysis, in terms of these major socioeconomic indicators. We 

will consider whether regions already exist which perform poorly according to these 

socioeconomic indicators, and therefore, could be a particular area of concern should 

socioeconomic conditions worsen. 

Figure 1.5.1 shows recent population growth in the major coal-producing 

counties of Appalachia during the 1990 to 1997 period. Note that population growth 

Figure 1.5.1: Percent Population Change, 1990 – 1997, by County in the ARC Region 

rates are highly volatile among the coal-producing counties. There is both a substantial 

number of growing counties and a substantial number of counties where population 

Less than 0%

0% - 5%

5% - 10%

10% - 20%

Greater than 20%
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declined from 1990 through 1997. Most counties grew or contracted by no more than 

5% to 7% over the seven years. However, changes were quite dramatic in some 

counties. Cumulative growth over these seven years was as high as 35.6% in Shelby 

County, Alabama, but population loss was as great as 12.6% in McDowell County, West 

Virginia. Looking at the county growth rates, it is evident that the contracting counties 

were most common in the Central Appalachia and Northern Appalachia regions. 

Population growth was more common in Southern Appalachia. These county data are 

consistent with regional totals for population growth, which are illustrated in Table 

1.5.2. The major coal-producing counties in Northern Appalachia had a slight decline in 

population over the seven-year period, as did the counties in Central Appalachia. In 

Southern Appalachia, however, the coal-producing counties had a substantial increase 

in population of 6.4%, which is just less than a 1% annual increase. Due to the growth 

in Southern Appalachia, the 118 major Appalachian coal-producing counties overall 

experienced a slight increase in population. 

Table 1.5.2: Regional Totals for Socioeconomic Conditions 

Socioeconomic Indicator All 118 Counties Northern 

Appalachia 

Central 

Appalachia 

Southern 

Appalachia 

Population Growth (1990 – 

1997) 

0.7% -0.4% -0.2% 6.4% 

 

Per Capita Temporary 

Assistance to Needy 

Families (TANF/AFDC) 

$51.51 $53.74 $85.37 $14.74 

 

Per Capita Supplementary 

Security Income (SSI) 

$143.36 $111.24 $292.86 $143.25 

 

Per Capita Food Stamps $86.73 $71.51 $169.15 $77.04 

Per Capita Unemployment 

Insurance 

$110.53 $135.43 $71.58 $46.62 

 

Per Capita Medical 

Transfers (Including 

Medicare and Medicaid) 

$1,785.90 $1,870.24 $1,730.64 $1,505.63 

 

Per Capita Social Security 

(OASDI) 

$1,739.37 $1,787.30 $1,803.39 $1,500.69 

Source: Regional Economic Information System, 1969-1998 (REIS) 

 Figures 1.5.2 through 1.5.4 show per capita payments to individuals from three 

transfer programs focused on income maintenance. Temporary Assistance to Needy 
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Families (TANF/AFDC) is an income maintenance program for poor households, 

typically households with children. Supplementary Security Income (SSI) provides 

payments to workers who are certified as disabled. The Food Stamp program provides 

families with extra income for food purchases. Higher per capita payments from these 

programs likely reflect higher rates of poverty and lower rates of income within any 

area. In the case of TANF, however, payments may also reflect the level of financial 

support that each state chooses to provide. There also may be smaller state 

contributions in the case of the SSI and Food Stamp programs. This suggests that high 

payments in these programs may reflect that an area possesses a higher burden on 

federal and state government as well as indicating lower income and higher poverty. 

Figure 1.5.2: TANF Payments per Capita by County in the ARC Region, 1997 

$0 - $25

$26 - $50

$51 - $75

$76 - $100

Greater than $100
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Figure 1.5.3: SSI Payments per Capita by County in the ARC Region, 1997 

$0 - $100

$101 - $200

$201 - $300

$301 - $500

Greater than $500
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Figure 1.5.4: Food Stamp Payments per Capita by County in the ARC Region, 1997 

$0 - $50

$51 - $100

$101 - $150

Greater than $200

$151 - $200
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Results in Figures 1.5.2 through 1.5.4 indicate that payments in these programs 

typically are higher in counties in Central Appalachia. There are counties in the higher 

payment classification throughout the Appalachian region, but such counties clearly are 

concentrated in counties in Eastern Kentucky, Southern West Virginia, and Southwest 

Virginia. These county results are reflected in the regional figures for these programs 

presented in Table 1.5.2. Per capita payments are clearly higher in Central Appalachia 

under all three programs. Generally speaking, the average per capita payment in 

Central Appalachia is roughly twice as large as in the two other regions. 

Figures 1.5.5 through 1.5.7 show per capita payments to individuals from three 

programs oriented towards providing “social insurance.” In these programs, workers 

directly or through their employers typically make donations to these programs and 

then receive payments at a later time when and if they meet the required criteria. 

Unemployment insurance is a program where contributions are made based on a 

worker’s wages and then workers receive payments should they become unemployed. 

In the social security program (OASDI), workers and their employers make 

contributions based on a worker’s wage rate and the worker and their family can 

receive benefits upon retirement, or in some cases, the worker’s death. In the Medicare 

portion of medical payments, worker’s wages are taxed in order to help fund health 

care upon retirement. However, other portions of medical payments such as Medicaid 

are more consistent with an income maintenance program in that payments are made to 

households with lower income, or with medical expenses that are beyond the family’s 

financial needs. 

Results in Figures 1.5.5 through 1.5.7 indicate that payments in these programs 

do not vary as systematically by region as the three income maintenance programs. 

Higher payment counties are spread throughout the 118 county region. Higher and 

lower payment areas are not highly concentrated on the maps, at least not as strongly as 

was the case with the three income maintenance programs. Looking at the regional 

averages in Table 1.5.2, per capita payments are somewhat higher in Northern 

Appalachia, and somewhat lower in Southern Appalachia, particularly in the case of 

unemployment insurance. In the case of unemployment insurance, this likely reflects 

the much larger unemployment benefits available in northern states. The smaller 

differences found for social security (OASDI) and medical transfer payments likely 

reflect that wages are higher in Northern Appalachia, and that the population is 

somewhat older in both Northern and Central Appalachia than in Southern Appalachia. 
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Figure 1.5.5: OASDI Payments per Capita by County in the ARC Region, 1997 

$0 - $1,250

$1251 - $1,500

$1,501 - $1,750

$1,751 - $2,000

Greater than $2,000
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Figure 1.5.6: Medical Payments per Capita by County in the ARC Region, 1997 

$0 - $1,000

$1,001 - $1,500

$1,501 - $2,000

$2,001 - $3,000

Greater than $3,000
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Figure 1.5.7: UI Payments per Capita by County in the ARC Region, 1997 

$0 - $50

$51 - $75

$76 - $100

$101 - $150

Greater than $150
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Summary 

The changing fortunes of the coal mining industry, more than many industries, 

has the potential to have a significant impact on the basic socioeconomic conditions of 

major coal-producing counties. This is the case both because the industry is often a 

large part of the local economy and because it is one of the few industries that offers 

high-wage jobs for worker’s which on average have low general skills. Although, these 

workers certainly have built up great skill which they utilize in their work as coal 

miners. 

Research by Dr. Dan Black and others (1996, 1999) has demonstrated the impact 

which fluctuations in coal mining employment and earnings has on major 

socioeconomic indicators such as population growth and transfer payments. The 

potential for future changes in coal mining earnings to affect these indicators in 

Appalachia will be discussed later in this report in sections that address forecasts for the 

coal industry. But, the possibility that changes in the industry could worsen these 

socioeconomic indicators is a concern, particularly given some of the current values of 

these indicators within the coal-producing counties of Appalachia. In particular, 

population is already shrinking on average in the coal-producing counties of both 

Northern and Central Appalachia. Meanwhile, the coal-producing counties of Central 

Appalachia already have high levels of income maintenance program payments. The 

per capita payments for three income maintenance programs- TANF, SSI, and Food 

Stamps- are already twice as high in Central Appalachia as in Northern and Southern 

Appalachia. 
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Part 1.6: Groupings of Appalachian Coal-Producing 

 Counties Organized by Sectors, Sub-State Areas, 

 and Other Appropriate Approaches 

The 118 major Appalachian coal-producing counties cover a wide geographic 

area from Alabama to Pennsylvania, and comprise a great variety of coal and mine 

types. The importance of the coal industry in each county’s economy also varies greatly 

within the group. Finally, while the productivity of these mines has risen throughout 

Appalachia, the rate of productivity growth has varied within the coal-producing 

counties. 

All of these factors suggest that any analysis of Appalachian coal-producing 

counties should not just consider the situation for the industry in Appalachia overall, 

but should also examine the industry in groupings of similar counties. Such groupings 

would not necessarily consist of identical or even very similar counties, but would be 

designed to broadly capture how the situation and prospects for the coal industry differ 

in the coal-producing counties of Appalachia. The county groupings also could be 

considered to be geographic regions, if the groupings are made using contiguous 

counties. In fact, three broad geographic regions are currently used by the Energy 

Information Administration (EIA) of the U.S. Department of Energy. These regions are 

Northern Appalachia, Central Appalachia, and Southern Appalachia. The regions are 

illustrated in Figure 1.6.1. Summary data on prices and production are reported for 

these 3 regions in selected EIA coal reports and forecasts. The three regions comprise 3 

of the 11 major coal-producing regions in the United States. 

This regional distinction used by the EIA is sensible, since the three regions are 

quite different. The Northern Appalachia region has a significant level of production of 

high sulfur coal, and even some lignite coal production, but relatively little production 

of premium coal. The Northern Appalachian region has experienced the most rapid 

growth in labor productivity in recent years. The Central Appalachia region is 

primarily compliance and medium sulfur coal, with a significant amount of production 

(just less than one-quarter) devoted to premium coal. The region contains some of the 

most coal-dependent counties in Appalachia. The Southern region is characterized by 

higher coal prices, at least in the Alabama coal-producing counties, where most 

Southern Appalachia production takes place. Mines in Southern Appalachia overall 

have had the slowest labor productivity growth rates in recent year. 

Finally, the three regions of Appalachia have fairly distinct forecasts for future 

levels of coal production and employment, as is discussed in the second part of this 

study. All of this suggests that these three regions should be utilized for analysis in the 

remainder of this report. However, the regions are rather large geographically, 

particularly Northern Appalachia. This raises the question of whether any or all of 

these three regions should be divided into sub-regions during further analysis. 
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This report will analyze the coal industry in these three regions, but will not 

consider any such sub-regions. This is done because forecasts for production, price, and 

employment, which are discussed in the second part of this report, do not point to any 

consistent basis for differentiating areas within regions. There is no consistent 

difference between the prospects for production growth of compliance and low sulfur 

coal, or even for the high sulfur coal so common in Northern Appalachia.17 Similarly, 

there is no consistent difference between growth forecasts for premium coal versus 

bituminous coal. 

There are differences between forecasts for underground versus surface mines. 

In particular, production is forecast to grow in underground mines across Appalachia 

while falling in surface mines. This forecast result, however, was primarily driven by 

EIA assumptions regarding future productivity growth in underground mines and 

surface mines. The future labor productivity growth of underground mines was 

assumed to be much greater in EIA forecast models, as it has been in some cases in 

recent years. This assumption may be a reasonable one, but the future of productivity 

growth is hard to predict, and past rates may not continue. For example, a rapid 

expansion of “mountain top removal” mining techniques could quickly raise the 

productivity of surface mines in Central Appalachia. 

Since distinctions between the forecasts for underground and surface mines may 

be too sensitive to uncertain assumptions about productivity growth, sub-regions will 

not be defined based on whether counties primarily have surface mines versus 

underground mines.18 Such a distinction could lead to erroneous expectations about 

the prospects for production growth within sub-regions of Northern, Central, or 

Southern Appalachia. 

The analysis that follows, therefore, will consider the current situation and 

forecast future impact of the coal mining industry on the Appalachian coal-producing 

area overall, as well as the distinct impact in Northern Appalachia, Central Appalachia, 

and Southern Appalachia. The three regions are pictured in Figure 1.6.1. The Northern 

Appalachia region contains major coal-producing counties in Pennsylvania, Ohio, 

Maryland, and Northern West Virginia. The Central Appalachia region contains 

 

17 Conversations with personnel at EIA suggest that high sulfur coal production in the future may no 

longer be negatively effected by compliance with the Clean Air Act due to the installation of “scrubbers” 

to clean emissions at nearby power plants, and the stockpiling of emissions credits by these same power 

companies. 

18 The uncertainty regarding forecast for surface versus underground mines also discourages forming 

sub-regions of most coal-dependent, and least coal-dependent counties within Central Appalachia, as 

well as Northern Appalachia. The difficulty is that underground mines tend to be concentrated in the 

most coal-dependent counties, while surface mines are more common in the least coal-dependent 

counties. Thus, forming sub-regions based on coal-dependence would essentially lead to forecasts based 

on the surface versus underground mining, which are very sensitive to uncertain assumptions about the 

future growth of mine productivity. 
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Appalachian coal-producing counties in Virginia, Kentucky, and Southern West 

Virginia. The Southern Appalachia region contains coal-producing counties in 

Tennessee and Alabama. 

Figure 1.6.1: The Northern, Central, and Southern Regions of the Appalachian Coal-Producing Area 

#

Northern Appalachia

#

Central Appalachia

#

Southern Appalachia
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Section 2: Economic Forecast — The Future Role and Status of 

the Coal Industry in the Region’s Economy 

The current economic impact of coal production within Appalachia could change 

substantially over the next decade. Continuing increases in labor productivity can be 

expected to reduce the total amount of work and earnings paid per ton of coal mined. 

At the same time, competition from mines in the western U.S. and environmental 

regulations, both existing and potential, will tend to limit coal production growth in 

Appalachia and could even cause declines in production in some cases. Thus, losses in 

employment and earnings in the coal mining industry may occur within Appalachia in 

coming years. These losses could be concentrated in certain parts of the Appalachian 

region, among specific groups of major coal-producing counties, while other counties 

continue to expand production and employment. The pattern of losses or gains will 

also depend on the growth rate in the economy, the price of other fuels, such as oil, and 

the types of environmental regulations that are enacted over the next decade. 

Part 2.1: Economic Forecasts for the Appalachian Coal-producing 

Region Using Baseline and Alternative Scenarios 

Introduction 

This second portion of the study focuses on forecasting the future condition of 

the coal mining industry in Appalachia, specifically around the year 2010. The goal will 

be to forecast the level of production, price, employment, and earnings in the industry 

in that year, and how each of these measures will change over the 1997 to 2010 period. 

This section of the report also will examine how employment and earnings changes in 

the coal mining industry might effect the overall economy of Appalachian coalproducing regions. Analysis will be conducted for the major Appalachian coalproducing counties overall, and for the groupings of counties identified in Section 1, 

Task 6. The Task will examine a baseline forecast, forecasts under four alternative 

macroeconomic conditions, and under six alternative environmental policy scenarios 

related to the Kyoto environmental protocol. Forecasts may vary a great deal based on 

the forecast scenario, so the differences between the baseline forecast and the forecasts 

in other scenarios will be a major focus of the analysis below. 

Given this, the next section will examine the assumptions and justifications 

behind each of the four macroeconomic and six Kyoto scenarios. Afterward, there will 

be a detailed discussion of the baseline forecast for the Appalachian coal industry for 

2010. In the last section, we compare the baseline forecast versus each of the 

macroeconomic and Kyoto forecast scenarios. 
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Forecast Scenarios 

 This section describes the 4 alternative macroeconomic scenarios and the six 

alternative Kyoto environmental scenarios. The alternative macroeconomic scenarios 

are described first. Each of the alternative macroeconomic scenarios was estimated as 

part of the Annual Energy Outlook 1999 (AEO99) forecast, which was also the source 

for the baseline forecast. The baseline and alternative projections in AEO99 reflect 

ongoing changes in the financial structure of the U.S. electricity industry and cost 

reductions that are becoming evident with increased competition. The economic 

growth has a strong impact on the projections of energy and consumption and therefore 

carbon emissions. 

The baseline case reflects considerable optimism about the potential for 

worldwide supply. Production from countries outside OPEC is expected to show a 

steady increase, reaching almost 47 million barrels per day by the year 2000 and 

increasing gradually thereafter to more than 55 million barrels per day by 2010. The 

total U.S. gross oil imports increase from 10.2 million barrels per day in 1997 to 14.1 

million in 2010. 

The high economic growth rate scenario includes higher growth rates for 

population, labor force, and labor productivity resulting in higher industrial output, 

lower inflation and lower interest rates. As a result, GDP increases at an average rate of 

2.6 percent a year from 1997 to 2020, compared with a growth rate of 2.1 percent a year 

in the reference case. Total energy consumption in the high economic growth case is 

129.4 quadrillion Btu in 2020, compared with 119.9 quadrillion Btu in the reference 

case.19

The low economic growth case assumes lower growth rates for population, labor 

force, and productivity, resulting in higher prices, higher interest rates, and lower 

industrial output growth. In the low growth case, economic output increases by 1.5 

percent a year from 1997 through 2020, and growth in GDP per capita slows to 0.9 

percent a year. With lower economic growth, energy consumption in 2020 is reduced 

from 119.9 quadrillion Btu to 110.5 quadrillion Btu, and carbon emissions are 1,826 

million metric tons, or 8 percent, lower than in the baseline case. 

The historical record shows substantial variability in world oil prices. There is 

considerable uncertainty about future prices. Three cases with different price paths 

allow an assessment of alternative views on the course of future oil prices. For the 

baseline case (year 1997), a prices increase of about 0.9 percent a year, reaching $21.30 in 

constant 1997 dollars in 2010, is used. The high price case has a price increase of about 

 

19 Btu or British Thermal Unit is defined as the amount of heat required to raise the temperature of one 

pound of water one degree Fahrenheit and is equal to 252 calories. 
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2.5 percent a year, where in 2010 the oil price reaches $27.33. The price further increases 

in 2015 and levels off at $29.35 in 2020. The leveling off at about $29.35 in the high price 

case is due to the market penetration of alternative energy supplies that could become 

Table 2.1.1: Macroeconomic and Kyoto Scenarios 

Scenario Source of Scenario 

Macroeconomic Scenarios 

Baseline EIA, Annual Energy Outlook, 1999

High Growth EIA, Annual Energy Outlook, 1999

Low Growth EIA, Annual Energy Outlook, 1999

High Oil Price EIA, Annual Energy Outlook, 1999

Low Oil Price EIA, Annual Energy Outlook, 1999

Kyoto Scenarios 

Baseline EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

24% Above 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

14% Above 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

9% Above 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

Stabilization at 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

3% Below 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

7% Below 1990 Levels EIA, Impacts of the Kyoto Protocol on U.S. Energy Markets and 

Economic Activity

economically viable at that price. The low price case has prices rising, after the current 

price slump, to $14.57 by 2005 and remaining at about that level to 2010. 

The alternative environmental forecasts are based on policies to reduce 

greenhouse gas emissions. Over the past several decades, rising concentrations of 

greenhouse gases have been detected in the Earth’s atmosphere, and it has been 

suggested that this may lead to an increase in the average temperature of the Earth’s 

surface and may consequently lead to detrimental effects. Some are emitted from 

natural sources; others result from anthropogenic, or human activities. The 

Intergovernmental Panel on Climate Change (IPCC) was established by the World 

Meteorological Organization and the United Nations Environment Program concluded 

that, “our ability to quantify the human influence on global climate is currently limited 

because the expected signal is still emerging from the noise of natural variability, and 

because there are uncertainties in key factors.” Nevertheless, many believe that there is 

a discernible human influence on global climate. 
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Conventions including the Montreal Protocol and the Framework Convention on 

Climate Change, in Rio de Janeiro, were held in an attempt to establish an objective of 

stabilizing the greenhouse gas concentrations in the atmosphere at a level that would 

prevent anthropogenic interference with the climate system. The signatories of the 

Framework Convention agreed to formulate programs to mitigate climate change, and 

the developed countries agreed to adopt national policies to return anthropogenic 

emission of greenhouse gases to their 1990 levels. On December 1 through 11, 1997, 

representatives from more than 160 countries met in Kyoto, Japan, to negotiate binding 

limits for greenhouse gas emissions for developed nations. In the resulting Kyoto 

Protocol, emissions targets were established for the developed nations to achieve an 

overall reduction of about 5.2 percent. The targets range from an 8 percent reduction 

for the European Union to a 10 percent increase allowed for Iceland. The reduction 

target for the United States is 7 percent below 1990 levels. The established targets must 

be achieved over the period 2008 to 2012, the first commitment period. Each country 

should make demonstrable progress by 2005. 

In order to achieve carbon emission reductions, the type of energy fuel used in 

the United States is projected to change because of higher relative carbon content of 

coal. The reduction in coal use would come at a cost. Although coal is the major carbon 

emitter, existing coal plants are very economical and their operating costs are falling. 

Under stringent emission reduction targets and rising carbon prices, the economics of 

coal-fired generation would change. Coal plants simply are not very economical when 

carbon prices are high. Higher carbon prices would result in converting existing coalfired plants into natural gas plants and a reduction in coal exports. 

The Kyoto protocol allows for some flexibility in meeting the emission targets. 

The emission targets can be achieved through a number of potential actions including 

energy efficiency improvements, research development of sequestration technology, 

and phasing out of fiscal incentives and subsidies that may inhibit the goal of emissions. 

An Emission trading program has been favored in the Kyoto protocol as a means of 

achieving emission reductions. The countries that reduce emissions below their 

allowed levels can sell excess emission permits that can be purchased by the other 

countries at the prevailing market price. However, no principles, rules, and guidelines 

have been established for trading the carbon permits. 

The protocol established a Clean Development Mechanism (CDM), under which 

the countries can take credit for the projects that reduce emission. In addition, the 

countries that have ratified the treaty may create a bubble or umbrella to meet the total 

commitment of all the member nations. In the bubble, countries would agree to meet 

their total commitment by allocating a share to each member. In an umbrella 

arrangement, the total reduction of all member nations would be met collectively 

through the trading of emission rights. The United States may have an interest in 

entering into an umbrella trading arrangement with the countries outside the European 
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Union. However, industrialized nations have had difficulty writing rules for carbon 

trading, as was illustrated during a recent meeting in the Netherlands. The use of 

carbon sinks and carbon trading with less industrialized nations in particular has been 

questioned. 

Still, the potential for flexibility in meeting the emission reduction goal for the 

United States suggests that actual emissions may not need to be reduced to 7 percent 

below the 1990 level to comply with the Kyoto Protocol. The energy information 

administration has developed a baseline scenario and 6 alternative scenarios. None of 

these scenarios, however, examine the possible offsetting impacts of any economic 

adjustments programs that might be established to mitigate the employment, income 

and transfer payment effects of these emission reductions. 

The baseline scenario is 33 percent above the 1990 level and represents 

projections of energy markets and carbon emissions without any enforced limits 

and is compared with energy market impacts. The projected carbon emission is 

1791 million metric tons. 

The first scenario, 24 percent above the 1990 level, assumes that carbon emissions 

can increase to an average of 1,670 million metric tons between 2008 and 2012. 

Compared to the average emissions in the baseline case, carbon emissions are 

reduced by an average of 122 million metric tons during the commitment period. 

The second scenario, 14 percent above the 1990 level, represents carbon 

emissions averaging 1,539 million metric tons between 2008 and 2012, 

approximately at the level estimated for 1998 in AEO98, 1,533 million metric 

tons. This results in an average annual reduction of 253 million metric tons of 

carbon from the baseline case. 

The third scenario, 9 percent above the 1990 level, assumes that energy-related 

carbon emissions can increase to an average of 1,467 million metric tons between 

2008 and 2012. This results in an average annual reduction of 325 million metric 

tons from the baseline case. 

The fourth scenario assumes stabilization at 1990 levels and that carbon 

emissions reach an average of 1,345 million metric tons during the commitment 

period of 2008 through 2012, stabilizing approximately at the 1990 level. This is 

an average annual reduction of 447 million metric tons from the baseline case. 

The fifth scenario, 3 percent below the 1990 level, assumes that energy-related 

carbon emissions are reduced to an average of 1,307 million metric tons between 

2008 and 2012, an average annual reduction of 485 million metric tons from the 

baseline case projections. 
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Finally, the sixth scenario, 7 percent below the 1990 level, assumes energy-related 

carbon emissions are reduced from the 1990 level to an average of 1,250 million 

metric tons in the commitment period, 2008 to 2012. This is an average annual 

reduction of 542 million metric tons of energy-related carbon emissions during 

that period. 

Baseline Forecast 

 The baseline forecast represents the expected path for the Appalachian coal 

mining industry through 2010 assuming moderate macroeconomic conditions, and 

existing environmental standards. The baseline forecast results from movements of the 

underlying forces affecting the Appalachian coal mining industry such as demand 

growth, competition from low-cost Western mines, and labor productivity growth. As 

the forecast will demonstrate, even under moderate, baseline conditions, these forces 

alone will create an interesting pattern of growth and contraction within the 

Appalachian coal mining industry and resulting changes in the industry’s impact on the 

Appalachian economy. 

Rates of Change 

The results of the baseline forecast for coal production are summarized in Figure 

2.1.1. That figure shows the forecast percent change in coal mine production in 

Appalachia through the year 2010, both overall and by region. The forecast calls for 

roughly flat production levels in the Appalachian region overall through 2010. 

Production is forecast to increase by only 1.0% over the entire 1997 to 2010 period. The 

forecast for Central Appalachia calls for a modest decline over 1997 to 2010, roughly in 

line with the overall forecast. Production is forecast to grow by 15.6% in Northern 

Appalachia, or an annual growth rate over 1%. Production in Southern Appalachia is 

forecast to decline 21.7% by 2010, which is a decline of nearly 1.5% per year. 

These production changes are forecast to occur in an environment of falling coal 

prices. Figure 2.1.2 shows the baseline forecast for real (inflation adjusted) coal prices 

over the 1997 to 2010 period in all regions. Real prices are forecast to decline by 16.1% 

for Appalachia as a whole, which is an average decline of more than 1% per year. Such 

price declines are possible because of steady increases in mine productivity that are 

expected over the next decade (EIA, 1999). The steepest decline is forecast for Northern 

Appalachia. The smallest price decline is forecast for Southern Appalachia. Southern 

Appalachia is also the region where the productivity of mines in output per man hour is 

expected to grow the most slowly, so that there will be fewer opportunities for cost 

cutting. 
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Figure 2.1.1: Forecast Change in Coal Production Under Baseline Scenario (Millions of Tons), 1997-

2010 

#

Northern Appalachia

24.70 Million Tons

(15.6%)

#

Central Appalachia

-13.49 Million Tons

(-4.8%)

#

Southern Appalachia

-6.03 Million Tons

(-21.7%)

All Appalachia

4.77 Million Tons

(1.0%)
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Figure 2.1.2: Forecast Change in Coal Prices (Minemouth) Under Baseline Scenario, 1997-2010 

#

Northern Appalachia

-18.5%

#

Central Appalachia

-14.2%

All Appalachia

-16.1%

#

Southern Appalachia

-18.5%
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Previous figures have illustrated forecasts for coal industry production and price 

through the year 2010. Figure 2.1.3 shows forecasts for coal industry sales, which is 

simply industry production times price. Sales also can be refered to as output, which is 

the term used in Figure 2.1.3. The output forecasts reflect what was found in the 

production and price forecast information presented above. The production forecast 

called for total production in all of Appalachia to be roughly flat through 2010 in the 

baseline scenario. But, the price forecast called for real prices to fall significantly during 

the period. As a result, it is not surprising that total Appalachian output (i.e., sales) 

would therefore be forecast to fall over the 1997 to 2010 period. The same pattern is 

repeated in the three regions of Appalachia. Even in Northern Appalachia, where 

production was forecast to grow significantly, output is forecast to fall due to price 

declines. The decline in output naturally was more severe in Central Appalachia and in 

Southern Appalachia, where both falling prices and falling production are forecast. 

The output declines forecast in the baseline scenario represent a significant 

decline for the industry, and point to a significant reduction in the economic impact of 

the coal industry on the Appalachian regions, particularly in Central Appalachia. The 

forecast total decline in industry output from 1997 to 2010 is $1.89 billion. Of this, $1.37 

billion is forecast to be lost in Central Appalachia. 

Forecasts for employment and earnings also point to a reduction in economic 

impact, with both industry employment and real (inflation adjusted) earnings forecast 

to decline substantially. Figure 2.1.4 illustrates the forecast employment change for the 

coal mining industry in Appalachia through 2010 under the baseline scenario. These 

employment forecasts were based on the forecasts for production presented above and 

expected changes in mine labor productivity. These productivity expectations were 

developed by EIA and utilized in coal industry forecast models. Growth in labor 

productivity was forecast for all regions of Appalachia. The forecasts called for a rapid 

growth in labor productivity in Northern Appalachia, particularly in underground 

mining. The forecast rate of productivity growth was more moderate in Central 

Appalachia, while productivity growth forecasts were slowest in Southern Appalachia. 

Forecast production levels were then divided by the EIA productivity estimates each 

year to yield estimates of labor requirements in 1997, and in 2010 under each scenario. 

As seen in Figure 2.1.4, industry employment is forecast to decline by about onequarter from 1997 to 2010, with the most rapid percentage declines forecast in Northern 

and Southern Appalachia, where employment is forecast to decline by roughly 30%. 

Note that the rapid decline in employment is forecast for Northern Appalachia even 

though this region is forecast to have the fastest production growth. The explanation 

for this is the forecast rapid rate of growth in labor productivity in mines in Northern 

Appalachia. The more rapid rate of decline in Southern Appalachia results primarily 

from forecast declines in production in that region in the baseline scenario, combined 

with a modest rate of labor productivity growth. 
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Figure 2.1.3: Forecast Change in Coal Output Under Baseline Scenario (Billions of Dollars), 1997-

2010 

#

Northern Appalachia

-$0.22 Billion

(-5.8%)

#

Central Appalachia

-$1.37 Billion

(-18.3%)

#

Southern Appalachia

-$0.30 Billion

(-28.3%)

All Appalachia

-$1.89 Billion

(-15.3%)
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Figure 2.1.4: Forecast Change in Coal Employment Under Baseline Scenario, 1997-2010 

#

Northern Appalachia

-6,200 Jobs

(-29.1%)

#

Central Appalachia

-7,700 Jobs

(-23.3%)

#

Southern Appalachia

-1,800 Jobs

(-29.6%)

All Appalachia

-15,700 Jobs

(-25.9%)
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As for the level of employment loss, while the percentage rate of employment 

loss was lower in Central Appalachia then in other regions, the absolute decline is 

largest since Central Appalachia has the most employment. The forecast calls for 

roughly 7,700 lost jobs in Central Appalachia. The forecast employment loss in 

Northern Appalachia was 6,200 jobs. The baseline scenario forecasts a loss of 1,800 coal 

mining industry jobs in Southern Appalachia. Again, these substantial declines in 

industry employment even in the baseline scenario likely portend a similar reduction in 

the economic impact of the coal mining industry, particularly in Central Appalachia. 

Figure 2.1.5 shows the forecast change in earnings for the coal mining industry in 

the baseline scenario. The forecast is obtained by multiplying the forecast for 

employment under each scenario by the forecast real wage, and then calculating the 

change in earnings. The percentages in Figure 2.1.5, however, mirror those for 

employment change on a percentage basis. This is because the when making the 

forecasts EIA assumed that real wages would remain constant from 1997 through 2010. 

Thus, the forecast percentage change in employment is also the forecast change in 

earnings. 

These percentage losses translate into a substantial loss in coal industry earnings. 

The baseline forecast calls for a loss of $1.06 billion in coal industry earnings from 1997 

through 2010. These losses will be concentrated in Northern Appalachia, which will 

account for $0.48 billion of lost annual earnings, and Central Appalachia, where $0.46 

billion worth of earnings are forecast to be lost. Note that the absolute loss in earnings 

is larger in Northern Appalachia then in Central Appalachia. This was not the case for 

employment, and reflects that average earnings per job are somewhat higher in 

Northern Appalachia than in Southern Appalachia. Approximately $130 million in 

annual earnings are forecast to be lost in the coal mining industry in Southern 

Appalachia. As was the case with the declines in output, and employment, these 

declines in earnings suggest that there will be a substantial decline in the direct 

economic impact of the coal mining industry on the Appalachian economy. The next 

section considers how much of an effect these declines in the coal mining industry 

might have on the overall economy of each Appalachian region. 
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Figure 2.1.5: Forecast Change in Coal Earnings Under Baseline Scenario (Billions of Dollars), 1997-

2010 

#

Northern Appalachia

-0.6%

#

Central Appalachia

-3.4%

#

Southern Appalachia

-0.5%

All Appalachia

-0.9%
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The Relative Impact of Coal Industry Change 

Industry output, employment, and earnings represent the direct economic 

impacts of the coal mining industry on the Appalachian economy. Forecast declines in 

each of these measures suggests that there would be a substantial drop in the economic 

impact of the coal mining industry in Appalachia under the baseline scenario. Results 

presented above suggest that the contraction of the coal mining industry output will be 

most severe in Central Appalachia, but that the decline in industry employment and 

earnings will be about as substantial in Northern Appalachia. 

What effect will these large drops in output, earnings, and employment have on 

the economies of Northern and Central Appalachia, as well as Southern Appalachia? 

The answer to this question relies in part on how much the economy of each region is 

dependent on the coal mining industry. In other words, will the large losses of direct 

output, earnings, and employment represent a substantial loss for the overall economy 

of these regions, or a relatively small loss? This section addresses this issue by 

comparing the forecast losses in the coal mining industry with the size of the overall 

regional economy. Note that this section only compares the direct economic impact of 

the coal mining industry with the size of the overall economy, the indirect or 

“multiplier” effect is not included. Changes in the total impact of the industry will be 

discussed in the next section of this report. 

As illustrated in Figures 2.1.6 and 2.1.7 below, forecast losses in the coal mining 

industry are likely to have the largest effect on the economy of Central Appalachia, the 

region where coal mining is the largest part of the economy. In this region, the 

significant declines in coal industry output, employment, and earnings forecast in the 

baseline scenario would represent a large share of the regional economy. The direct 

losses in the industry would account for 2.4% of regional employment and 3.4% of 

regional earnings. Outside of this Central Appalachian region, the relative size of coal 

industry losses are small compared to the overall economy. The large reductions in coal 

industry employment and earnings examined in the baseline scenario would account 

for about 0.5% of earnings in both Northern and Southern Appalachia. For the 

Appalachian coal-producing region overall, losses in the coal mining industry would 

account for 1% or less of total employment and earnings. 
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Figure 2.1.6: Lost Coal Earnings as a Share of All Earnings Under Baseline Scenario 

#

Northern Appalachia

-0.6%

#

Central Appalachia

-3.4%

#

Southern Appalachia

-0.5%

All Appalachia

-0.9%
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Figure 2.1.7: Lost Coal Employment as a Share of All Employment Under Baseline Scenario 

#

Northern Appalachia

-0.3%

#

Central Appalachia

-2.4%

#

Southern Appalachia

-0.3%

All Appalachia

-0.5%
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Summary 

 While production is forecast to remain steady overall, significant losses in coal 

industry earnings, employment, and output are forecast under the baseline scenario. 

These losses are forecast to be substantial, with approximately 15,000 jobs and over $1 

billion in annual earnings lost in the entire Appalachian region. These losses are 

expected to occur throughout the region. Even these signficant losses, however, may 

not have a large direct effect on the overall Appalachian economy. Losses forecast for 

the coal mining industry would account for less than 1% of the current employment 

and earnings in the major Appalachian coal-producing counties overall. However, the 

direct effect is forecast to be much greater in Central Appalachia, where the coal mining 

accounts for a larger share of the local economy. 
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Forecast Scenarios 

 Forecasts for any industry are always made with a degree of uncertainty. Two 

factors that create uncertainty for coal industry forecasts are future macroeconomic 

conditions of the economy, which can effect demand for coal, and future environmental 

regulation. This section considers the forecast for the Appalachian coal industry 

through 2010 under a number of alternative macroeconomic scenarios. It also considers 

the forecast under six alternative emissions reduction scenarios related to the Kyoto 

protocol. The baseline scenario also is presented in order to make comparisons with 

these alternative forecast scenarios. 

Table 2.1.2 illustrates the relative growth rates of coal production under the 

baseline forecast as well as under each macroeconomic and Kyoto scenario. Overall 

Appalachian growth rates are presented along with the forecast growth rates in each of 

the three coal-producing regions in Appalachia. Forecast production levels are only 

modestly affected by changes in future macroeconomic conditions. Overall 

Appalachian production growth rises to just 4.1% under high growth macroeconomic 

conditions, and falls to 0.3% under low growth macroeconomic conditions. Given that 

these figures are totals over the entire 1997 to 2010 period, it is fair to say that 

Appalachian coal production will be essentially unchanged, or grow very modestly, 

whether economic growth is rapid, average or slow. The same could be said regarding 

production under alternative scenarios for the price of oil. The growth in Appalachian 

coal production is just 3.4% over the 1997 to 2010 period in the high oil price scenario 

and 1.4% in the low oil price scenario. 

As was the case for total Appalachian production, coal production in the regions 

of Appalachia is not greatly altered in the alternative macroeconomic scenarios. Each 

macroeconomic forecast scenario calls for a modest drop in production in Central 

Appalachia, the largest coal-producing region. Each macroeconomic scenario calls for a 

significant percentage growth in production in Northern Appalachia, but a significant 

percentage decline in production in Southern Appalachia. 

 However, there are great differences in Appalachian production forecasts under 

alternative scenarios for the environmental regulations under the Kyoto protocols. All 

Kyoto scenarios would lead to less coal production in Appalachia than forecast under 

the baseline scenario, or under any macroeconomic scenario. However, the forecast loss 

is much greater under the most strict emissions reductions. Compared to a baseline 

forecast of 1% growth, Appalachian production would fall by roughly 50% if emissions 

levels must be reduced to 1990 levels, or less. However, if emissions in 2010 are 

allowed to exceed the 1990 level by 24%, forecast coal production can be expected to 

decline by only 13.5%. The manner in which the Kyoto agreements are regulated can 

have a substantial effect on the level of coal production in Appalachia in the future. 
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 There are significant reductions in all three Appalachian coal-producing regions 

under the Kyoto scenarios. However, the Southern Appalachian region appears to be 

less effected by the Kyoto scenarios. While production growth in the Southern 

Appalachian region was the weakest in the baseline scenario, production losses in the 

the Southern region were similar to those in Northern and Central Appalachia under 

most Kyoto scenarios. At the same time, Northern Appalachia would be particularly 

hard hit under the stricter Kyoto emission reduction scenarios. Production in Northern 

Appalachia is forecast to grow significantly under the baseline scenario, but under 

scenarios where 2010 emissions would be at 1990 levels or less, production would 

contract the most rapidly in Northern Appalachia. 

 In summary, baseline and alternative macroeconomic scenario forecasts each call 

for little change in Appalachian production during the 1997 to 2010 period. Each of 

these scenarios also calls for a small change in Central Appalachian production, 

significantly rising Northern Appalachian production, and significantly falling 

Southern Appalachian production. Further, changing environmental regulations such 

as the Kyoto protocol appear to have a much more profound impact on production in 

the coal industry than macroeconomic concerns. Appalachian production would fall 

under all emission control scenarios, and would fall rapidly under strict emission 

reduction regimes. The Kyoto emissions reductions would effect Southern Appalachian 

production the least, and under the strict reduction scenarios, would effect Northern 

Appalachian production the most. 

 These results for Northern and Southern Appalachia may occur due to the 

relative importance of premium coal in the production of each region. Premium coal is 

most likely to be used for industrial purposes or exported. Therefore, demand for 

premium coal is less directly affected by the implementation of the Kyoto Protocol in 

the United States. Premium coal accounts for a relatively small share of coal mined in 

Northern Appalachia, but a relatively large share in Southern Appalachia 
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Table 2.1.2: Growth Rate in Appalachian Coal Production, 1997-2000, by Macroeconomic and Kyoto Scenarios  Macroeconomic Scenarios Kyoto Scena

Growth Oil Price 

 Less than 1990 

Level 

 Baseline Low High Low High 7% 3% 

1990 

Level 

Total Appalachian 1.0% 4.1% 0.3% 3.4% 1.4% -57.8% -52.4% -48.6% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

15.6% 24.7% 16.2% 22.0% 12.0% -65.3% -58.4% -52.6% 

Medium Sulfur (Premium) 2.4% 47.1% -4.0% 37.4% -1.9% -7.9% -7.9% -7.8% Low Sulfur (Bituminous) -14.7% 55.0% -23.6% -4.2% 41.6% -84.5% -81.0% -78.0% 

Medium Sulfur (Bituminous) 35.1% 39.6% 38.4% 39.3% 23.3% -70.8% -64.2% -59.0% High Sulfur (Bituminous) 10.7% 18.0% 9.7% 16.7% 10.5% -70.7% -61.0% -52.2% High Sulfur (Gob) -68.8% -69.6% -66.7% -64.7% -67.0% -19.7% -19.0% -24.1% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-4.8% -4.7% -6.2% -4.4% -2.1% -54.3% -49.9% -47.1% 

Medium Sulfur (Premium) -9.2% -13.8% -8.3% -13.2% -8.4% -13.4% -13.3% -13.2% 

Low Sulfur (Bituminous) -1.3% 2.9% -6.0% -0.9% 6.6% -72.3% -67.5% -65.6% Medium Sulfur (Bituminous) -4.4% -4.2% -5.3% -2.2% -3.1% -65.2% -58.9% -54.5% 

Southern Appalachia (TN & AL) -21.7% -20.5% -22.5% -20.8% -22.4% -52.0% -44.9% -41.7% 

Low Sulfur (Premium) -15.4% -15.5% -15.1% -15.9% -14.5% -7.8% -7.8% -7.6% 

Low Sulfur (Bituminous) -21.7% -20.8% -22.4% -19.5% -23.5% -73.7% -60.1% -57.8% 

Medium Sulfur (Bituminous) -26.7% -24.1% -28.5% -26.0% -27.3% -57.4% -51.9% -46.4% 

Source: Unpublished data, Energy Information Administration 
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Table 2.1.3 illustrates the production growth forecasts shown in Table 2.1.2 in 

terms of absolute change rather than in percentage terms. Data in Table 2.1.3 indicate 

the magnitude of lost production forecast under some of the most restrictive Kyoto 

emission reduction scenarios. Coal production in Appalachia would be forecast to fall 

by well over 200 million tons per year under half of the scenarios, and by 63 millions 

tons a year even in the least restrictive scenario. 

Data in this table also illustrate that the largest absolute declines in production 

tend to be in Central Appalachia, the largest coal-producing region. This pattern holds 

under each of the macroeconomic and Kyoto scenarios. Although, the Kyoto scenarios 

have nearly as large an impact on production levels in Northern Appalachia as in 

Central Appalachia, as can be seen in Table 2.1.4. Results in Table 2.1.4 indicate that 

relative to the baseline scenario the absolute losses due to Kyoto scenarios are nearly as 

great in Northern Appalachia as in Central Appalachia. This is particularly true under 

the more strict Kyoto reduction scenarios, such as a return to 1990 emission levels, or to 

3% to 7% below 1990 emissions levels. 
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Table 2.1.3: Level of Growth in Appalachian Coal Production, 1997-2000, by Macroeconomic and Kyoto Scenarios (T Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian 4,282 18,605 944 15,378 6,310 -270,826 -245,725 -227,819 -161,618 

Northern Appalachia (PA, OH, MD, & Northern WV) 

24,013 37,954 24,925 33,830 18,480 -100,263 -89,740 -80,854 -41,146 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-3,701 -13,659 -17,720 -12,677 -5,961 -156,119 -143,503 -135,376 -111,979 

Southern Appalachia (TN & AL) -6,301 -5,690 -6,261 -5,776 -6,209 -14,444 -12,482 -11,589 -8,493 

Source: Unpublished data, Energy Information Administration Table 2.1.4: 2010 Coal Production Relative to Baseline by Macroecconomic and Kyoto Scenarios  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian 474,256 14,323 -3,338 11,096 2,028 -275,108 -250,007 -232,101 -165,900 

Northern Appalachia (PA, OH, MD, & Northern WV) 

182,709 13,941 911 9,817 -5,533 -124,276 -113,754 -104,867 -65,160 

Central Appalachia (Southern WV, VA, & Eastern KY) 

269,809 41 -4,019 1,024 7,739 -142,419 -129,803 -121,675 -98,278 

Southern Appalachia (TN & AL) 21,738 341 -230 255 -178 -8,413 -6,451 -5,558 -2,462 Source: Unpublished data, Energy Information Administration 
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Data in Table 2.1.5 show the forecast for future coal prices in Appalachia through 

2010. The table also shows the average 1997 prices for the major Appalachian coalproducing counties overall and by region. Note that the Southern Appalachian region 

has by far the highest prices, presumably due to higher coal production costs in the 

region. 

The expected price change does not vary significantly by forecast scenario. The 

forecast price decline is very similar in the baseline scenario and in each macroeconomic 

scenario. The forecast price decline is also similar among each of the Kyoto scenarios. 

Each scenario also has the same pattern of somewhat higher price declines in Northern 

Appalachia, and much smaller price declines in Southern Appalachia. Any differences 

between the price declines in the Kyoto scenarios and the macroeconomic and baseline 

scenarios occured because the Kyoto scenarios were part of a separate model run which 

generally called for smaller price declines, apart from any specific modeling of Kyoto 

emission reductions. 
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Table 2.1.5: Current and 2010 Coal Price (Minemouth) by Macroeconomic and Kyoto Scenarios  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Current 

Prices 

Baseline Low High Low High 7% 3% 1990 9% 

Total Appalachian $26.41 -16.1% -15.3% -17.1% -16.0% -16.0% -12.3% -12.5% -12.6% -13.5% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$24.48 -18.5% -19.5% -19.6% -18.0% -18.6% -19.2% -18.7% -18.6% -17.8% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$26.10 -14.2% -13.9% -15.1% -14.1% -14.1% -11.7% -11.9% -11.7% -12.0% 

Southern Appalachia (TN & AL) 

$38.38 -8.4% -7.6% -9.2% -8.4% -8.7% -5.9% -5.6% -6.0% -4.7% 

Source: Unpublished data, Energy Information Administration 
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The previous tables have shown forecasts for coal industry production and price 

through the year 2010. Table 2.1.6 shows forecasts for coal industry output 

(price*production). The output forecasts in Table 2.1.6 reflect what was found in the 

production and price forecast information presented above. As was the case with 

production forecasts, the amount of lost output is greatest in Central Appalachia in each 

of the scenarios. Under the macroeconomic scenarios, the absolute amount of output 

lost is modest for both Northern Appalachia and Southern Appalachia (there is an 

output gain in Northern Appalachia in a few scenarios), although the losses are large in 

Southern Appalachia on a percentage basis. However, under the Kyoto scenarios, the 

losses in Northern Appalachia are large in both an absolute and percentage basis. 

Further, relative to the baseline scenario, the percentage absolute loss of output is as 

large in Northern Kentucky as in Central Kentucky under most Kyoto scenarios. The 

percentage loss is higher. This same pattern also was observed in the case of 

Appalachian coal production. 

These large forecast losses in coal output have important implications for the 

economic impact of the coal mining industry on the Appalachian economy. Changes in 

industry output reflect changes in the direct effect of the coal mining industry, and have 

a substantial influence on the indirect effect. These substantial declines in industry 

output likely portend a similar reduction in the economic impact of the coal mining 

industry. 
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Table 2.1.6: Level and Percentage of Growth in Appalachian Coal Industry Output, 1997-2010, by Macroeconomic an

(Billions of 1997 Dollars) 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -$1.90B 

(-15.3%) 

-$1.47B 

(-11.9%) 

-$2.09B 

(-16.9%) 

-$1.63B 

(-13.2%) 

-$1.84B 

(-14.9%) 

-$7.80B 

(-63.0%) 

-$7.23B 

(-58.4%) 

-$6.83B 

(-55.1%) 

-$5.35B 

(-43.2%) 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-$0.22B 

(-18.3%) 

$0.16B 

(4.1%) 

-$0.25B 

(-6.6%) 

$0.00B 

(0.1%) 

-$0.34B 

(-8.9%) 

-$2.74B 

(-71.9%) 

-$2.53B 

(-66.2%) 

-$2.34B 

(-61.4%) 

-$1.52B 

(-39.8%) 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-$1.37B 

(-18.3%) 

-$1.35B 

(-17.9%) 

-$1.53B 

(-20.3%) 

-$1.34B 

(-17.9%) 

-$1.19B 

(-15.9%) 

-$4.47B 

(-59.6%) 

-$4.19B 

(-55.9%) 

-$4.00B 

(-53.5%) 

-$3.47B 

(-46.2%) 

Southern Appalachia (TN & AL) -$0.30B 

(-28.3%) 

-$0.28B 

(-26.5%) 

-$0.32B 

(-29.7%) 

-$0.29B 

(-27.4%) 

-$0.31B 

(-29.2%) 

-$0.28B 

(-54.9%) 

-$0.51B 

(-48.0%) 

-$0.48B 

(-45.2%) 

-$0.36B 

(-33.8%) 

Source: Authors’ calculations 
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Table 2.1.7 shows the forecast employment change for the coal mining industry 

in Appalachia through 2010 under the baseline scenario, each macroeconomic scenario 

and the Kyoto scenarios. As with the baseline forecast, scenario employment forecasts 

were based on the forecasts for production presented above and expected changes in 

mine labor productivity. The results for the macroeconomic forecasts are similar to 

those in the baseline forecast, with roughly 1,000 fewer lost jobs in the high growth and 

high oil price scenarios. However, the Kyoto forecasts are quite different from the 

baseline forecast. Job losses are much larger under the Kyoto scenarios, although, it 

should be noted that none of these scenarios consider any mitigation or adjustment 

programs to offset these impacts. Under the most restrictive emission scenarios from 

Kyoto, roughly 60% of coal industry employment would be lost compared with only 

about 25% in the baseline scenario. This translates into roughly 39,000 of 60,000 coal 

mining jobs present in Appalachia as of 1997. Although, it must be mentioned that 

under the least restrictive Kyoto emission scenario, job losses would be just slightly 

above what is expected under the baseline forecast scenario. As with production, while 

the largest percent losses occurred in Northern Appalachia, particularly under the most 

restrictive Kyoto scenarios, the largest absolute loss of employment occurred in Central 

Appalachia. 

Table 2.1.8 shows the forecast change in earnings for the coal mining industry 

under each scenario. Both the absolute and percentage change are listed. Note that the 

forecast annual loss in earnings is a billion dollars or more for Appalachia as a whole in 

each of the scenarios, and is particularly large in the case of the Kyoto scenarios. In 

some scenarios, the absolute losses in earnings are larger in Northern Appalachia than 

in Central Appalachia. This was not the case for employment, and reflects that average 

earnings per job are somewhat higher in Northern Appalachia than in Southern 

Appalachia. 
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Table 2.1.7: Level and Percentage of Growth in Appalachain Coal Industry Employment, 1997-2010, by MacroeconomScenarios (Jobs)  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -15,677 

(-25.9%) 

-14,421 (-23.9%) 

-16,017 (-26.5%) 

-14,697 

(-24.3%) 

-15,463 (-25.6%) 

-39,067 (-64.6%) 

-36,337 (-60.1%) 

-34,441 (-57.0%) 

-27,457 (-45.4%) 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-6,194 

(-29.1%) 

-5,008 (-23.5%) 

-6,116 (-28.7%) 

-5,359 

(-25.2%) 

-6,664 (-31.3%) 

-15,939 (-74.8%) 

-14,882 (-69.9%) 

-13,988 (-65.7%) 

-9,996 (-46.9%) 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-7,720 

(-23.3%) 

-7,716 (-23.3%) 

-8,093 (-24.4%) 

-7,624 

(-23.0%) 

-7,000 (-21.1%) 

-19,818 (-59.7%) 

-18,536 (-55.9%) 

-17,710 (-53.4%) 

-15,333 (-46.2%) 

Southern Appalachia (TN & AL) -1,763 

(-29.6%) 

-1,698 (-28.5%) 

-1,714 (-28.8%) 

-1,808 (-30.8%) 

-1,798 

(-30.2%) 

-3,309 (-55.6%) 

-2,920 (-49.0%) 

-2,742 (-46.0%) 

-2,127 (-35.7%) 

Source: Authors’ calculationsTable 2.1.8:Level and Percentage of Growth in Appalachain Coal Industry Earnings, 1997-2010, by Macroeconomic a

(Billions of 1997 Dollars) 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -$1.06B 

(-26.3%) 

-$0.97B 

(-23.9%) 

-$1.08B 

(-26.8%) 

-$0.99B 

(-24.5%) 

-$1.06B 

(-26.2%) 

-$2.64B 

(-65.4%) 

-$2.46B 

(-60.8%) 

-$2.32B 

(-57.6%) 

-$1.83B 

(-45.4%) 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-$0.48B 

(-29.1%) 

-$0.38B 

(-23.5%) 

-$0.47B 

(-28.7%) 

-$0.41B 

(-25.2%) 

-$0.51B 

(-31.3%) 

-$1.22B 

(-74.8%) 

-$1.14B 

(-69.9%) 

-$1.07B 

(-65.7%) 

-$0.77B 

(-46.9%) 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-$0.46B 

(-23.3%) 

-$0.46B 

(-23.3%) 

$0.48B 

(-24.4%) 

-$0.45B 

(-23.0%) 

-$0.42B 

(-21.1%) 

-$1.18B 

(-59.7%) 

-$1.10B 

(-55.9%) 

-$1.05B 

(-53.4%) 

-$0.91B 

(-46.2%) 

Southern Appalachia (TN & AL) -$0.16B 

(-29.6%) 

-$0.12B 

(-28.5%) 

-$0.13B 

(-30.8%) 

-$0.12B 

(-28.8%) 

-$0.13B 

(-30.2%) 

-$0.24B 

(-55.6%) 

-$0.21B 

(-49.0%) 

-$0.20B 

(-46.0%) 

-$0.15B 

(-35.7%) 

Source: Authors’ calculations
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The Relative Impact of Coal Industry Change Under Each Scenario

Tables 2.1.9 and 2.1.10 below compare forecast losses in the coal mine industry 

with total employment in Appalachian coal-producing counties, overall and by region. 

Results in the tables indicate that forecast losses in the coal mining industry are likely to 

have the largest effect on the economy of Central Appalachia, the region where coal 

mining is the largest part of the economy. Note that these large losses are only the 

direct effect of coal mining industry earnings and employment, and do not consider the 

additional “multiplier” effect on the economy. 

As the tables illustrate, the percentage losses can be much higher than the 

baseline in several of the Kyoto scenarios, but percentages change little in the 

macroeconomic scenarios. In the macroeconomic scenarios, the same regional pattern 

also is evident, with the largest percent losses in earnings and employment occuring in 

Central Appalachia, where the economy is most dependent on the coal mining industry. 

The loss of earnings in Appalachia overall is less than 1% in all macroeconomic 

scenarios, and the percent losses are roughly 0.5% in both Northern and Southern 

Appalachia. 

Percent losses are much higher in the more restrictive Kyoto emissions scenarios. 

The percent loss of earnings is near or above 2% in the Kyoto scenarios where emissions 

return to 1990 levels, or lower, while the employment loss is above 1%. In these same 

scenarios, the percentage losses are most substantial in Central Appalachia where near 

or above 8% of regional earnings is lost, as is 5.5% to 6.1% of regional employment. The 

percentage loss in these more restrictive emission scenarios also rise rapidly for 

Northern Appalachia, but never rise above 1.5% for earnings or 0.8% for employment. 

Percent losses are less severe under the less restrictive Kyoto emission scenarios, 

particularly in Northern and Southern Appalachia. Under each of these scenarios 

where emissions are restricted above 1990 levels, losses in the coal industry quickly fall 

toward those in the baseline forecast as emissions standards are relaxed. However, in 

Central Appalachia, the percent loss of earnings remains above 6.0% even under the 

scenario where emissions are able to rise to 14% above 1990 levels. Earnings and job 

losses are similar to those of the baseline forecast only in the scenario where emissions 

are able to rise 24% above 1990 levels. 
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Table 2.1.9: The Direct Effect of Coal Industry Changes: Loss in Coal Industry Earnings as a Percentage of 1997 RegMacroeconomic and Kyoto Scenarios (Billions of 1997 Dollars)  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -0.9% -0.8% -0.9% -0.8% -0.9% -2.2% -2.0% -1.9% -1.5% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-0.6% -0.5% -0.6% -0.5% -0.6% -1.5% -1.4% -1.3% -0.9% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-3.4% -3.4% -3.6% -3.4% -3.1% -8.8% -8.2% -7.9% -6.8% 

Southern Appalachia (TN & AL) -0.5% -0.5% -0.5% -0.5% -0.5% -1.0% -0.8% -0.8% -0.6% Source: Authors’ calculationsTable 2.1.10: The Direct Effect of Coal Industry Changes: Loss in Coal Industry Employment as a Percentage of 1997 

Employment by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -0.5% -0.5% -0.5% -0.5% -0.5% -1.3% -1.2% -1.1% -0.9% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-0.3% -0.2% -0.3% -0.3% -0.3% -0.8% -0.7% -0.7% -0.5% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-2.4% -2.4% -2.5% -2.3% -2.2% -6.1% -5.7% -5.5% -4.7% 

Southern Appalachia (TN & AL) -0.3% -0.3% -0.3% -0.3% -0.3% -0.5% -0.5% -0.4% -0.3% Source: Authors’ calculations
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Part 2.2: Estimates of the Future Direct, Indirect, and Induced Economic 

Effects Attributable to the Coal Industry Using Economic 

Forecasts through 2010 

The purpose of this section is to consider the total economic impact of the coal 

mining industry on the local economies of major Appalachian coal-producing counties. 

The first step will be to examine how the total impact would be expected to change 

under the baseline forecast for the Appalachian coal industry in the year 2010. Next, the 

baseline forecast will be compared to each of the four alternative macroeconomic 

scenarios, and the six Kyoto emissions reduction scenarios. 

The proceeding section considered how the direct effect of the coal industry on 

Appalachia could be expected to change by the year 2010, under a number of 

alternative forecast scenarios. Forecasts were provided for a number of coal industry 

indicators such as production and price, and the direct effects of the industry in terms of 

output, employment, and earnings. The primary findings in these forecasts is that the 

direct effect of the coal mining industry was expected to fall in most areas of 

Appalachia by 2010, and under most forecast scenarios. Losses in industry output, 

employment, and earnings would have a direct effect on the Appalachian economy, 

ranging from small in some areas to large in others. 

These direct effects, as large as the effects were in some cases, only represent a 

portion of the total impact that future changes in the coal mining industry would have 

on the Appalachian economy. There also would be indirect or “multiplier” effects due 

to the changes in the output, employment, and earnings generated in the coal mining 

industry. These indirect effects occur because the coal mining industry supports 

economic activity throughout the economies of many of the major Appalachian coalproducing counties. Coal companies often support the activities of their suppliers in 

the manufacturing, machine shop, construction, and business services industry. The 

wages earned by coal miners supports their spending for a range of retail goods and 

services throughout the economy. These sorts of additional spending indicate that the 

total impact of the coal mining industry will be larger in magnitude than the change in 

the direct employment and earnings in the coal industry itself. 

The Baseline Forecast 

The baseline forecast, as reported in the last section, called for substantial 

changes in the coal mining industry through the year 2010. In particular, the baseline 

forecast called for a significant decline in the direct employment and worker earnings in 

the coal mining industry itself. In some regions of Appalachia, and in many individual 

major coal-producing counties, these forecast declines in employment and earnings 

would account for a significant share of the overall employment and earnings in this 

area. These county and multi-county areas can expect to be significantly affected by the 
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expected declines in mining job opportunities described in the baseline forecast. This is 

even more evident when the total impact of the coal mining industry is examined. This 

total impact not only includes the coal mining industry itself, but changes in other 

industries due to the indirect and induced effect of changes in the coal mining industry. 

The total economic impacts are substantially larger than the direct impacts discussed in 

the last section. 

Total Baseline Forecast Ouput Impact 

Figure 2.2.1 illustrates the total output impact of the forecast changes in the coal 

mining industry for Appalachia overall and for each of the three Appalachian regions. 

The total output decline forecast for the Appalachian region from 1997 to 2010 is $3.21 

billion dollars. A majority of this total output impact is forecast to occur in Central 

Appalachia, where the total lost output is forecast to reach $2.32 billion dollars. The 

total output loss is forecast to reach $0.38 billion in Northern Appalachia, and $0.51 

billion in Southern Appalachia. These total output impacts are one illustration of the 

full impact of a decline in coal industry output on the Appalachian economy, and point 

to a significant reduction in the economic impact of the coal industry on the 

Appalachian regions, particularly in Central Appalachia. 

The total impact of forecast declines in the coal industry are substantial for both 

employment and earnings. The total impact is a loss of nearly 43,000 jobs and $1.76 

billion in worker earnings in the major Appalachian coal-producing counties. These 

figures suggest that there is a substantial “multiplier” effect from lost jobs in the coal 

mining industry due to high wages in the industry, with the total job impact exceeding 

the forecast loss in coal mining jobs by 150%, while earnings are roughly 75% higher. 

Total Baseline Forecast Earnings Impact 

Figure 2.2.2 shows the forecast total earnings impact in Northern Appalachia, 

Central Appalachia, and Southern Appalachia under the baseline scenario. It also 

relates that earnings impact as a share of total earnings in each region. For Appalachia 

overall, the total earnings impact remains a relatively small share, at roughly 1.4% of 

total earnings. However, this is a significant share of earnings loss to be generated by 

any one industry. The relative size of the loss is most pronounced in Central 

Appalachia, where the forecast decline in total earnings impact would account for over 

6% of current regional earnings. In absolute terms, the total earnings loss impact in 

Central Appalachia would $0.81 billion. In absolute terms, the loss of earnings would 

be nearly as great in Northern Appalachia, where the total earnings loss impact is 

forecast as $0.73 billion. 
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Total Baseline Forecast Employment Impact 

Figure 2.2.3 shows the forecast total employment impact for each region, both in 

absolute terms, and as a share of employment in each industry. Again, the decline in 

employment is equivalent to 1.4% of current employment in the Appalachian region 

overall. However, the total employment impact would be equivalent to 6.5% of current 

employment in the Central Appalachian region. In absolute terms, the total impact 

would be a loss of 21,000 jobs in Central Appalachia, and 16,500 jobs in Northern 

Appalachia. The absolute jobs impact would be approximately 5,000 jobs in Southern 

Appalachia. 

Figure 2.2.1: Total Ouput Impact Under Baseline Scenario 

#

Northern Appalachia

$0.38 Billion

#

Central Appalachia

$2.32 Billion

#

Southern Appalachia

$0.51 Billion

All Appalachia

$3.21 Billion
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Figure 2.2.2: Forecast Total Earnings Impact Overall and as a Share of All Earnings Under Baseline 

Scenario 

#

Central Appalachia

-$0.81 Billion

(-6.1%)

#

Northern Appalachia

-$0.73 Billion

(-0.9%)

#

Southern Appalachia

-$0.22 Billion

(-0.9%)

All Appalachia

-$1.76 Billion

(-1.4%)
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Figure 2.2.3: Forecast Total Employment Impact Overall and as a Share of All Employment Under 

Baseline Scenario 

Overall, impact estimates presented in Figures 2.2.1 through 2.2.3 indicate the total 

impact of forecast losses in the coal mining industry will be substantial even under 

baseline forecast conditions. The large total impacts would still account for a modest 

share of overall employment and earnings in the 118 Appalachian major coal-producing 

counties. The shares would be substantial, however, in specific areas. The total impact 

of forecast losses would account for more than 6% of employment and earnings in the 

Central Appalachian region overall. The share of forecast losses would likely be even 

#

Central Appalachia

-21,156 Jobs

(-6.5%)

#

Northern Appalachia

-16,586 Jobs

(-0.8%)

#

Southern Appalachia

-4,957 Jobs

(-0.8%)

All Appalachia

-42,699 Jobs

(-1.4%)
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larger in a number of individual counties in Central Appalachia, as well as in selected 

counties in other areas of Appalachia. 

Total Impact under Forecast Scenarios 

 The total economic impact of the coal mining industry is substantially larger than 

its direct economic impact, as was illustrated for the case of the baseline forecast. As a 

result, even in the baseline scenario, forecast declines in coal mining output, 

employment, and earnings lead to a large decline in total economic activity in the 

Appalachian region. This impact will be even larger under some of the alternative 

forecast scenarios that have been considered in this report. In particular, while the total 

impact of industry losses will be similar under alternative macroeconomic scenarios, it 

will be much larger in those environmental scenarios where there are strict emissions 

limitations under the Kyoto protocol. 

 This section of the report illustrates the total change in the economic impact of 

the coal industry under each of the alternative macroeconomic and environmental 

forecasts. In particular, Tables 2.2.1 and 2.2.2 illustrate the forecast change in the total 

jobs and earnings from 1997 through 2010 as a result of the forecast for the coal mining 

industry. The Tables also show these total job and earnings impacts as a share of total 

jobs and earnings in the 118 Appalachian coal-producing counties, and in the Northern, 

Central, and Southern Appalachia regions. 

Macroeconomic Forecast Scenarios 

 The results for the macroeconomic forecasts are similar to those in the baseline 

forecast. Under these alterantive scenarios, the total earnings impact of the coal mining 

industry drops to between $1.57 and $1.81 billion dollars, depending on the scenario. 

The total employment impact drops to between 38,000 and 44,000 jobs under the 

alternative forecasts. Again, these are findings for the total impact, including losses in 

the mining industry, and losses throughout the economy due to a diminished 

“multiplier effect” from the coal mining industry. Generally speaking, the losses are 

somewhat less under the high growth and high oil price scenarios, and somewhat more 

given lower oil prices or slower overall economic growth. As a share of the economy, 

these losses represent roughly 1.5% of employment and earnings in these 118 

Appalachian coal-producing counties, as was the case in the baseline scenario. The 

losses represented about 6% to 7% of employment and earnings in the more coaldependent Central Appalachia region. 

Kyoto Forecast Scenarios 

 The relative size of the total impact, however, rises under some of the more 

restrictive Kyoto emission reduction scenarios. Under the least restrictive scenario, 
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where emissions can grow to 24% higher than their 1990 level, the total impact is similar 

to that in the baseline scenario. The total earnings impact is forecast to be a loss of $2.01 

billion in earnings and 50,000 jobs, compared to $1.75 billion in earnings and 42,000 jobs 

in the baseline scenario. But, the size of the impact rises rapidly as greater emission 

reductions are made necessary, particularly in the Central Appalachia. 

The largest reduction in total impact occurs in the three Kyoto scenarios where 

emission reduction must fall to 1990 levels, or below. The total impact of coal mining 

on worker earnings declines by $4 to $5 billion per year under each of these scenarios, 

and by over 100,000 jobs. The total impact is centered in both Central Appalachia and 

Northern Appalachia. These regions each lose around $2 billion in earnings, and 40,000 

to 50,000 jobs. The absolute impact is more modest in Southern Appalachia where the 

total impact declines by roughly $400 million and 8,000 to 9,000 jobs. 

 

 As a share of the economy, the total impact of losses in the coal mining industry 

rise sharply as a share of the economy under these more restrictive Kyoto emission 

reductions. For the 118 county coal-producing region, the total impact would account 

for a loss of between 3% to 4% of all employment and earnings in the economy. As 

always, the relative impact would be greatest in the Central Appalachia region. In 

particular, the reduction in the total impact of the coal mining industry would be 

equivalent to between 14% to 18% of total employment and earnings in the region, 

depending on the particular scenario. The losses would account for less than 2% of 

employment and earnings in Southern Appalachia, and between 2% and 2.5% of 

employment and earnings in Northern Appalachia. However, there would be selected 

counties in these regions where the losses would be more on a par with what would be 

seen in Central Appalachia. 

 These findings for the Kyoto scenario again suggest that it is very important how 

much emissions reduction will be required. If the most significant emissions reductions 

are required, then the total impact of the policy could be quite substantial in terms of 

the economy of some parts of Appalachia. In particular, the total impact of forecast 

losses in the coal mining industry could rise from 6% of the economy under the baseline 

scenario to from 14% to 16% under the more restrictive Kyoto scenarios. Under any of 

these scenarios, the employment and earnings impacts could change if a mitigation 

program were considered to address the adverse job and income effects. 
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Table 2.2.1: The Total Effect of Coal Industry Changes: Loss in Earnings Overall and as a Percentage of 1997 RegionMacroeconomic and Kyoto Scenarios (Billions of 1997 Dollars)  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -$1.76B 

-1.4% 

-$1.57B 

-1.3% 

-$1.81B 

-1.5% 

-$1.62B 

-1.3% 

-$1.75B 

-1.4% 

-$4.67B 

-3.9% 

-$4.43B 

-3.6% 

-$4.19B 

-3.4% 

-$3.29B 

-2.7% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-$0.73B 

-0.9% 

-$0.55B 

-0.7% 

-$0.72B 

-0.9% 

-$0.60B 

-0.7% 

-$0.79B 

-0.9% 

-$2.14B 

-2.5% 

-$1.99B 

-2.4% 

-$1.87B 

-2.2% 

-$1.32B 

-1.6% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-$0.81B 

-6.1% 

-$0.81B 

-6.0% 

-$0.86B 

-6.4% 

-$0.80B 

-6.0% 

-$0.73B 

-5.5% 

-$2.21B -16.5% 

-$2.07B -15.4% 

-$1.98B -14.7% 

-$1.71B -12.8% 

Southern Appalachia (TN & AL) -$0.22B 

-0.9% 

-$0.21B 

-0.8% 

-$0.22B 

-0.9% 

-$0.21B 

-0.9% 

-$0.22B 

-0.9% 

-$0.41B 

-1.7% 

-$0.37B 

-1.5% 

-$0.34B 

-1.4% 

-$0.26B 

-1.1% 

Source: Authors’ calculationsTable 2.2.2: The Total Effect of Coal Industry Changes: Loss in Employment Overall and as a Percentage of 1997 Re

Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -42,699 

-1.4% 

-38,273 

-1.3% 

-44,027 

-1.4% 

-39,465 

-1.3% 

-42,217 

-1.4% 

-115,571 

-3.8% 

-107,427 

-3.5% 

-101,698 

-3.3% 

-80,447 

-2.6% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-16,586 

-0.8% 

-12,460 

-0.6% 

-16,471 

-0.8% 

-13,795 

-0.7% 

-18,134 

-0.9% 

-48,887 

-2.3% 

-45,537 

-2.2% 

-42,720 

-2.0% 

-30,087 

-1.4% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-21,156 

-6.5% 

-21,062 

-6.5% 

-22,453 

-6.9% 

-20,854 

-6.4% 

-19,021 

-5.9% 

-57,329 

-17.7% 

-53,647 

-16.5% 

-51,233 

-15.8% 

-44,389 

-13.7% 

Southern Appalachia (TN & AL) -4,957 

-0.8% 

-4,750 

-0.8% 

-5,108 

-0.8% 

-4,816 

-0.8% 

-5,063 

-0.8% 

-9,355 

-1.5% 

-8,242 

-1.3% 

-7,745 

-1.2% 

-5,971 

-1.0% 

Source: Authors’ calculations
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Distressed Regions and Counties 

 The proceeding results indicate that the declining impact of the coal mining 

industry over the next decade will have a relatively large effect on the economies of 

selected Appalachian counties that are heavily specialized in coal mining and in many 

counties in the Central Appalachian region. As will be disucssed in a later section, the 

decline of the industry also may have a significant influence on the rate of population 

growth and transfer dependency in these counties. 

 These counties will have a significant task in diversifying their economies in 

order to replace job opportunities lost in coal mining or affected industries, and 

perhaps, to adjust towards a declining population, since it may be difficult for some 

areas to replace all coal-related employment. Further, in some cases it may not be clear 

which sorts of additional industries would be an appropriate fit for these counties as 

part of diversification efforts. Perhaps the most effective approach would be to attempt 

to raise education levels and other aspects of human capital in these counties in order to 

raise wage rates, labor force participation, and the capacity for entrepreneurship in new 

industries. In order to facilitate this transition and mitigate the repercussions, 

workforce and community adjustment programs might be established to help fund the 

employment and training services and the transition planning process for coaldependent, distressed communities. 

Whatever approach is chosen, the task is made all the more challenging, and 

urgent, because these most affected economies also are among the poorest in the 

Appalachian region, and the nation. Figure 2.2.4 illustrates this by displaying on the 

same map each of the 118 Appalachian coal-producing counties and each of the 

Appalachian counties among the coal-producing counties that have been designated as 

economically “distressed” by the Appalachian Regional Commission. Such distressed 

counties were identified as having high rates of both poverty and unemployment as 

well as lower per capita income. The map clearly shows that many of the distressed 

counties were the same counties where the coal mining industry is the most significant 

share of the economy. In particular, many of the coal-producing counties of Central 

Appalachia have been designated as economically distressed. These “distressed” 

counties expected to be most impacted by declines in employment and earnings in the 

coal mining industry over the next decade. 
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Figure 2.2.4: Distressed Counties in the ARC Coal-Producing Region 

Conclusion 

 The purpose of this section has been to consider the total economic impact of the 

coal mining industry on the local economies of major Appalachian coal-producing 

counties. This total impact includes the direct losses in the coal mining industry itself, 

plus the indirect and induced losses in other parts of the economy which are supported 

by coal mining industry activity. The total impact of forecast losses in the coal mining 

industry was found to be substantial even under baseline forecast conditions, with a 

total loss of $1.76 billion in earnings and 42,000 jobs. The large total impacts would still 

Non-Distressed

Distressed
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account for a modest share of overall employment and earnings in the 118 Appalachian 

major coal-producing counties. The shares would be substantial, however, in specific 

areas such as Central Appalachia overall, and in selected counties throughout the 

Appalachian region. 

As for forecasts under the alternative scenarios, the results for the 

macroeconomic forecasts are similar to those in the baseline forecast. The relative size 

of the total impact is somewhat greater under the very least restrictive Kyoto emissions 

reduction scenarios. However, the size of the impact rises rapidly as greater emission 

reductions are made necessary, particularly in the Central Appalachia. Under the most 

restrictive scenarios, the total impact would account for a loss of between 3% to 4% of 

all employment and earnings in the economy for the 118 county Appalachian coalproducing region overall. As always, the relative impact would be greatest in the 

Central Appalachia region. In particular, the reduction in the total impact of the coal 

mining industry would be equivalent to between 14% to 18% of total employment and 

earnings in Central Appalachia. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 132 

Center for Business and Economic Research 

 Part 2.3: Estimates of Future Tax Revenue Impacts Related 

 to Coal Production and Exports Using 

 Economic Forecasts through 2010 

The baseline and economic analysis discussed earlier in this report forecast 

falling output, earnings, and employment in Appalachian coal-producing counties due 

to changes in the coal mining industry. Even coal production was found to fall in some 

of the Appalachian regions, at least in several of the alternative scenarios. Each of these 

forecast declines in economic activity in the coal industry and the economy overall 

portends a declining tax impact for the coal mining industry. A falling direct and total 

earnings impact will lead to a declining income tax impact. A declining direct and total 

output impact will lead to lower severance tax and sales tax revenues. 

This section measures how the tax impact of the coal mining industry can be 

expected to change from 1997 through 2010 under the baseline scenario and each of the 

alternative scenarios. The change in revenue will be discussed for revenues overall and 

separately for severance tax, income tax, and sales tax revenue. Forecast changes in the 

economic impact of the coal mining industry will be used to develop the expected 

changes in coal mining tax impact by 2010. The baseline forecast is discussed first, 

followed by the alternative macroeconomic and Kyoto forecasts. 

In the analysis that follows, recall that the previous forecasts for earnings, 

output, and sales were in real (inflation adjusted) dollars. This means that the tax 

revenue forecasts also will reflect changes from 1997 to 2010 in real dollars. Inflation 

will cause the nominal tax collections in 2010 to be much higher than the value of these 

revenues in constant dollars. Thus, while this report may talk of declines in the tax 

revenue impact in real terms, that is, in the actual spending power of the government 

revenues, the nominal tax revenues will decline by less, or may even rise. 

Tax Revenue Impact Under the Baseline Forecast 

 The tax revenue impact of the Appalachian coal mining industry will fall from 

1997 to 2010 under the baseline forecast for the industry. This decline in revenue will 

result from a decline in the constant dollar output and earnings of the coal mining 

industry, and the resulting decline in the industry’s total economic impact. Recall that 

under the baseline scenario, the constant dollar output of the coal mining industry was 

forecast to fall by 15.3% from 1997 to 2010, while the constant dollar earnings was 

forecast to fall by 26.3%. 

 Table 2.3.1 shows the forecast change in tax revenues from severance, income, 

and sales taxes from 1997 to 2010 for the 118 major Appalachian coal-producing 

counties overall, and in each of the three regions. Both the absolute dollar decline and 
A Study on the Current Economic Impacts 

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the percent decline are reported. Recall that the annual tax revenue impact of the coal 

mining industry was estimated as $559.5 million in 1997. 

Under the baseline forecast, total tax revenue is forecast to decline by $113.2 

million in Appalachia overall from 1997 to 2010, which is a 20.2% decline. Most of this 

decline is forecast to occur in Central Appalachia. Roughly three-quarters of the lost tax 

revenue will be lost in the Central Appalachian region. This occurs both because 

Central Appalachia is the region with the most mining and production, and because 

Central Appalachia has the highest tax rates, and for severance taxes, by far the highest 

tax rates. The percentage decline in severance taxes is so modest in Northern 

Appalachia because severance taxes are levied on production rather than output in 

some Northern Appalachian states, and output was forecast to increase in Northern 

Appalachia under the baseline scenario.20 As is seen in Figure 2.3.1, the percentage 

decline in the overall tax revenue impact of coal mining is similar in Northern and 

Central Appalachia, but higher in Southern Appalachia. 

Table 2.3.1: Forecast Change in the Tax Revenue Impact of the Appalachian Coal Mining Industry 

Under the Baseline Scenario 

Area Total Severance Income Sales 

All Appalachia -$113.2 million 

(-20.2%) 

-$56.1 million 

(-16.5%) 

-$40.5 million 

(-27.7%) 

-$16.6 million 

(-22.4%) 

Northern Appalachia -$18.8 million 

(-16.6%) 

-$1.8 million 

(-4.5%) 

-$15.1 million 

(-30.5%) 

-$1.9 million 

(-8.1%) 

Central Appalachia -$85.5 million 

(-20.4%) 

-$53.1 million 

(-18.1%) 

-$21.5 million 

(-25.2%) 

-$10.9 million 

(-26.5%) 

Southern 

Appalachia 

-$8.9 million 

(-33.9%) 

-$1.2 million 

(-21.7%) 

-$3.9 million 

(-34.2%) 

-$3.7 million 

(-41.1%) 

Source: Authors’ calculations

 There is a substantial decline in the income tax impact of the coal mining 

industry in all regions from 1997 to 2010. This mirrors the forecast decline in the 

earnings impact of the coal mining industry, which was discussed in the last section. 

Note that while the absolute decline is largest in Central Appalachia, the percentage 

declines are higher in Northern and Southern Appalachia. Overall, the lost income tax 

impact is $40.5 million for Appalachia overall, which is over one-third of all lost tax 

revenue. Lost sales tax revenues account for about 15% of the forecast decline in the tax 

revenue impact. 

 In summary, under the baseline scenario the coal-producing states and counties 

of Appalachia can expect to experience a significant decline over the next decade in the 

 

20 Production refers to the amount of coal mined, usually measured in tons, and output refers to 

production multiplied by the minemouth price of coal. 
A Study on the Current Economic Impacts 

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real tax revenue generated due to the coal mining industry, particularly in the Central 

Appalachian region. About one-half of this decline will be seen in revenues from the 

direct (severance) taxation of the Appalachian coal mining industry, while the 

remainder will be in general tax revenues from income and sales taxes. There may be 

additional losses in local property taxes or other local taxes, but these types of local tax 

impacts were not modeled here. 

Figure 2.3.1: Forecast Change in Tax Revenue Impact of Appalachian Coal Industry Under Baseline 

Scenario 

#

Central Appalachia

-85.5 Million

(-20.4%)

#

Northern Appalachia

-18.8 Million

(-16.6%)

#

Southern Appalachia

-8.9 Million

(-33.9%)

All Appalachia

-113.2 Million

(-20.2%)
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Center for Business and Economic Research 

Tax Revenue Impact Under Alternative Forecast Scenarios 

 This section examines changes in the tax revenue impact of the Appalachian coal 

mining industry under the four alternative macroeconomic and six alternative Kyoto 

protocol scenarios. Table 2.3.2 shows the absolute and percentage change in overall tax 

revenues from 1997 to 2010 under each scenario. This is the combined change in 

severance, income, and sales tax revenues. Table 2.3.3 shows the change in the 

severance tax revenue alone. 

 As was the case with economic impact forecasts, the tax impact forecasts change 

relatively little for the macroeconomic forecasts compared to the baseline forecast. The 

forecast decline in taxes overall and severance taxes are fairly similar under the high 

and low growth, and high and low oil price scenarios. The declines are smaller in the 

high growth and high oil price scenarios than in the baseline. Severance tax payments 

actually are forecast to increase in Northern Appalachia under the high growth and 

high oil price scenarios. The greatest decline in real tax revenues is greatest in the low 

growth scenario. In all macroeconomic scenarios, the vast majority of revenue losses 

will occur in Central Kentucky. This is particularly true for severance taxes. 

 Forecast tax revenues do differ greatly between most of the Kyoto protocol 

scenarios relative to the baseline scenario. The loss of revenue is modestly higher under 

the least strict emissions reduction scenario, which calls for emissions at just 24% above 

1990 levels in the year 2000. Real tax revenue is forecast to decline by 28.5% by 2010 in 

this scenario compared to 20.2% in the baseline. However, the loss in revenues grows 

steadily as the emissions reductions become increasingly strict. The lost annual tax 

revenue rises to over $330 million per year under the three strictest scenarios where 

emissions are forecast to decline to 1990 levels or below. Under these scenarios, overall 

real tax revenues would decline by between 60.3% and 68.3%. More than half of these 

losses will be lost severance tax revenue. Real severance taxes are forecast to decline by 

$180 million or more under the three strictest scenarios, with the decline ranging from 

53.6% to 60.5%. None of these calculation consider the possible offsetting effects on 

transfer payments of any special financial transition benefits for affected workers and 

communities. 

As under the baseline and macroeconomic scenarios, the vast majority of tax 

revenues are lost in the Central Appalachian region. However, the share of revenues 

lost in Northern Appalachia does rise substantially under the most strict Kyoto 

emission reduction scenarios, which call for a return of emissions to 1990 levels or lower 

by 2010. In particular, roughly one-quarter of all tax revenue is lost in the Northern 

Appalachian region under these scenarios. 
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Conclusion 

 The forecasts call for the tax revenue generated by the coal mining industry to 

fall in real terms in Appalachia in the next decade. This is true of revenue from both 

severance taxes levied directly on coal as well as general taxes such as sales and income 

taxes that are generated due to the overall economic impact of the coal mining industry. 

These forecast declines in the tax impact are consistent with the expected losses in 

industry output and worker earnings over the next decade. Lost severance tax 

revenues are expected to account for a little more than half of all tax revenues, while 

another third of revenues will result from lost income tax revenues. Under all forecast 

scenarios, the vast majority of revenue losses are forecast to occur in Central 

Appalachia. This makes sense given that most production occurs in Central 

Appalachia, and the region has higher tax rates, particularly higher severance tax rates. 

 Tax revenues due to the coal mining industry are forecast to decline by $113 

million per year from 1997 to 2010 under the baseline forecast. This is roughly a 20% 

decline in revenue. These losses are a significant decline in the real tax revenue 

generated due to the coal mining industry, particularly in the Central Appalachian 

region. The forecast tax impact under each of the alternative macroeconomic scenarios 

is similar to this baseline forecast. However, the forecast decline in tax revenues is 

much greater in the Kyoto environmental scenarios that limit emissions most strictly. 

The three scenarios where emissions are limited to at or below 1990 levels call for a 

forecast decline in tax revenues of over $330 million. This represents a 60% or greater 

reduction in the tax revenues generated due to the coal mining industry. Lost revenues 

are more modest, however, under less strict emission reductions. Under the scenario 

where 2010 emissions are allowed to be 24% above 1990 levels, real tax revenue declines 

by only 28% by 2010 compared to the 20% decline forecast in the baseline scenario. 
A Study on the Current Economic Impacts 

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University of Kentucky 137 Center for Business and Economic Research 

Table 2.3.2: Forecast Change in Overall Tax Revenue Impact of Appalachian Coal Mining Industry, 1997-2010, by MaKyoto Scenarios (Millions of 1997 Dollars)  Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -113.2M 

-20.2% 

-100.3M 

-17.9% 

-122.4M 

-21.9% 

-104.3M 

-18.6% 

-106.6M 

-19.0% 

-382.3M 

-68.3% 

-355.9M 

-63.6% 

-337.3M 

-60.3% 

-274.6M 

-49.1% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-18.8M -16.6% 

-7.7M -6.8% 

-19.2M -17.0% 

-11.9M -10.5% 

-22.5M -19.9% 

-97.8M -86.2% 

-90.5M -79.8% 

-84.3M -74.4% 

-56.7M -50.0% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-85.5M -20.4% 

-84.2M -20.0% 

-94.0M -22.4% 

-83.8M -19.9% 

-75.0M -17.8% 

-267.0M 

-63.5% 

-250.1M 

-59.5% 

-238.6M 

-56.8% 

-207.1M 

-49.3% 

Southern Appalachia (TN & AL) -8.9M 

-33.9% 

-8.4M 

-32.2% 

-9.2M 

-35.3% 

-8.6M 

-32.9% 

-9.1M 

-34.8% 

-17.5M -67.1% 

-15.3M -58.8% 

-14.4M -55.2% 

-10.9M -41.7% 

Source: Authors’ calculationsTable 2.3.3: Forecast Change in Severance Tax Revenue Impact of Appalachian Coal Mining Industry, 1997-2010, by 

Kyoto Scenarios (Millions of 1997 Dollars) 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -56.1M 

-16.5% 

-51.0M -15.0% 

-62.3M -18.3% 

-52.5M -15.4% 

-50.5M -14.9% 

-205.4M 

-60.5% 

-191.8M 

-56.4% 

-182.1M 

-53.6% 

-152.0M 

-44.7% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-1.8M -4.5% 

-2.2M -5.6% 

-2.1M -5.2% 

-0.6M -1.6% 

-3.1M -7.7% 

-29.6M -73.2% 

-27.2M -67.2% 

-25.2M -62.3% 

-16.1M -39.9% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-53.1M -18.1% 

-52.1M -17.7% 

-59.0M -20.1% 

-51.9M -17.7% 

-46.2M -15.7% 

-172.9M 

-58.9% 

-162.1M 

-55.2% 

-154.6M 

-52.6% 

-134.2M 

-45.7% 

Southern Appalachia (TN & AL) -1.2M 

-21.7% 

-1.1M 

-20.5% 

-1.3M 

-22.5% 

-1.2M 

-20.8% 

-1.2M 

-22.4% 

-2.9M 

-52.0% 

-2.5M 

-44.9% 

-2.3M 

-41.7% 

-1.7M 

-30.6% 

Source: Authors’ calculations
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 138 

Center for Business and Economic Research 

Part 2.4: Analysis of Demographic and Transfer Payment Impacts 

 Using Economic Forecasts through 2010 

Research by Black and others (1996; 1999) suggests that the changing fortunes of 

the coal mining industry, more than many industries, have the potential to significantly 

impact socioeconomic conditions in coal-producing counties. This occurs in part 

because the industry is often a large part of the local economy, but it also is related to 

the nature of employment in the coal industry. Coal mining is one of the few industries 

that offers high-wage jobs for worker’s which on average have low general skills. 21 The 

coal jobs, once lost, may be difficult to replace, at least in the local area, which could 

affect both family incomes and local population. 

The estimates, in the form of elasticities, were reported earlier in this report in 

Table 1.5.1. The elasticity estimate for population was .22, which means that for each 

1% decline in local earnings due to a declining coal mining industry, there would be a 

0.22% decline in local population. The elasticity estimates for TANF/AFDC, SSI, Food 

Stamps, and Unemployment Insurance ranged between –0.95 and –2.6, indicating that 

these transfer payments would rise at least as fast as earnings falls, and by more than 

twice as fast in one case. Elasticity estimates were smaller for the two largest transfer 

payment categories of medical transfers (-0.41) which includes Medicare and Medicaid, 

and Social Security (-0.15).22 

These elasticity values can be combined with findings in the last section about 

the total impact of the coal industry in order to forecast expected changes in transfer 

payments or population through 2010. To give an example, lost output and earnings in 

the coal mining industry are expected to lead directly and indirectly to a total decline in 

earnings equivalent to 6.1% of 1997 earnings in the Central Appalachian region. This 

percentage could be combined with the elasticity value of for earnings and population 

to estimate the coal industry losses would lead to a 1.34% decline in population in 

Central Appalachia by 2010. 

This approach will be used below to estimate the future change in population 

and transfer payments in each region of Appalachia due to forecast changes in the coal 

mining industry through 2010. Results will first be presented for the baseline scenario 

for population growth as well as for each of the six types of transfer payments that have 

 

21 However, such workers clearly would have built up great skill which they utilize in their work as coal 

miners. 

22 Research by Dr. Dan Black and others has demonstrated a relationship between the coal mining 

industry, local earnings and important socioeconomic indicators such as population growth and transfer 

payments. These researchers have even developed specific econometric relationships showing the 

response of a specific transfer payment to a change in total local earnings as the coal industry expands or 

contracts. The relationship between local earnings growth and population growth also was examined. 
A Study on the Current Economic Impacts 

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University of Kentucky 139 

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been examined in this report. These include TANF/AFDC, SSI, Food Stamps, 

Unemployment Insurance, Medical Transfers, and Social Security (OASDI). 

Afterwards, estimates will be made for each of the 4 alternative macroeconomic 

scenarios and each of the 6 Kyoto environmental scenarios. 

Finally, some caution should be used when evaluating the forecasts in this 

section. First of all, recall that the relationship between the fortunes of the coal industry 

and the change in total earnings that were developed by Black and others (1996; 1999) 

were based on a regression analysis, rather than the input-output approach used here. 

The two approaches are not necessarily equivalent, which suggests some caution when 

utilizing the statistical relationships between changes in earnings (due to shocks to the 

coal industry) and changes in population or transfer payments. However, the 

relationships developed by Black and others do provide a way of utilizing the results of 

the economic impact forecasts to evaluate potential changes in the socioeconomic 

conditions in Appalachian coal-producing counties. 

The reader also should remember that the impacts discussed in this section 

represent estimated responses to changing coal industry conditions cetirus paribus, that 

is, keeping other factors unchanged. Forecast results should not be interpreted to mean 

that population will fall by a certain amount in Appalachia over the next 10 years, or 

that transfer payments will rise by a certain amount. Other factors such as changing 

policies improved educational attainment by area residents. Even the location of new 

industries in the region could have a large impact on these socioeconomic indicators in 

the future. The results presented below only show the estimated direction and 

magnitude that changes in the coal industry could push each of the indicators. 

Impact on Population and Transfer Payments Under Baseline Scenario 

 The baseline forecast scenario called for declining coal industry earnings in each 

of three Appalachian regions. Industry earnings were forecast to decline rapidly 

between 1997 and 2010, falling between 20% and 30%, depending on the region. These 

direct earnings losses lead to even larger declines in the total earnings impact of the coal 

industry. These total earnings impacts, however, represented a modest share of overall 

earnings across all industries in most local economies. The earnings lost due to the 

declining total impact of the coal industry accounted for just 1.5% of 1997 earnings in 

the 118 Appalachia coal-producing counties overall, and just 0.9% of earnings in the 

Northern and Southern Appalachia regions. The decline was more significant in the 

Central Appalachian region, where the reduced impact accounted for 6.1% of total 

earnings. The impact was even larger in selected counties. 

 Declines of these magnitudes can be used to estimate the expected impact of coal 

industry losses on population and transfer payments under the baseline scenario. The 

approach used would be similar to what was described above. The forecast percent 
A Study on the Current Economic Impacts 

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change in earnings, whether 0.9% or 6.1% of total earnings, would be applied to each of 

the elasticity estimates made by Black and others (1996; 1999), to estimate the percent 

change in population or per capita transfer payments. 

 Results are reported in Figures 2.4.1 through 2.4.3. Figures 2.4.1 shows the 

forecast loss of population in Northern, Central, and Southern Appalachia as a result of 

lost output and earnings in the coal mining industry. The population loss is reported in 

percentages and in the absolute loss of persons. Note that the percentage loss is greatest 

in Central Appalachia, where the coal mining industry represents the largest part of the 

local economy. Losses in coal mining earnings and output are forecast to lead to a 

1.34% decline in population in Central Appalachia. Population losses are expected to be 

around 0.2% in Northern and Southern Appalachia, where the coal mining industry 

represents a smaller share of the economy. The percentage losses would undoubtedly 

be even larger selected counties throughout the region where the coal mining industry 

is a large part of the economy. 

The absolute loss is largest in Central Appalachia, where population is expected 

to decline by 16,900 under the baseline forecast for the coal industry. The absolute loss 

in Northern Appalachia is estimated to be nearly as large, due to the greater population 

of the region, at 12,300. Population is forecast to decline by approximately 3,000 in 

Southern Appalachia. The total decline in population in all 118 counties is expected to 

be 32,100, or –0.37% under baseline conditions. 

Figure 2.4.2 shows the forecast loss for the three income maintenance transfer 

programs of TANF/AFDC, SSI, and Food Stamps. The percentage gains for these 

programs were much larger than for population given the much more elastic 

relationship between the total earnings impact of the coal industry, and each of these 

types of transfer payment. The percentage gains also were higher in Central 

Appalachia given that the coal industry is larger part of its economy. To be specific, 

forecast losses in the coal mining industry were expected to lead to a 2% increase in per 

capita TANF and SSI payments across the 118 counties and a 4.5% increase in Food 

Stamp payments. The expected increase was below this average in Northern and 

Southern Appalachia, but was much higher in Central Appalachia where there was an 

expected increase of 5.77% in per capita TANF payments, 4.8% in SSI payments, and 

11.35% in Food Stamp payments. 

These percent differences corresponded to substantial increases in per capita 

transfer payments in Central Appalachia, particularly given that this region already had 

higher payment levels in 1997 than the other parts of Appalachia. The estimate is that 

there would be $4.92 increase in per capita TANF payments in Central Appalachia, a 

$14.04 increase in per capita SSI payments, and a $19.20 increase in per capita Food 

Stamp payments each year. For the 118 counties overall, the average increase in per 

capita SSI payments was $1.07 per year, while the per capita increase was $2.79 for SSI 
A Study on the Current Economic Impacts 

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and $3.89 for Food Stamps. Another way to examine these increases is to translate the 

per capita increases into total increases across the total population of each region. In 

Central Appalachia, this would lead to a $6.2 million annual increase in TANF 

payments, a $17.7 million increase in SSI payments, and a $24.3 million increase in Food 

Stamp payments. For the 118 counties overall, the estimate is a $9.3 million increase for 

TANF, a $24.1 million increase for SSI, and a $33.6 million increase for Food Stamps. 

Figure 2.4.1: Estimated Population Loss by Region Under Baseline Scenario 

#

Central Appalachia

-16,868

(-1.34%)

#

Northern Appalachia

-12,263

(-0.21%)

#

Southern Appalachia

-2,937

(-0.19%)

All Appalachia

-32, 067

(-0.37%)
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Figure 2.4.2: Estimated Change in Per Capita Transfer Payments by Region Under Baseline 

Scenario 

Figure 2.4.3 shows the forecast loss for the three other transfer programs, 

unemployment insurance, medical transfers (including Medicare and Medicaid), and 

social security (OASDI). The percentage gains were even larger for the unemployment 

insurance program than for the Food Stamp program, reflecting the elastic relationship 

between earnings and unemployment insurance transfers identified in Black’s research. 

However, the percentage increases were much smaller for the social security and 

medical transfer programs, which makes sense given that these programs are not as 

#

Central Appalachia

TANF: $4.92 (5.77%)

SSI: $14.04 (4.80%)

Food Stamps: $19.20 (11.35%) #

Northern Appalachia

TANF: $0.48 (0.90%)

SSI: $0.83 (0.75%)

Food Stamps: $1.27 (1.77%)

#

Southern Appalachia

TANF: $0.12 (0.84%)

SSI: $1.00 (0.69%)

Food Stamps: $1.27 (1.64%)

All Appalachia

TANF: $1.07 (2.08%)

SSI: $2.79 (1.95%)

Food Stamps: $3.87 (4.48%)
A Study on the Current Economic Impacts 

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directly linked to labor market conditions as unemployment insurance or the various 

income maintenance programs. The social security and medical transfer payments, 

however, are very large programs so that the small percentage gains translate into 

larger gains in program payments per capita. 

Figure 2.4.3: Estimated Change in Income in Per Capita Unemployment Insurance, Medical 

Transfers, and Social Security Payments by Region Under Baseline Scenario 

For all three programs, the percentage gains were largest in Central Appalachia, 

where on average the coal mining industry accounts for the largest share of the 

#

Central Appalachia

UI: $11.30 (15.78%)

Medical Transfers $43.07 (2.49%)

Social Security: $16.42 (0.91%) #

Northern Appalachia

UI: $3.34 (2.37%)

Medical Transfers: $7.28 (0.39%)

Social Security: $2.54 (0.14%)

#

Southern Appalachia

UI: $1.07 (2.29%)

Medical Transfers: $5.43 (0.36%)

Social Security: $1.98 (0.13%)

All Appalachia

UI: $4.10 (3.71%)

Medical Transfers: $12.18 (0.68%)

Social Security: $4.47 (0.26%)
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economy. Unemployment insurance payments are estimated to rise by 15.78% in 

Central Appalachia over the forecast, while rising by from 2.25% to 2.5% in Northern 

and Southern Appalachia. Medical transfer payments were estimated to rise by 2.49% 

in Central Appalachia under the baseline scenario, versus a 0.39% increase in Northern 

Appalachia and a 0.36% increase in Southern Appalachia. Even in Central Appalachia, 

social security payments were estimated to increase by 0.91% due to forecast declines in 

the coal industry, with much smaller gains estimated for other parts of Appalachia. 

 These smaller percentage gains for the medical transfers and social security do 

represent significant increases in per capita payments. Per capita social security 

payments are estimated to increase by $4.47 across all 118 coal-producing counties, and 

$16.42 in Central Appalachia. Increases in medical transfer payments were even larger, 

with per capita payments estimated to increase by $12.18 across all 118 counties, and by 

$43.07 per person in Central Appalachia. Per capita unemployment insurance 

payments are estimated to increase by $4.10 across all 118 counties in the baseline 

forecast, and by $11.30 in Central Appalachia. Looking at total rather than per capita 

payments, there would be a $105.4 million increase in medical transfers in all 118 

counties under the baseline scenario, along with a $38.7 million increase in social 

security payments, and a $35.5 million increase in unemployment insurance payments. 

Payments in Central Appalachia would account for roughly half of these totals. 

 Overall, the finding is that forecast declines in the coal mine industry under the 

baseline scenario are expected to lead to a decline in population and an increase in 

transfer payments in the coal mining regions of Appalachia. The population loss is 

expected to reach around 30,000 over 10 years, with about half of the population loss in 

Central Appalachia. Transfer payments for income maintenance programs are expected 

to increase by 2% to 4.5% across all 118 coal-producing counties, and by 5% to 11% in 

Central Appalachia. Roughly two-thirds of the increase in income maintenance 

transfers is expected to occur in Central Appalachia. Smaller percentage increases are 

expected for medical transfer and social security payments, but due to the size of these 

programs, the absolute increase in payments is expected to be higher, reaching $105.4 

million in the case of medical transfers. Central Appalachia is expected to account for 

only about one-half of the increase in medical transfer and social security payments. 

 These findings suggest that under the baseline scenario forecast declines in the 

coal mining industry will result in some decline in population and some increase in 

transfer payments in the coal mining regions of Appalachia. Such impacts on 

population growth and transfer programs may be even larger under some of the 

alternative forecast scenarios for the Appalachian coal industry, particularly under 

some of the alternative environmental scenarios. The following section discusses the 

estimated impact on population growth and transfer payments under each of the four 

alternative macroeconomic scenarios, and the six alternative Kyoto environmental 

scenarios. 
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Impact on Population and Transfer Payments Under Baseline Scenario 

 Future changes in the coal mining industry under the baseline scenario could be 

expected to lead to changes in population growth and transfer payments throughout 

coal-producing Appalachia, particularly in Central Appalachia. This pattern also holds 

under the alternative scenarios for the coal industry forecast. Expected changes in 

population growth and transfer payments are very similar under the alternative 

macroeconomic forecast scenarios. Impacts on population growth and transfer 

payments are larger, and sometimes much larger, under most of the Kyoto 

environmental scenarios. 

 Table 2.4.1 reports the impact of coal industry forecasts on future population 

growth within the regions of Appalachia under each of the 10 alternative scenarios, 

along with the baseline scenario. Forecasts do not vary a great deal between the 

baseline scenario and each of the 4 macroeconomic scenarios. The estimated population 

loss is very similar to the baseline under the low growth and low oil price forecast 

scenarios, and is roughly 4,000 less under the high growth scenario and the high oil 

price scenario. As in the baseline scenario, the largest population impact is expected to 

occur in Central Appalachia under each alternative macroeconomic scenario. The lost 

population impact is expected to exceed 1% of the Central Appalachia population in 

each of the macroeconomic scenarios.
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Table 2.4.1: Forecast Change in Population, 1997-2010, Due to Forecast Growth in the Appalachian Coal Mining Indu

Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian -32,067 

-0.37% 

-28,003 

-0.32% 

-32,035 

-0.37% 

-28,775 

-0.33% 

-30,374 

-0.35% 

-84,310 

-0.97% 

-78,452 

-0.91% 

-74,329 

-0.86% 

-59,301 

-0.69% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

-12,263 

-0.21% 

-8,399 

-0.14% 

-11,098 

-0.19% 

-9,297 

-0.16% 

-12,218 

-0.21% 

-32,919 

-0.56% 

-30,664 

-0.52% 

-28,767 

-0.49% 

-20,261 

-0.34% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

-16,868 

-1.34% 

-16,789 

-1.33% 

-17,915 

-1.42% 

-16,624 

-1.32% 

-15,157 

-1.20% 

-45,850 

-3.63% 

-42,906 

-3.40% 

-40,974 

-3.24% 

-35,502 

-2.81% 

Southern Appalachia (TN & AL) -2,937 

-0.19% 

-2,815 

-0.19% 

-3,022 

-0.20% 

-2,853 

-0.19% 

-2,999 

-0.20% 

-5,542 

-0.37% 

-4,883 

-0.32% 

-4,588 

-0.30% 

-3,538 

-0.23% 

Source: Authors’ calculations
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

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Center for Business and Economic Research 

The population impact varies a great deal based on the Kyoto emissions 

reduction scenario. Under the least restrictive scenario for emissions, 24% above 1990 

emissions levels, the population impact is only somewhat greater than in the baseline 

scenario. The population impact, however, rises quickly if emissions need to be 

restricted further, and is much greater under the 3 most restrictive scenarios. The total 

population impact is from 75,000 to 85,000 in these most restrictive scenarios, which is 

equivalent to a loss of roughly 0.9 to 1.0% of the population in the 118 Appalachian 

coal-producing counties. The absolute loss of population is somewhat higher in Central 

Appalachia than in Northern Appalachia. Population impacts range from 40,000 to 

45,000 in lost population in Central Appalachia and 28,000 to 33,000 in lost population 

in Northern Appalachia. In Central Appalachia, this amounts to between 3.24% and 

3.63% of regional population. 

Tables 2.4.2 through 2.4.4 report the impact of coal industry forecasts on 

payments for three income maintenance transfer programs: TANF, SSI, and food 

stamps. Results illustrate a familiar pattern. The impact on these programs varies little 

between the four alternative macroeconomic scenarios and the baseline scenarios. In all 

four scenarios, the largest increase by far in the three transfer payments occurs in 

Central Appalachia, as was the case in the baseline scenario. As for the emissions 

reduction scenarios, the impact on transfer payments in the least restrictive scenarios is 

somewhat higher than in the baseline scenario. However, the transfer payments impact 

is 2 to 3 times as large under the most restrictive scenarios, where emissions must return 

to or below 1990 levels. Even in Northern and Southern Kentucky, where the impact on 

transfer payments is expected to be modest, per capita payments in each program are 

expected to rise to between $0.25 and $4 in these most restrictive scenarios. Transfer 

payment increases are so low in dollar terms in Southern Appalachia because the region 

has very low per capita payment levels to begin with in 1997, particularly for the TANF 

program. 

The increase in per capita transfer payments is very large in Central Appalachia 

under these more restrictive scenarios. Per capita payments rise between 12% and 30%. 

The 30% increase is expected in Food Stamp payments in these three most restrictive 

scenarios, while the 12% increase is expected in SSI payments. The 15% increase is 

expected in TANF program payments. The expected increases are large in dollar terms 

as well as on a percentage basis. Total per capita payments in the three programs 

would rise by about $100 per person under these more restrictive scenarios compared to 

only about $40 in the baseline scenario. This per capita increase would translate into an 

$125 million expected increase in income maintenance transfer payments across the 

entire population of Central Appalachia. 

Tables 2.4.5 through 2.4.7 report the impact of coal industry forecasts on 

payments for three other transfer programs under each of the alternative forecast 

scenarios. These are the unemployment insurance, medical transfers (including 
A Study on the Current Economic Impacts 

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University of Kentucky 148 

Center for Business and Economic Research 

Medicare and Medicaid), and the social security (OASDI) programs. As before, the 

expected impacts under the 4 alternative macroeconomic scenarios are similar to those 

in the baseline scenario. Impacts are much higher under the more restrictive Kyoto 

emissions reduction scenarios, particularly for the unemployment insurance program. 

Under the three scenarios where emissions must fall to or below 1990 levels, the impact 

on unemployment insurance payments is expected to reach a 40% increase in program 

payments in Central Kentucky. This is equivalent to a $29 increase in per capita 

payments. Even in Northern Appalachia, unemployment insurance payments are 

expected to increase by roughly $9 per capita (6.62%) under these more restrictive 

scenarios. The per capita increase is only expected to reach about $2 per capita in 

Southern Appalachia. 

The percentage rate of payment increases is much more modest in the case of the medical 

transfer and social security programs, even under the most restrictive environmental scenarios in 

terms of allowable emissions. Even under these most restrictive scenarios, the increase in social 

security payments is never more than 1% for the 118 Appalachian coal-producing counties, 

while the increase in medical transfer payments is never more than 2%. The more rapid rate of 

increase for medical transfer may result because the category includes Medicaid payments, 

which may be more sensitive to earnings losses than the Medicare component, or the social 

security program. Even in Central Appalachia, the rates of increase are more modest, with 

medical transfer payments expected to rise by about 6% under the most restrictive environmental 

scenarios, while social security payments are forecast to increase by about 2.25%. However, 

since these programs make such large payments, these modest increases translate into significant 

dollar amounts. Medical transfer payments are expected to rise by roughly $110 per capita in 

Central Appalachia under the three most restrictive emissions reduction scenarios, while per 

capita social security payments are expected to increase by roughly $40. In the other two 

Appalachian regions, medical transfer payments are expected to increase by $10 to $20 per 

capita, while social security payments increase by $4 to $7 per capita. Once again, it should be 

noted that none of these calculation consider the possible offsetting effects on transfer payments 

of any special financial transition benefits for affected workers and communities. 
A Study on the Current Economic Impacts 

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University of Kentucky 149 Center for Business and Economic Research 

Table 2.4.2: Forecast Change in Per Capita TANF Program Payments, 1997-2010, Due to Forecast Growth in the App

Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $1.07 

2.08% 

$0.96 

1.87% 

$1.08 

2.10% 

$0.98 

1.90% 

$1.00 

1.93% 

$2.88 

5.58% 

$2.69 

5.21% 

$2.55 

4.95% 

$2.08 

4.04% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$0.48 

0.90% 

$0.33 

0.62% 

$0.44 

0.82% 

$0.37 

0.68% 

$0.48 

0.93% 

$1.30 

2.42% 

$1.21 

2.25% 

$1.14 

2.12% 

$0.80 

1.49% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$4.92 

5.77% 

$4.90 

5.74% 

$5.23 

6.12% 

$4.85 

5.68% 

$4.42 

5.18% 

$13.38 

15.67% 

$12.52 

14.67% 

$11.96 

14.01% 

$10.36 

12.14% 

Southern Appalachia (TN & AL) $0.12 

0.84% 

$0.12 

0.80% 

$0.13 

0.86% 

$0.12 

0.81% 

$0.13 

0.85% 

$0.23 

1.58% 

$0.20 

1.39% 

$0.19 

1.31% 

$0.15 

1.01% 

Source: Authors’ calculationsTable 2.4.3: Forecast Change in Per Capita SSI Program Payments, 1997-2010, Due to Forecast Growth in the Appala

Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $2.79 

7.95% 

$2.60 

1.81% 

$2.87 

2.00% 

$2.62 

1.83% 

$2.58 

1.80% 

$7.42 

5.18% 

$6.92 

4.83% 

$6.58 

4.59% 

$5.46 

3.81% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$0.83 

0.75% 

$0.57 

0.51% 

$0.75 

0.68% 

$0.63 

0.57% 

$0.83 

0.75% 

$2.24 

2.01% 

$2.09 

1.87% 

$1.96 

1.76% 

$1.38 

1.24% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$14.04 

4.80% 

$13.98 

4.77% 

$14.92 

5.09% 

$13.84 

4.73% 

$12.62 

4.31% 

$38.17 

13.03% 

$35.72 

12.20% 

$34.11 

11.65% 

$29.56 

10.09% 

Southern Appalachia (TN & AL) $1.00 

0.69% 

$0.95 

0.67% 

$1.02 

0.71% 

$0.97 

0.67% 

$1.02 

0.71% 

$1.88 

1.31% 

$1.65 

1.15% 

$1.55 

1.09% 

$1.20 

0.84% 

Source: Authors’ calculations
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of the Appalachian Coal Industry and its Future in the Region 

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Table 2.4.4: Forecast Change in Per Capita Food Stamp Program Payments, 1997-2010, Due to Forecast Growth in th

Mining Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $3.89 

4.48% 

$3.59 

4.14% 

$3.98 

4.59% 

$3.69 

4.19% 

$3.60 

4.15% 

$10.35 

11.93% 

$9.65 11.13% 

$9.17 10.58% 

$7.59 

8.75% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$1.27 

1.77% 

$0.87 

1.22% 

$1.15 

1.61% 

$0.96 

1.35% 

$1.26 

1.77% 

$3.41 

4.76% 

$3.17 

4.44% 

$2.98 

4.16% 

$2.10 

2.93% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$19.20 

11.35% 

$19.11 

11.30% 

$20.39 

12.06% 

$18.92 

11.19% 

$17.25 

10.20% 

$52.19 

30.85% 

$48.84 

28.87% 

$46.64 

27.57% 

$40.41 

23.89% 

Southern Appalachia (TN & AL) $1.27 

1.64% 

$1.21 

1.58% 

$1.30 

1.69% 

$1.23 

1.60% 

$1.29 

1.68% 

$2.39 

3.10% 

$2.11 

1.73% 

$1.98 

2.57% 

$1.53 

1.98% 

Source: Authors’ calculationsTable 2.4.5: Forecast Change in Per Capita Unemployment Insurance Program Payments, 1997-2010, Due to Forecas

Appalachian Coal Mining Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $4.10 

3.71% 

$3.37 

3.05% 

$4.00 

3.62% 

$3.53 

3.19% 

$3.93 

3.56% 

$10.92 

9.88% 

$10.18 

9.21% 

$9.62 

8.70% 

$7.44 

6.73% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$3.34 

2.47% 

$2.29 

1.69% 

$3.02 

2.23% 

$2.53 

1.87% 

$3.33 

2.46% 

$8.97 

6.62% 

$8.36 

6.17% 

$7.84 

5.79% 

$5.52 

4.08% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$11.30 

15.78% 

$11.24 

15.71% 

$12.00 

16.76% 

$11.13 

15.55% 

$10.15 

14.18% 

$30.71 

42.90% 

$28.73 

40.15% 

$27.44 

38.34% 

$23.78 

33.22% 

Southern Appalachia (TN & AL) $1.07 

2.29% 

$1.02 

2.19% 

$1.10 

2.35% 

$1.04 

2.22% 

$1.09 

2.33% 

$2.01 

4.31% 

$1.77 

3.80% 

$1.67 

3.57% 

$1.28 

2.75% 

Source: Authors’ calculations
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of the Appalachian Coal Industry and its Future in the Region 

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Table 2.4.6: Forecast Change in Per Capita Medical Transfer Program Payments, 1997-2010, Due to Forecast Growth 

Coal Mining Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $12.18 

0.68% 

$10.55 

0.59% 

$12.13 

0.68% 

$10.87 

0.61% 

$11.54 

0.65% 

$32.14 

1.80% 

$29.92 

1.68% 

$28.34 

1.59% 

$22.54 

1.26% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$7.28 

0.39% 

$4.98 

0.27% 

$6.59 

0.35% 

$5.52 

0.30% 

$7.25 

0.39% 

$19.54 

1.04% 

$18.20 

0.97% 

$17.07 

0.91% 

$12.02 

0.64% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$43.07 

2.49% 

$42.87 

2.48% 

$45.74 

2.64% 

$42.45 

2.45% 

$38.70 

2.24% 

$117.08 

6.76% 

$109.56 

6.33% 

$104.63 

6.05% 

$90.65 

5.24% 

Southern Appalachia (TN & AL) $5.43 

0.36% 

45.20 

0.35% 

$5.59 

0.37% 

$5.27 

0.35% 

$5.54 

0.37% 

$10.24 

0.68% 

$9.02 

0.60% 

$8.48 

0.56% 

$6.54 

0.43% 

Source: Authors’ calculationsTable 2.4.7: Forecast Change in Per Capita Social Security (OASDI) Program Payments, 1997-2010, Due to Growth in 

Mining Industry by Macroeconomic and Kyoto Scenarios 

 Macroeconomic Scenarios Kyoto Scenarios 

Growth Oil Price 

Less than 1990 

Level 

 

 Baseline Low High Low High 7% 3% 1990 9% Total Appalachian $4.47 

0.26% 

$3.90 

0.22% 

$4.47 

0.26% 

$4.01 

0.23% 

$4.23 

0.24% 

$11.80 

0.68% 

$10.99 

0.63% 

$10.41 

0.60% 

$8.32 

0.48% 

Northern Appalachia (PA, OH, MD, & Northern WV) 

$2.54 

0.14% 

$1.74 

0.10% 

$2.30 

0.13% 

$1.93 

0.11% 

$2.54 

0.14% 

$6.83 

0.38% 

$6.36 

0.36% 

$5.97 

0.33% 

$4.20 

0.24% 

Central Appalachia (Southern WV, VA, & Eastern KY) 

$16.42 

0.91% 

$16.34 

0.91% 

$17.44 

0.97% 

$16.18 

0.90% 

$14.75 

0.82% 

$44.63 

2.47% 

$41.77 

2.32% 

$39.89 

2.21% 

$34.56 

1.92% 

Southern Appalachia (TN & AL) $1.98 

0.13% 

$1.90 

0.13% 

$2.04 

0.14% 

$1.92 

0.13% 

$2.02 

0.13% 

$3.73 

0.25% 

$3.29 

0.22% 

$3.09 

0.21% 

$2.38 

0.16% 

Source: Authors’ calculations
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 152 

Center for Business and Economic Research 

Summary 

Forecast changes in the coal mining industry are expected to have a significant 

impact on the level of transfer payments and the rate of population growth in Central 

Appalachia, but more modest impacts in Northern and Southern Appalachia. Forecast 

losses in the coal mining industry are expected to cause population to decline by less 

than 0.5% in both Northern and Southern Appalachia under the baseline scenario, and 

by 1.33% in Central Appalachia. Overall, this represents a loss of 32,000 in population 

in the 118 major coal-producing counties of Appalachia. Roughly the same level of 

population loss is also expected under each of the alternative macroeconomic scenarios, 

and a somewhat higher loss is expected under the least restrictive emissions reduction 

scenarios. However, under the more restrictive environmental scenarios for the Kyoto 

protocol, where emissions must fall to or below 1990 levels, population loss is expected 

to be roughly 2.5 times greater than in the baseline scenario. Population is expected to 

decline by roughly 80,000 under these scenarios, with just over half of this population 

loss occurring in Central Appalachia, and most of the rest occurring in Northern 

Appalachia. 

Transfer payment impacts also are expected to be 2 to 3 times higher under the 

most restrictive emissions reduction scenarios than under the baseline scenario. In any 

case, the impact on transfer payments under all scenarios is most dramatic in the case of 

Central Appalachia. In Central Appalachia, the total increase in per capita payments 

under the six transfer programs is expected to reach $110 in the baseline scenario, a 

similar level under each macroeconomic scenario, and rise to around $280 under the 

more restrictive emissions reduction scenarios. Very large increases are expected in 

some transfer payments under the most restrictive emissions scenarios. Under these 

scenarios, transfer payments in the TANF, food stamp, and unemployment insurance 

programs are expected to rise by between 30% and 40%. More modest transfer 

payment impacts are expected in Northern Appalachia and Southern Appalachia, 

Finally, when examining these figures it is important to remember that these 

estimates for the future only represent the impact of changes in the coal mining 

industry on these transfer payment programs, with other factors held constant. These 

results should not be taken as a forecast that transfer payments will increase by the 

amounts stated over the next decade since a number of other factors such as policy 

reforms, education attainment, or industrial recruitment also will drive the future levels 

of transfer program payments. Changes in payments due to these factors may have a 

much larger effect than changes in the coal mining industry, and may act to either raise 

or lower payments overall. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 153 

Center for Business and Economic Research 

Conclusion 

This study examined the current and expected future impact of the coal mining 

industry in 118 Appalachian coal-producing counties. The results show that coal 

mining influences not only a sizeable portion of the economic activity in selected 

counties, but that it also plays an important role in many other counties in Appalachia. 

The study found that the coal mining industry currently is a large share of the economy 

in selected counties throughout the region, and in many counties in Central Appalachia. 

The results show also show that under assumed baseline conditions of modest 

economic growth with no new restrictive environmental initiatives, the impact of coal 

mining in the regional economy will decline in the next decade. 

The magnitude of this decline will vary among counties, but will adversely affect 

their tax revenues, population growth, employment, and earnings. The forecast decline 

in the economic impact of the coal mining industry varies little between the baseline 

forecasts and four alternative macroeconomic scenarios. However, the decline in the 

economic impact varies a great deal under alternative scenarios involving the Kyoto 

Protocol environmental initiative to reduce greenhouse gas emissions. In particular, the 

size of the decline depends on how much greenhouse gas emissions must be reduced 

given the protocol. The decline in the coal industry’s impact will be only somewhat 

greater than in the baseline scenario if emissions levels in 2010 are allowed to rise 

significantly above 1990 levels. However, the decline in the impact of the coal mining 

industry would be between two and three times greater if emissions must fall to or 

below 1990 levels. 

Current Conditions of the Coal Mining Industry 

The study began by examining the current conditions of the coal mining industry 

in Appalachia and its current impact on affected counties and regions within 

Appalachia. Three regional groupings are distinguished: 

• Northern Appalachia, which includes coal producing counties in 

Pennsylvania, Ohio, Maryland, and northern West Virginia. 

• Central Appalachia, which includes counties in the border region of 

Kentucky, Virginia, and West Virginia. 

• Southern Appalachia, which includes counties in Tennessee and Alabama. 

The year 1997 was used as the “current” year due to lags in the data, and coal 

production data came from the Department of Energy’s Energy Information 

Administration while employment and earnings data came from the Department of 

Commerce. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 154 

Center for Business and Economic Research 

An examination of the data revealed a large mining industry that accounted for a 

modest share of overall Appalachian employment, but a large share in selected counties 

and county groupings. Data revealed over 470 million tons of coal production in 

Appalachia in 1997 within 118 coal-producing counties. The total output of the 

industry in these counties was roughly $12.3 billion during that year. The industry 

employed just over 60,000 workers and worker earnings topped $4 billion in the 118 

coal-producing counties in Appalachia. Reflecting the high wages in the industry, this 

accounted for roughly 2% of all employment in these 118 counties, and 3.3% of 

earnings. 

 

The coal mining industry accounted for a much larger share of employment and 

earnings in selected counties throughout Appalachia, but many of these counties were 

concentrated in Central Appalachia, particularly in the border area of Kentucky, 

Virginia, and West Virginia. In the Central Appalachia region, the coal mining industry 

accounted for roughly 10.4% of employment and 14.7% of earnings. 

 The total impact of the coal industry on the economy exceeded industry 

employment and earnings due to the additional indirect and induced impacts on other 

sectors of the economy. The total impact was approximately 50% higher than the direct 

industry impact for output, value-added, and earnings, and 100% greater for 

employment. The total earnings impact was $6.2 billion and the total employment 

impact was 135,000 jobs in the 118 Appalachian coal-producing counties. These total 

impacts accounted for 4.4% of 1997 employment and 5.1% of 1997 worker earnings in 

these 118 counties overall. The shares were much larger in selected counties 

throughout Appalachia, particularly in Central Appalachia. The total economic impact 

of the coal mining industry accounted for 29.9% of employment and 27.6% of earnings 

in the Central Appalachia region. 

 

The tax impact of the coal mining industry was also concentrated in Central 

Appalachia. The overall tax impact was estimated to be $559.5 billion per year in the 

118 coal-producing counties from severance, income, or sales taxes. These figures did 

not include the tax impact of more locally oriented taxes such as property taxes, utility 

taxes, or other miscellaneous taxes. Much of the tax impact occurred in Central 

Appalachia, primarily due to the much higher severance tax on coal in the region. Onethird of this overall tax impact occurred in Kentucky, 7% in Virginia, and 45% in West 

Virginia. 

 The potential impact of the coal industry on factors such as population growth 

and participation in transfer programs also would be expected to be greater in Central 

Appalachia. Research by Black et. al. (1996; 1999) has found that local population 

growth and dependence on transfer payments are affected by significant changes in 

earnings opportunities in the coal mining industry. And, Central Appalachia is the 

region most dependent on the coal mining industry. Further, Central Appalachia, along 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 155 

Center for Business and Economic Research 

with Northern Appalachia, already had a falling population during the 1990s. Per 

capita payments for “income maintenance” transfer programs such as Temporary 

Assistance to Needy Families (TANF) and food stamps also were much higher in 

Central Appalachia than in other parts of Appalachia, particularly Southern 

Appalachia, where transfer payments are low. 

Economic and Kyoto Scenarios 

The study also examined potential scenarios for the development of the coal 

mining industry in Appalachia over the next decade. Results changed very little under 

the four alternative macroeconomic scenarios that were considered. The decline in the 

industry and its impact was only slightly lower in the favorable high economic growth 

and high oil price scenarios, and slightly higher in the less favorible low growth or low 

oil price scenarios. Results, however, did differ a great deal under alternative emissions 

reduction scenarios related to compliance with the Kyoto environmental protocol. 

Compliance with the protocol could require significant emissions reductions, although 

smaller reductions may be possible if emissions trading and other innovative 

approaches are included when the protocol is implemented. But, even in this case, the 

level of emissions reduction that would be required is uncertain. The 6 alternative 

scenarios examined assumed different levels of reduction in greenhouse gas emissions 

in order to comply with the Kyoto protocol. Under scenarios where there was less 

restriction on omissions, the forecast decline in the coal mine industry and its impact 

was only somewhat higher than in the baseline scenario. However, the size of the 

impact rises rapidly as greater emission reductions are made necessary, particularly in 

the Central Appalachia. 

The total impact rises sharply under more restrictive Kyoto emission reduction 

scenarios, in which 2010 emissions levels are required to return to or below emissions in 

1990. Under the most restrictive scenarios, the direct impact would rise to between 

between 1.1% and 2.2% of all employment and earnings in the 118 county Appalachian 

coal-producing region. The total impact including the “multiplier effect” would be a 

decline of between 3% to 4% of all employment and earnings in the region. As always, 

the relative impact would be greatest in the Central Appalachia region. In particular, 

the direct reduction in coal mining employment and earnings would account for 

between 5.5% and 8.8% of Central Appalachia employment and earnings under these 

most restrictive emissions scenarios. The reduction in the total impact of the coal 

mining industry would be equivalent to between 14% to 18% of total employment and 

earnings in Central Appalachia. Finally, there were many individual counties where 

the decline in total earnings could exceed even these levels. 
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 156 

Center for Business and Economic Research 

Tax Revenue, Demographic, and Transfer Payments Impacts Under Varying 

Scenarios 

 In addition to its impact on employment and earnings, the forecast decline in the 

coal mining industry has the potential to impact tax revenue, population growth, and 

participation in transfer payment programs. Under the baseline scenario, tax revenues 

due to the coal mining industry are forecast to decline by $113 million per year from 

1997 to 2010. This is roughly a 20% decline in revenue. The forecast tax impact under 

each of the alternative macroeconomic scenarios is similar to this baseline forecast. 

However, the forecast decline in tax revenues is much greater in the Kyoto 

environmental scenarios that limit emissions most strictly. The three scenarios where 

emissions are limited to at or below 1990 levels call for a forecast decline in tax revenues 

of over $330 million. This represents a 60% or greater reduction in the tax revenues 

generated due to the coal mining industry. 

At the same time, forecast changes in the coal mining industry are expected to 

have a significant impact on the level of transfer payments and the rate of population 

growth in Central Appalachia, but more modest impacts in Northern and Southern 

Appalachia. Forecast losses in the coal mining industry are expected to cause 

population to decline by less than 0.5% in both Northern and Southern Appalachia 

under the baseline scenario, and by 1.33% in Central Appalachia. Overall, this 

represents a loss of 32,000 in population in the 118 major coal-producing counties of 

Appalachia. Under the more restrictive emissions reduction scenarios for the Kyoto 

protocol, where emissions must fall to or below 1990 levels, population loss is expected 

to be roughly 2 1⁄2 times greater than in the baseline scenario. Population is expected to 

decline by roughly 80,000 under these scenarios, with just over half of this population 

loss occurring in Central Appalachia, and most of the rest occurring in Northern 

Appalachia. 

The impact on transfer payments under all scenarios is most dramatic in the case 

of Central Appalachia. In Central Appalachia, the total increase in per capita payments 

under the six transfer programs is expected to reach $110 in the baseline scenario, with 

program payments rising by between 5% and 15% in the TANF, SSI, food stamp, and 

unemployment insurance programs. A similar level of payments increase is expected 

under each alternative macroeconomic scenario. Under the most restrictive Kyoto 

greenhouse gas emission scenarios, total per capita transfer payments are forecast to 

rise by around $280 per year in Central Appalachia. Forecast payment increases are less 

than half as large in Northern and Southern Appalachia. 

It should remembered that under all of these forecast scenarios, the reductions in 

employment, earnings, tax revenues, and population that are discussed, along with the 

increases in transfer payments, are forecast changes due to the coal mine industry alone, 

with other factors held equal. In particular, no special workforce or community 

economic adjustment programs are examined to determine how they might alter the 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 157 

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estimated employment, income or transfer payment impacts. Many other factors could 

occur, such as growth in other industries in these regions or increases in the earnings 

potential of regional workers, which could have a substantial impact on the fortunes of 

these regions a decade from now. Indeed, these other factors may have a much larger 

economic impact on these counties than potential changes in the coal mining industry 

alone. 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 158 Center for Business and Economic Research 

Appendices Appendix A: 118 Major Coal-Producing Counties in the ARC Region 

Alabama Kentucky Maryland Ohio Pennsylvania Tennessee Virginia 

Bibb Bell Allegany Belmont Allegheny Anderson Buchanan 

Blount Breathitt Garrett Carroll Armstrong Campbell Dickenson 

Cullman Clay Columbiana Beaver Claiborne Lee 

Fayette Floyd Coshocton Blair Fentress Russell 

Jackson Harlan Gallia Butler Marion Tazewell 

Jefferson Johnson Guernsey Cambria Morgan Wise & Nort

Marion Knott Harrison Carbon Scott Shelby Knox Holmes Centre Sequatchie 

Tuscaloosa Lawrence Jackson Clarion 

Walker Leslie Jefferson Clearfield 

Winston Letcher Meigs Columbia 

 Magoffin Monroe Elk  Martin Morgan Fayette  Owsley Muskingm Greene  Perry Noble Indiana  Pike Perry Jefferson  Whitley Tuscarawas Lackawanna  Vinton Lawrence  Luzerne  Lycoming  Mercer  Northumberland  Schuylkill  Somerset  Sullivan  Venango  Washington  Westmoreland 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 159 

Center for Business and Economic Research 

Appendix B: Mathematical Derivation of IMPLAN Multipliers 

 Multipliers used in this analysis are developed using the Micro IMPLAN model. 

These multipliers serve the purpose of breaking down the stimuli of economic activity 

into three components: direct effects, indirect effects, and induced effects. These effects 

are defined as follows23: 

• Direct effects are defined as the economic activity changes that occur in the 

industry to whom a final demand change was made. 

• Indirect effects are the changes that occur as a result of the inter-industry 

purchases as the directly affected industry responds to the direct change. 

• Induced effects reflect the changes in household spending due to changes in 

income or population as a result of the changes in production. 

These multipliers were generated in the economic activity categories of income, 

employment, and value-added. The process of developing the multipliers begins with a 

matrix of input-output transactions of industries. Columns of this matrix represent 

purchases by that industry to produce its goods and services. Rows of the matrix 

represent demanders of the column industry’s goods. With the Type II multiplier, the 

household income row and household expenditures column are treated as an industry. 

Thus they are included in the Leontief inversion explained below. A coefficient matrix 

is derived by dividing each industry column element by the column total. This is 

referred to as the A matrix of coefficients. The matrix of coefficients can be rewritten as 

a series of linear equations as is shown in the following example: 

X1 = 0.272*X1 + 0.312*X2 + 0.124*X3*Y1 

X2 = 0.123*X1 + 0.324*X2 + 0.313*X3*Y2 

X3 = 0.211*X1 + 0.111*X2 + 0.123*X3*Y3 

Or, in matrix notation: 

 

The above can also be written in matrix notation as: 

 

23 From IMPLAN user’s guide, analysis guide, and data guide. 

3

2

1

3

2

1

2

1

0.211 0.111 0.123

0.123 0.324 0.313

0.272 0.312 0.124

Y

Y

Y

X

X

X

X

X

X

= ∗ +

X = X * A + Y
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 160 

Center for Business and Economic Research 

This notation implies that output, designated as Xi, is equal to transactions (A*Xi) plus 

final demand (Yi). Subtracting transactions from both sides of the above equation 

yields: 

Using the property of the identity matrix, we can obtain: 

Now, after solving for X by multiplying both sides of the above equation by the inverse 

of the (I-A) matrix, we have: 

What results is the predictive multiplier model. The verbal interpretation of the above 

equation is that the change in total industry output, X, is equal to (I-A)-1 times the 

change in final demand. So, the inverse of the (I-A) matrix is the matrix of multipliers. 

X − X * A = Y

X * (I − A) = Y

X (I A) *Y −1 = −
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 161 

Center for Business and Economic Research 

Appendix C: Data Sources 

Energy Information Administration, Coal Industry Annual, 

www.eia.doe.gov/cneaf/coal/page/database.html 

Energy Information Administration, Coal Program, 1997, Annual Report

U.S. Census Bureau, Bureau of Economic Analysis, Gross Product by Industry for the 

United States and States, and the Regional Economic Information System 1969 to 1997 (REIS). 

1996, 1997, and 1998 Income Tax Paid, www.bea.doc.gov/bea/regional/spi/pi.htm 

U.S. Census Bureau, www.census.gov/govs/www/state.html. 

Unpublished Data, Energy Information Agency 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 162 

Center for Business and Economic Research 

Appendix D: References 

Black, Dan, Kermit Daniel, and Seth Sanders, 1996. “How Much Does Local Economic 

Growth Help the Poor?” Working Paper (January). 

Black, Dan, Terra McKinnish, and Seth Sanders, 1999. “How the Availability of HighWage Jobs for Low-Skilled Men Affects AFDC Expenditures: Evidence from Shocks to 

the Coal and Steel Industries.” Working Paper (June). 

Energy Information Agency, United States Department of Energy, 1999. 1999 Annual 

Energy Outlook. Washington, D.C.: United States Government Printing Office (or 

www.eia.doe.gov) 

Energy Information Administration, United States Department of Energy, 1998. Impacts 

of the Kyoto Protocol on U.S. Energy Markets and Economic Activity. D.C.: United States 

Government Printing Office (or www.eia.doe.gov). 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 163 Center for Business and Economic Research 

Appendix E: Baseline and Multiplier Data by County 

COUNTY Indirect 

Output 

Multiplier 

Coal Mining 

Earnings 1997 

(Millions of $) 

Total Earnings 

All Industries 

1997 

(Millions of $) 

Total Coal 

Mining 

Employment 

Total County 

Employment 

Earnings per 

Job, Coal 

Mining 

Subsurface 

Production 

In Tons, 1997 

Surface 

Production 

In Tons, 

1997 

Pr

In 

Bibb, AL 0.000000 344 121644 49 5285 82595 0 21199 2Blount, AL 0.160408 1535 309483 49 11260 82595 0 5765 Cullman, AL 0.097319 94 838399 38 28722 82595 0 74266 7

Fayette, AL 0.217151 9296 175890 375 7682 82595 1992408 0 19

Jackson, AL 0.117716 1197 572308 53 18510 82595 0 44716 4Jefferson, AL 0.257315 135971 14991912 2052 416260 82595 9068777 1300783 10

Marion, AL 0.225860 2274 374093 43 14102 82595 0 129653 1

Shelby, AL 0.249306 6164 1574264 87 55611 82595 853292 0 8Tuscaloosa, AL 0.330238 136846 2444828 1750 85133 82595 6074704 581669 66

Walker, AL 0.370409 99221 626770 750 21300 82595 515403 3562306 40Winston, AL 0.094868 3944 336519 53 12298 82595 0 243118 2

Bell, KY 0.365478 38663 272745 750 9849 60307 3325120 1638298 49

Breathitt, KY 0.262317 6160 91953 10 3765 60307 0 4311949 43

Clay, KY 0.248489 3066 135463 10 5552 60307 0 330451 3Floyd, KY 0.360768 41349 372950 1553 12765 60307 2897926 3460561 63

Harlan, KY 0.368982 71677 266699 1086 8262 60307 9026494 1577883 10Johnson, KY 0.340763 8481 191828 162 6566 60307 1327652 307587 16

Knott, KY 0.316787 63901 132241 976 3343 60307 5119285 7004536 12

Knox, KY 0.033762 6877 204670 175 7861 60307 444268 115604 5

Lawrence, KY 0.196157 964 85142 10 3295 60307 60326 174262 2Leslie, KY 0.286295 12860 131376 255 2247 60307 7354300 2580274 99

Letcher, KY 0.333496 44646 176528 998 6238 60307 6061261 2971004 90Magoffin, KY 0.026253 10238 68928 175 3092 60307 0 1330763 13Martin, KY 0.304672 48501 109214 750 3109 60307 7093081 5436740 12Owsley, KY 0.116985 688 17395 12 1015 60307 0 113279 1

Perry, KY 0.388361 56063 360864 1750 11640 60307 4841069 6638687 11

Pike, KY 0.370909 244039 817771 4241 23569 60307 22129237 12823451 34Whitley, KY 0.296630 6224 328555 152 14430 60307 247641 173950 4

Allegany, MD 0.253142 4882 928478 175 31161 N/A 0 561223 5Garrett, MD 0.297661 21501 315783 375 10832 N/A 3300861 297594 35

Belmont, OH 0.271386 39749 589798 622 23638 71854 5101746 1634796 67Carroll, OH 0.100147 470 190423 10 7064 71854 0 58322 5

Columbiana, OH 0.165839 8592 1036431 133 35995 71854 336566 442585 7
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 164 Center for Business and Economic Research 

COUNTY Indirect 

Output 

Multiplier 

Coal Mining 

Earnings 1997 

(Millions of $) 

Total Earnings 

All Industries 

1997 

(Millions of $) 

Total Coal 

Mining 

Employment 

Total County 

Employment 

Earnings per 

Job, Coal 

Mining 

Subsurface 

Production 

In Tons, 1997 

Surface 

Production 

In Tons, 

1997 

Pr

In 

Coshocton, OH 0.223226 7784 435978 240 18654 71854 0 368363 3Gallia, OH 0.099470 97 344736 60 12078 71854 0 333421 3

Guernsey, OH 0.138719 9188 417498 347 16503 71854 0 480672 4

Harrison, OH 0.276512 14573 101975 175 4465 71854 1385512 704207 20

Holmes, OH 0.120365 2059 460963 60 14986 71854 0 121907 1

Jackson, OH 0.249945 16834 317511 146 12328 71854 0 1147401 11

Jefferson, OH 0.222801 3743 703510 63 24071 71854 477480 429286 9

Meigs, OH 0.292440 53932 171445 750 5421 71854 6404517 0 64

Monroe, OH 0.234861 20394 198236 375 5699 71854 3243474 0 32Morgan, OH N/A 11183 133727 203 3710 71854 0 0 15Muskingum, OH 0.180242 4356 1066421 60 38702 71854 0 701407 7

Noble, OH 0.179742 2337 94547 60 3973 71854 0 869978 8Perry, OH 0.187071 2958 204714 49 7158 71854 0 1234156 12Tuscarawas, OH 0.230656 18419 1078122 434 38453 71854 0 1316504 13

Vinton, OH 0.275758 10149 66427 175 2817 71854 0 1809362 18Allegheny, PA 0.183288 128658 29446380 175 752310 99072 330 41057 4Armstrong, PA 0.282739 49141 669096 762 21256 99072 4391584 1557903 59Beaver, PA 0.156137 3853 2057147 79 58234 99072 0 88661 8

Blair, PA 0.147570 759 1853043 10 57994 99072 0 35796 3Butler, PA 0.225061 12827 2245150 60 67807 99072 0 111577 1

Cambria, PA 0.262487 64364 1832020 361 60400 99072 105923 1322972 14Carbon, PA 0.126434 1692 464348 53 16801 99072 0 0 3

Centre, PA 0.119504 1192 2196554 159 75151 99072 0 387960 3Clarion, PA 0.264750 20909 501537 158 16257 99072 0 683180 6

Clearfield, PA 0.337290 38197 982068 750 32683 99072 163374 4438218 46Columbia, PA 0.100809 512 794225 123 28253 99072 174513 748807 9

Elk, PA 0.131244 1770 581150 86 17347 99072 0 642795 6Fayette, PA 0.219710 13724 1157213 299 39830 99072 0 388437 3

Greene, PA 0.279462 183358 464288 2183 11961 99072 35324489 37580 35Indiana, PA 0.310788 159666 1111502 1105 32078 99072 3940553 879413 48Jefferson, PA 0.274739 33328 526697 237 16082 99072 613650 929015 15Lackawanna, PA 0.134524 1540 3109264 4 103146 99072 0 82951 8

Lawrence, PA 0.186184 3775 1082132 60 33857 99072 0 16648 1Luzerne, PA 0.202409 14736 4617495 154 142846 99072 0 896633 8

Lycoming, PA 0.163746 1511 1639209 60 54723 99072 0 406519 4

Mercer, PA 0.144334 530 1511430 4 51374 99072 0 3972 
A Study on the Current Economic Impacts 

of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 165 Center for Business and Economic Research 

COUNTY Indirect 

Output 

Multiplier 

Coal Mining 

Earnings 1997 

(Millions of $) 

Total Earnings 

All Industries 

1997 

(Millions of $) 

Total Coal 

Mining 

Employment 

Total County 

Employment 

Earnings per 

Job, Coal 

Mining 

Subsurface 

Production 

In Tons, 1997 

Surface 

Production 

In Tons, 

1997 

Pr

In 

Northumberland, PA 0.170379 

8603 968055 52 29935 99072 35767 281858 3

Schuylkill, PA 0.286212 62129 1616800 1024 51951 99072 208702 2221723 24

Somerset, PA 0.305836 94145 868573 781 26910 99072 2097040 3508069 56Sullivan, PA 0.098035 225 53144 2 1951 99072 0 16760 1

Venango, PA 0.164736 2981 697586 9 21306 99072 0 67689 6Washington, PA 0.304702 107168 2530798 1566 78668 99072 7772833 690823 84

Westmoreland, PA 0.169719 14359 4589451 96 143713 99072 0 872073 8Anderson, TN 0.162269 5660 1447732 175 41506 115868 173389 260192 4

Campbell, TN 0.272839 13683 277756 60 10644 115868 592873 283102 8

Claiborne, TN 0.115886 3783 225579 100 11293 115868 231407 441026 6

Fentress, TN 0.186252 801 136399 59 5734 115868 0 288016 2Marion, TN 0.171973 3028 184978 28 7119 115868 0 52525 5Morgan, TN 0.117502 1038 119950 53 3938 115868 55744 0 5Scott, TN 0.107869 1866 148597 148 7386 115868 107646 0 1Sequatchie, TN 0.221260 4262 72229 117 2971 115868 235420 578731 8Buchanan, VA 0.351391 137528 328065 2991 9898 54113 13219254 1201231 14

Dickenson, VA 0.288905 24806 104583 360 3117 54113 1845209 1212458 30Lee, VA 0.303049 21590 153560 270 6731 54113 1233966 237380 14Russell, VA 0.329305 28771 253905 686 10112 54113 897367 236044 11Tazewell, VA 0.351906 24899 437473 617 17521 54113 1704625 0 17Wise & Norton, VA 0.373467 122971 553380 2225 13091 54113 8028878 6020272 14Barbour, WV 0.298138 13145 82061 175 4106 66440 1291963 78763 13Boone, WV 0.311253 226185 356705 2904 7713 66440 18712172 11890107 30Braxton, WV 0.089818 2962 102722 45 4209 66440 412769 0 4

Brooke, WV 0.212676 11043 285890 168 8376 66440 1539002 0 15

Clay, WV 0.305958 25139 61812 375 2055 66440 0 6901924 69Fayette, WV 0.305613 35239 379677 1604 14212 66440 861865 2844474 37Gilmer, WV 0.202508 1604 53930 9 1990 66440 15460 0 1

Grant, WV 0.313163 14672 142626 375 5039 66440 1253750 663120 19

Greenbrier, WV 0.258599 6037 360732 80 13519 66440 501160 27018 5

Harrison, WV 0.274947 37375 1016105 707 34396 66440 5143801 148411 52

Kanawha, WV 0.274101 85614 3956987 591 114892 66440 4245978 4650637 88Lincoln, WV 0.191950 1713 81530 8 2840 66440 46818 0 4

Logan, WV 0.329049 112345 432456 1341 12725 66440 5275793 15191113 20

McDowell, WV 0.356964 34695 168181 750 6141 66440 4825795 1846966 66
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of the Appalachian Coal Industry and its Future in the Region 

University of Kentucky 166 Center for Business and Economic Research 

COUNTY Indirect 

Output 

Multiplier 

Coal Mining 

Earnings 1997 

(Millions of $) 

Total Earnings 

All Industries 

1997 

(Millions of $) 

Total Coal 

Mining 

Employment 

Total County 

Employment 

Earnings per 

Job, Coal 

Mining 

Subsurface 

Production 

In Tons, 1997 

Surface 

Production 

In Tons, 

1997 

Pr

In 

Marshall, WV 0.289783 57919 416277 863 9449 66440 10131444 0 10

Mineral, WV 0.226783 1614 176068 9 6740 66440 0 121862 1

Mingo, WV 0.327372 178542 383631 1750 9544 66440 17327072 5097023 22

Monongalia, WV 0.288770 81424 1178636 1213 44677 66440 6365490 1269183 76Nicholas, WV 0.387196 38016 232981 473 8514 66440 2103904 500868 26Preston, WV 0.361968 13742 180549 221 7648 66440 1608206 134528 17Raleigh, WV 0.340815 103019 902465 1238 29977 66440 12812100 1070148 13Randolph, WV 0.292708 6783 297994 175 11200 66440 625654 0 6

Tucker, WV 0.156741 1383 66998 21 3419 66440 0 192696 1Upshur, WV 0.285924 8566 205855 82 8048 66440 1314665 269892 15Wayne, WV 0.296382 26998 299479 464 11008 66440 3715297 678838 43

Webster, WV 0.327176 27208 75454 522 2640 66440 2548071 2775952 53Wyoming, WV 0.315483 74947 194139 1750 5960 66440 9038805 775256 98