Prosperity Strategy Analysis

Krista Hanada, Lauria Gehr,

Hector Quiles, Andrew Kerfoot

Econ 309, April 11, 2003, Prof. Hackett

Strengths:

The few cities that comprise the North Coast developed a report on the goals and needs for achieving prosperity. These communities wanted to elevate their financial status and sustain their way of life. The Industry Cluster model used by the prosperity report is one that is being implemented throughout the United States. Examples of some Industry Clusters would be tourism in South Florida, North Carolina's Research Triangle, the Louisiana Economic Development and California's Central Valley Economic Corp. Ina book by Harvard Professor Michael E. Porter, The Competitive Advantage of Nations

(1990), "industry cluster's overall support faster improvement and innovation of products."

The major strength located in the report was the amount of cooperation among the three hundred plus organizations that helped formulate this report. Finding common goals, beliefs and values was a task they seemed to overcome quite successfully. As Georgiana Wood of the Arcata Economic Development Corp pointed out, "the strategy was developed to fit the natural resources of the area and support existing businesses." The notion of building an infrastructure from nine base industry clusters means keeping jobs local and "promoting local entrepreneurship as the primary economic

development."(Hackett:4/9/03)

The strengthening of social capital was prevalent in this report with the creation of support cluster's to help promote economic vitality for the North Coast. "Social Capital, according to Putnam(1993), refers to the features of social organization including networks, norms, and trust that facilitate coordination and cooperation for mutual benefit." Their economic strategy clearly follows these guidelines set forth by social capital and have the potential to achieve a higher level of it.

The Lumber and Wood products cluster surprisingly saw a need for restoration

work and alternative forest products. This will create many new jobs for unemployed loggers and environmentalists who wish to stay in the area. The Dairy cluster has a desire to expand and is an important injection of capital for Humboldt County. According to Professor Hackett, "the dairy industry exports roughly 80% of their cream and milk products to outside sources." Keeping the injection of income high and minimizing leakages will ensure the North Coast continues to prosper.

Weaknesses:

While the Prosperity Strategy makes several strong assessments of Humboldt County’s economic potential and predominate industries, there are several insights the strategy lacks. One of the most notable weaknesses of the strategy is its lack of a clear, detailed plan for implementation. No infrastructure is defined, and resources are not accounted for or visibly allocated. Indeed, the some of the largest economic influences in the County are not addressed.

A clear weakness of the Prosperity Strategy is its avoidance of addressing the issue of marijuana in regards to its effect on the local economy. Georgianna Wood cited in her presentation the reason for its exclusion being that marijuana can not be included due to the difficulty in obtaining accurate figures. Since the authors of the strategy declined a rough estimation of these numbers, the issue was not addressed.

The role of Humboldt State University on the local economy was also not given adequate representation. A local economic depression is a possibility should the University ever close, and as tuition steadily rises enrollment drops, leaving the remaining students with less money to return to the community.

One of the main focuses of the strategy is identifying industry clusters. While such a method might be useful to am economist, it is unrealistic. The strategy admits a focus on the importance of small businesses; to survive small businesses must either find a niche in the market or compete with similar businesses. To suggest that individual companies in a given industry collaborate sounds uncomfortably similar to the creation of a cartel, and would undoubtedly diminish the social capital of producers and consumers.

Opportunities:

It is essential to know that the economic opportunities here in Humboldt County are limitless. Through sustainable timber harvesting and fisheries, the county could revive a lack luster economy. However, the possibilities of diverse new economic possibilities lay on the horizon. The community forest has brought about new change since the beginning of 1979, or earlier. With the offer to allow Arcata to purchase land from Pacific Lumber at the Jacoby watershed, Humboldt County is looking at a revised community safe fresh water habitat, as well as continued safe timber harvest plans.

Humboldt County serves as one of the last sustainable temperate forest in North America, making it a prime model for sustainable forestry through out the world, thus bringing out large quantities of people, for both research and personal achievement. Humboldt is fortunate, for its large population is looking for new answers to old problems. Humboldt County could prosper from its innovative work in the environmental and pursuits of new technologies. Countries from around the globe are looking towards Humboldt County for answers to sustainable resources and economies. It is unfortunate that at this time we have not been a "super power" in conveying our message of sustainability. Humboldt County provides a mutually acceptable example for many countries that sustainability can be achieved.

The forests here in Humboldt County contribute more than most forests in the world (Don Lenard; Humboldt County Tourism.) The Redwoods which sustain our economy through timber also are our key link between suburban life and tourism. Many people across the globe look towards the Redwoods as a safe haven and place of prosperity.

Threats:

The Humboldt County Economic Prosperity Report is a detailed overview of the

future of our county’s economy. Nevertheless there are several threats to the economic prosperity of Humboldt County that are not looked at in this report. Humboldt County’s dependence on marijuana production is a major threat to the economy. The tourism industry has several threats facing it. Also, the emphasis that the report places on sustainable economy rather than sustainable forestry is a potential threat.

When asked to comment on the underground marijuana economy of Humboldt County, Dr. Hackett of HSU stated, “Humboldt County likely generates 200-500 million dollars through marijuana production every year. What would happen if marijuana were legalized?” The economic ramifications of marijuana legalization would indeed be devastating to Humboldt County. Pro-legalization laws such as Proposition 215 (Medical Marijuana) in California demonstrate that this issue needs to be addressed in the Prosperity Report.

According to Don Lenard of the Humboldt County Tourism Bureau, tourism brings in about $237,000,000 to the Humboldt economy every year. When asked about

possible threats to the tourism economy Lenard stated, “The biggest threat facing tourism in Humboldt County is transportation, particularly the highway 101 slide at Confusion Hill. The vast majority of tourists drive here and having 101 closed makes this difficult.” An interview with Dr. Hackett revealed some other threats. These included sudden oak disease (altering the natural beauty of the area), water diversions (altering our local rivers and harming rafting and sport fishing opportunities), and terrorism which could make people less likely to travel.

Forestry has historically been the largest industry in Humboldt County. Georgiana Wood from the Arcata Economic Development Corporation commented on

the Prosperity report stating, “The lumber cluster emphasis is not sustainable forestry, instead it is on a sustainable economy.” This is a problem because without sustainable forestry practices, sustainable economic prosperity is impossible for those in the timber industry. Dr. Hackett stated, “Non-timber forest products such as edible mushrooms and ornamental plants are going to become more important in the future.” Without sustainable forestry practices these economies will also not be sustainable.