NE1749: Enhancing Rural Economic Opportunities, Community Resilience, and Entrepreneurship

(Multistate Research Project)

Status: Active

NE1749: Enhancing Rural Economic Opportunities, Community Resilience, and Entrepreneurship

Duration: 10/01/2017 to 09/30/2022

Administrative Advisor(s):


NIFA Reps:


Statement of Issues and Justification

Statement of Issues and Justification


The NE1049 group (Community Health and Resilience) formally requests consideration for a revision/replacement as its five-year term ends. The group is in its fourth incarnation (NE1029, NE1011, and NE162), and was originally organized prior to the establishment of the new NIFA focus areas.  This project will extend the group’s efforts by extending and expanding previous areas of research, while also exploring new issues facing rural areas. 


 


Overview.  Rural communities face a wide range of economic growth and development issues ranging from changing economic structure to public service provision.  A recent Congressional Briefing on the changing demographics of rural America, “Changing Demographics Reshape Rural America” (Population Reference Bureau, 2017) noted that around 2010, for the first time rural counties began experiencing an overall population loss, reflecting out-migration of young adults, decreasing births, and older adults aging in place. Populations with large shares of old, poor, or minorities have different needs for medical care, legal assistance, and social services, yet rural areas characterized by chronic out-migration are unlikely to attract highly educated professionals to provide those services as these areas lack urban amenities, good schools, and high-quality health care. A related area is retirement/wealth distribution issues, as we are facing the retirement of the first generation to fully embrace individual retirement accounts, which could lead to an intergenerational shift in wealth which didn’t occur with pension-based systems.  Rural areas are also more diverse now than they were 20 years ago, as jobs in construction, manufacturing, agriculture, and food processing brought an influx of immigrants.


 


Additionally, U.S. military veterans are disproportionately represented in rural areas.  Since 36 percent of veterans who use the Veteran’s Administration (VA) for health care live in rural areas, distances to VA facilities pose challenges. These veterans could be an important resource for rural communities, bringing educational skills and leadership experiences. Finally, considering health, urban mortality rates have been dropping faster than rural rates since 1985.  “Deaths of despair” due to suicide, alcohol abuse, and drug overdoses are most prevalent in rural parts of the nation. “Accumulated disadvantage” related to low education levels, unemployment, poor mental and physical health, and isolation puts rural residents at higher risk of premature death (Population Reference Bureau, 2017).


USDA’s Research, Education, and Economics (REE) Action Plan (February, 2012) presents a vision to address these rural problems using “Impact-driven agricultural science” to expand economic opportunity through innovation, promote sustainability and conservation, enhance environmental quality, and improve quality of life for farmers, farm workers, and society.  Of the seven goals identified in the REE plan, four are relevant to the new NE1079 proposal:



  1. Rural-Urban Interdependence and Prosperity. While many rural communities have taken advantage of new economic opportunities, others have experienced persistent outmigration, poverty, and/or stagnant labor markets. How rural areas position themselves through diversification and enhanced entrepreneurship to better compete in a global environment where skills, knowledge, and innovation are key drivers of economic growth will be key to enhanced resiliency.  Rural communities need to take advantage of market opportunities (e.g. local/regional/organic food systems) and technologies (e.g. broadband, green technologies, and renewable energies).  There is also a need to establish determinants of rural prosperity and develop indicators to measure regional assets and performance.

  2. Sustainable Use of Natural Resources. Technologies and management prescriptions need to be developed to produce needed products while conserving natural resources, and provide reliable water sources for energy, ecosystem services, and water-rights claims of Native Americans.  

  3. Education and Science Literacy. Decreases in the rural workforce will exacerbate labor costs in rural areas; economic conditions in rural areas already make it difficult to attract and retain workers, particularly young people who leave rural areas for better social and career options.

  4. Responding to Climate and Energy Needs. Agricultural and forestry producers, land managers, and other decision makers need tools to help with greenhouse gas mitigation and adaptation.    


It is notable that there is substantial overlap between these goals and the recent Presidential Executive Order on Promoting Agriculture and Rural Prosperity in America (The White House, 2017) which establishes an Interagency Task Force on Agriculture and Rural Prosperity.  Some of the functions of this task force include identifying legislative, regulatory, and policy changes to promote rural America agriculture, economic development, job growth, infrastructure improvements, technological innovation, energy security, and quality of life, specifically promoting long-term, sustainable rural development, expanding educational opportunities for students in rural communities (especially in agricultural fields), ensuring access to a reliable workforce, and issues regarding property rights, public lands, and advancing traditional and renewable energy production.


Recent and ongoing projects in these areas by members of NE1049 include local foods and sustainable small scale agriculture, water and environmental issues pertaining to rural communities, rural amenities and economic growth and development, rural tourism, agricultural tourism and recreation, rural access to information technology, links between broadband provision and employment, impacts of state tax and expenditure limitations on state and local governments, economic impacts of renewable energy industries on the local economy, and new measures to implement the community capitals framework.  In its 2017 annual meeting, the group identified three primary research areas which link to the priorities set out by REE and the Interagency Task Force on Agricultural and Rural Prosperity around which it wishes to engage in the coming years:  Rural Entrepreneurship and Community Well-being; Community Resilience; and Energy and Land Use policies in rural areas.  In developing a vision for the next iteration of the research project, we note that many rural areas continue the economic shift from extractive industries to retirement or tourism based economies, while some regions are moving toward energy development (e.g. fracking).  Changes in labor availability in rural areas, due partly to population decline, may cause substantial shifts in economic opportunity.  If labor becomes more expensive, more automation may result.  Land use issues also may play a major role in development and change in rural areas, with proposed changes in federal policies, federal land and water management, and land ownership which could affect income and employment.  Development of renewable energy sources like wind and solar also have the potential to cause changes in land use and economic structure in rural areas.  More “traditional” energy sources also affect local conditions, with the siting of pipelines and powerlines creating both opportunities and controversy.  These issues and the research they will motivate fit well under the goals outlined by REE’s Action Plan, as described in the objectives listed in a later section.

Related, Current and Previous Work

Related, Current, and Previous Work


 


The team of researchers associated with the proposed project and its predecessors NE1049, NE1029, NE1011, and NE162 has a history studying the wide variety of issues surrounding entrepreneurship and resiliency.  We will discuss past and current work by NE1049 members and others related to the key rural community issues we have identified.  The lingering effects of the Great Recession, coupled with a financial crisis, left many rural communities lagging their urban counterparts.  From 2006 to 2015 metropolitan employment grew by 9.1% for U.S. overall but only 1.1% for nonmetropolitan regions.  Over this period metro wage & salary employment grew by 4.9% but declined by -1.7% in nonmetro counties.  Much of the work done by project members focused on this disparity in growth, development, and recovery from the recession.  We have also, as part of these efforts, worked on the theoretical bases for regional economic development, which are not as well defined as the foundation for other areas of economics.


 


Through studying the overall community economic development process the importance of wealth creation, broadly defined, has gained wide acceptance as an important element in understanding economic growth and development (Pender, Marré and Reeder 2011). The wealth of the community is composed of both the tangible and intangible assets at the disposal of the community. The Floras (Flora and Flora 1993, 2008) talk of these assets in terms of seven community capitals including built, financial, political, social, human, cultural and natural capitals (Flora and Gillespie 2009). Built capital includes machinery, equipment and buildings along with public infrastructure such as roads and water treatment systems. Financial capital is access to credit, loans and debt that is necessary to finance private and public investments. Political capital refers to the ability of the community to influence laws and regulations that determine what is or is not legal as well as access to resources from higher levels of government. Social capital includes density of acquaintance, collective identity, trust, and reciprocity. Human capital includes education, skills, experiences of individuals, and ability of people to use those resources. Cultural capital speaks to the way people think of the world and how they fit into and contribute to that world and, as well as their traditions and language. Each of these capitals represents an important piece of the community economic development puzzle. 


 


Extensive research by Levine and Renelt (1992), Pack (1994), Sala-i-Martin (1997), Schultz (1999), Durlauf and Quah (1999), Durlauf (2000), Brock and Durlauf (2001), Brock, Durlauf and West (2007), Deller and Lledo (2007) and Deller, Lledo and Marcouiller (2008) argues that theory identifies multiple ways to measure development factors. Within the rural wealth creation or community capitals framework, theory suggests that each form of wealth or capital is important. The challenge is to identify which capitals are the most important within different contextual settings. The second element here centers on measurement. Consider one of the community capitals, social capital, which is considered by many (e.g., Shaffer, Deller and Marcouiller 2004, 2006; Rupasingha, Goetz, and Freshwater 2006; Kangayi, Olfert and Partridge 2009) to be fundamental to resilient and viable communities. Social capital describes the quality of connections between individuals and how well they are leveraged to achieve success within the region creating a whole that is greater than the sum of the parts.


 


Fannin, Barreca and Detre (2012) used the community capitals framework to explore how natural disasters associated with hurricanes have affected the fiscal health of local governments in Gulf Coast states and Chen and Weber (2012) explore how community capitals have helped rural communities in the Pacific Northwest adapt to changes in Federal forestry policies. Their results suggest that community assets or capital matter in how communities can respond and adjust to both natural and human-made disasters. But this line of work points to four research issues that need to be addressed: (1) while we can conceptualize the notions of community assets or capital, can we quantify them for rigorous analysis? (2) how do these quantified notions of community assets or capitals affect the community economic growth and development process with an eye toward community resilience from disasters, whether they be natural or human-made? (3) which type(s) of community capitals influence community economic growth and development processes most? and (4) how can policies be crafted to positively influence the key forms of community capital?


 


Current research also points to the importance of entrepreneurial ecosystems that reflect the social interactions, attitudes, and norms of the larger community in which the entrepreneur operates.  As noted by McKeever, Anderson and Jack (2014) individual entrepreneurs and the processes to start and grow a business are embedded in the social context of their community; studying the individual entrepreneur outside of local context is misdirected. The Floras (1993) speak of “entrepreneurial social infrastructure” where community attitudes and norms help drive the well-being of the community.  Gedajlovic et al. (2013) note that entrepreneurs and entrepreneurship are embedded within these social and cultural norms of their community. 


 


With respect to human capital, access to high quality child care supports both the current workforce and future human capital development, yet not all families have opportunities for their children to participate in and benefit from high quality child development programs. Studies have demonstrated the influence of child care prices and availability on parental employment, particularly for mothers (e.g. Connelly, 1992; Davis and Connelly, 2005; Mammen et al. 2009). Herbst and Barnow (2008) estimate how variation in child care supply across geographic areas within a state influences female participation in the workforce; it is well known that there is wide spatial variation in the availability and price of child care (Davis and Li, 2009; Gordon and Chase-Landsdale, 2001; Kimmel, 2006). Projections of worker shortages in rural areas have increased interest in research on links between rural labor force availability and lack of child care. Recent concerns about shortages of child care options in rural areas have been widespread (Malik et al. 2016). A Center for American Progress report estimates that 54% of the rural ZIP code areas examined in eight states meet their definition of a “child care desert” based on an insufficient number of child care centers for young children residing in the area. Ohio and Minnesota had the highest rates of rural child care deserts (Malik et al. 2016). Yet few studies have closely examined links between local labor markets and child care availability. Only recently has the focus of research shifted from family decision-making to the influence of federal, state and local policy on local child care markets and providers (e.g., Kimmel 2006). One recent study notes the connection between shortages of health care workers in rural communities and availability of child care (Henning-Smith and Kozhimannil, 2016). There are growing calls for early childhood development programs to be considered and supported as part of economic development policies (Rolnick and Grunewald 2003). One objective of this project is to determine how workforce policies (related to child care, education, and training) and economic development policies (increasing job opportunities) can improve labor market outcomes for rural families and communities.


 


Regarding physical capital (infrastructure) issues, North Carolina researchers analyzed the link between broadband provision and employment using county-level data over the period 2008-2012 from the 48 contiguous states. Their results indicate no significant relationship between 2010-2012 employment growth and broadband growth in the preceding biennial period, and were unable to detect meaningful predictive causality running from increasing broadband penetration to employment growth (or vice versa) (Dinterman and Renkow, 2017; Kandilov et al. 2017).  Another recent study highlights the connection between broadband and other types of infrastructure to the possibility of job loss due to automation, especially in rural areas (Devaraj et al. 2017).  In related work on rural entrepreneurship, Wisconsin research highlighted the role of women entrepreneurs and women farmers, the latter of which overlaps significantly with local foods (Deller, Conroy, and Watson, forthcoming).  Research on the impact of state restrictions, often referred to as tax and expenditure limitations, on state and local governments found that these types of restrictions seldom have the anticipated outcome and indeed results in several negative unintended consequences such as underinvestment in infrastructure, reduced credit rates, higher interest costs on debt, higher levels of debt and overall weaker fiscal health (Deller, Stallmann, and Amiel, 2012).  Researchers in North Dakota assessed the economic impact of renewable energy industries on the local economy (Coon et al. 2015).


 


In one specific body of research on the effect of small entrepreneurs on local economies, NE1049 researchers analyzed local/regional food systems as a component of the entrepreneurial economy from different perspectives.  Researchers in Colorado and Oklahoma evaluated the role of small and mid-size farms and their impacts in local and regional food systems, as well as the rural economic impacts of local food systems. Researchers in Colorado also developed a toolkit to assess the Outreach, Training and Proof of Concept of USDA AMS Economic Impact Assessment through Cooperative Agreement with USDA-AMS. Additionally, Colorado researchers are collaborating with researchers from University of California at Davis and University of Northern Colorado to develop an integrated approach to agritourism development in the western US.  Researchers in New Hampshire continue their efforts on a NIFA-funded project to assess the potential for local food production and the constraints faced by suppliers of produce grown in Maine, New Hampshire and Vermont. Their surveys use contingent choice modeling on food characteristics to identify “status quo bias” and spatial dimensions associated with local food systems, drawing heavily on previous survey and econometric work done at Colorado State University and the University of Wisconsin, among others.  Researchers in Idaho investigated the local food system by examining the role of intermediaries in the food system. They are currently surveying restaurants and stores to determine the role of intermediaries in local food systems, which will inform nascent work in New Hampshire on the same topic.  In related policy work, researchers in Wisconsin conclude that evidence that local foods enhance rural economic growth is limited (though this is not to say that there are no unique business opportunities for entrepreneurs).  West Virginia researchers have also examined the more general topic of how and why some rural regions prosper while others stagnate or lag behind (e.g. Stephens and Partridge, 2011; Stephens, Partridge, and Faggian, 2013).


 


On the general topic of resilience, the effects of fiscal policy and government institutions was researched by NE1049 members in Wisconsin, Missouri, Nevada, Oregon, and Oklahoma (e.g. Dabson et al. 2013; Stallmann et al. 2013).   Wisconsin researchers investigated impacts of tax and expenditure limits on government resiliency by cataloging the unintended consequences associated with these fiscal policies. Oregon researchers examined spatial evolution of municipal government structures and how this might affect community resilience to natural disasters. Oklahoma researchers examined the effects broadband can have on marginalized populations. Colorado researchers are developing new measures to implement the Community Capitals framework.  North Dakota researchers examined the effects of casino development on county level economic and job growth. These efforts are especially important as they all contribute to our search for an elusive unifying paradigm of rural economic development.  Research in Michigan also examined how Google searches can predict suicide rates as a potential indicator of mental health, while Ohio researchers examined the effects of opioid addiction on economic development potential across counties, tying in with the “deaths of despair” problem noted earlier in this proposal.


 


Spatial analysis techniques have been and will continue to be a specialty of many NE1049 contributors.  Past work on spatial economic issues by NE1049 researchers includes areas as diverse as regional labor markets (Davis and Weber 2003; Goetz, Han, Findeis, and Brasier 2010; Renkow 2003, 2007), rural industrial restructuring (Olfert and Partridge 2010; Barkley and Henry 2005), rural impacts of investment in broadband technologies (Stenberg, et al 2009), rural governance (Skidmore and Scorsone 2009; Skidmore et al. 2009), rural poverty (Partridge and Rickman 2008; Deller 2010), and fiscal impact analysis (Johnson, Otto, and Deller 2006). Researchers in NE1049 have been at the forefront of economic and impact modeling (Johnson, Otto, and Deller 2006; Swenson and Otto 2000; Partridge, Rickman, and Li 2009; Irwin, Isserman, Kilkenny, and Partridge 2010; Monchuk, Brewin, and Partridge 2009; Goetz et al. 2010; Hansen and Kalambokidis 2010).  These skills are applicable to most of the empirical research undertaken in addressing sectoral and locational issues affecting community resiliency. 


 


Regarding the general issues of the previous work by NE1049 researchers, one of the major strengths of NE1049 and its predecessors has been the extent to which researchers have collaborated across state boundaries and shared theoretical, survey design, and quantitative expertise.  A review of publications of project members over recent years show that a majority are co-authored by individuals from different states, often multiple states.  An excellent example is the edited book by Pender (IFPRI), Weber (Oregon State University), Johnson (University of Missouri), and Fannin (Louisiana State University) Rural Wealth Creation, which has drawn universal accolades, and Johnson, Otto (Iowa State University), and Deller’s (University of Wisconsin) widely read 2006 book on community policy analysis modeling.  Some of the areas of research where either direct or indirect (i.e. building directly on previous project work) collaboration has occurred includes taxation and fiscal impact analysis (e.g. Amiel, Deller, and Stallman, 2012; Sands and Skidmore, 2014; Kalambokidis, Laura. 2014; Maher et al. 2016; Stallman et al. 2012), child health and welfare (e.g. Skidmore, Anderson, and  Eiswerth, 2014; Krafft, Davis, and Tout, 2017; Davis et al. 2014), natural disasters (e.g. Skidmore and Toya, 2014; Atreya, Ferreira, and Kriesel, 2013), sectoral and economic impact analysis (e.g. Coon et al. 2015; Gabe and Lisac, 2014; Winkler, Deller, and Marcouiller, 2015; Wojan, Brown, and Lambert, 2014;  Janeski and Whitacre, 2014; Winfree, Watson, 2014; Hardesty et al. 2014; Harris, Deller, and Goetz, 2014; Hill et al. 2014; Pyburn et al 2016; Lim, 2016), location theory (e.g. Conroy, Deller, and Tsvetkova, 2016; Fortenbery, Deller, and Amiel, 2013; Fallah, Partridge, and Rickman, 2014), broadband development (e.g. Dinterman and Renkow, 2017; Whitacre, Gallardo, and Strover. 2014; Kandilov et al. 2017), social capital (e.g. Halstead and Deller, 2015; Deller and Deller, 2012), land use and environmental issues related to regional economies (e.g. Atreya, Kriesel, and Mullen, 2016; Irwin, Jeanty, and Partridge, 2014; Lim, 2014), and general rural economic development and resiliency issues (e.g. Deller and Conroy, 2017; Deller and Watson, 2016a; Deller, and Watson, 2016b; Kirk, Allen, and Shideler, 2014; Stephens, Partridge, and Faggian, 2013).  It is of course worth noting that many of these previous research accomplishments feed directly into the goals of the current proposal and the priorities identified by USDA and the White House. 


 


Surveys (e.g., of consumer behavior regarding local food purchase) have been conducted over multiple states with multiple PIs, and new efforts have built on previous efforts.  Two of our quantitative centerpiece methods, input-output modeling and spatial econometrics, are featured in many research efforts with the help of NE1049 “specialists” in these techniques.  Project members have collaborated to construct multi-state research projects funded by USDA/AFRI and other agencies.  Finally, the mix of appointments of NE1049 members between those with heavy research responsibilities and those with mixed extension/outreach appointments leads to a research agenda which better reflects current rural concerns and enhances outreach. 


 


An effective strategy for promoting information sharing and collaboration across individual state projects has been timing the annual NE1049 Business Meeting to coincide with annual regional science association meetings (most often the Southern Regional Science Association, though occasionally the Western Regional Science Association).  NE1049 members generally stay on and actively participate in the meetings, often hold office in these associations, and have a history of sponsoring substantial numbers of graduate students at these meetings. 


 

Objectives

  1. Enhancing rural economic opportunities and entrepreneurship. This is an exceptionally broad, multi-faceted objective which encompasses both the need for advancing the theoretical structure of community economic development and the need for empirical, focused, policy relevant research. Some of the areas which NE1049 researchers have pursued and will expand in the new project are discussed in the comments section.
    Comments: a. The Theory of “Community capitals” (Flora and Flora 1993, 2008). These seven community capitals include built, financial, political, social, human, cultural and natural capitals (Flora and Gillespie 2009). NE1049 researchers have done substantial research on social capital over the past five years (e.g. Goetz and Rupasinga, 2006; Halstead and Deller, 2015). Research in the capitals overlaps with many sub-topics in both this and the second proposal objective, and helps in the pursuit of a broad paradigm for economic development. b. Issues of wealth/income distribution and rural economic development. Country-level studies have largely found that income inequality and economic growth are inversely related (e.g. Person and Tabellini, 1994; Alesina and Rodrik, 1994; Banerjee and Duflo, 2000). Income and wealth distribution is also an issue in rural areas. Bishaw and Posey (2016) noted that rural Americans have lower median household incomes than urban households, but rural areas have lower poverty rates than their urban counterparts. c. Non-agricultural development opportunities. A particular area of research for NE1049 has been the economics of local agriculture. However, many rural communities have tried to expand into tourism and recreation with mixed success; in any case, employment opportunities generated in some of these sectors tend to be relatively low-income. Diversification of local economies (e.g. export base and local agriculture; business attraction and retention) through both expanding the small business sector (Eschker, Gold and Lane, 2017) and fostering retention and expansion of existing businesses (Halstead and Deller, 1997) are key development objectives which clearly affect resiliency in the face of natural and human caused shocks to the system. How entrepreneurs behave socially, exchange information, and procure resources and establish reciprocity, are key areas of research (Markeson and Deller 2015). d. Infrastructure needs, development, and deficiencies. Infrastructure is a broad concept, including both Economic Overhead Capital (which includes roads, bridges, powerlines, etc.) and Social Overhead Capital (health, education, etc.) (Hansen, 1965). Built infrastructure has been researched by team members since the 1980s (e.g. Johnson et al. 1988). Such investments have the potential to affect virtually all the subtopics in both proposed objectives. Specific topics under scrutiny by NE1049 researchers include impacts of broad band internet availability/deficiency on economic development and availability and affordability of child care as a deterrent to availability of affordable labor, and its effects on rural quality of life. e. Chronic and progressive labor availability problems, related to the issues raised in the third REE goal listed above. If labor becomes more expensive, more automation may result (Devaraj et al. 2017). This can cause economic distortion, and affect labor participation rates, economic goal setting, and other key features at the community level f. The impact of entrepreneurship on rural areas. There is evidence from previous research that entrepreneurs can contribute to growth in rural areas (e.g. Sepehns et al. 2013; Rupasingha and Goetz, 2013) and understanding what types of policies can contribute to this growth will be critical to deal with the restructuring of rural areas.
  2. 2. Evaluating Factors and Policies Affecting the Resiliency of Rural Communities. Many of the natural and human induced “shocks” which impact rural communities are external i.e. communities have little or no control over whether the shock occurs. Examples include major storms (Hurricane Harvey, Superstorm Sandy), restructuring of the tax code or health care system, or State and Federal changes in energy, land, and water use policy. However, there are proactive and reactive mechanisms communities can adopt to minimize negative effects and enhance positive effects of these shocks, and to mitigate effects which do happen. The degree to which a community can bounce back from these changes is a measure of resiliency. Proposed and ongoing research areas under this objective are discussed in the comments section.
    Comments: 1. objective are: a. Impacts of federal infrastructure investment plans. Funding mechanisms for proposed infrastructure upgrades and expansion are not yet determined and may be quite different from historical funding efforts and effects on tax bases (Deller, Amiel, Stallmann, and Maher, 2013a; Janeski and Whitacre, 2014). b. Changes in health care availability due to changes in the Affordable Care Act and possible new health care legislation. Many rural counties currently have few or no health care providers, and often suffer from substance abuse issues (Henning-Smith and Kozhimannil, 2016; Skidmore et al. 2014). The disproportionate representation of veterans in rural areas presents both problems and opportunities; veterans may require health care and counseling services difficult to find in rural areas. c. Why are some areas lagging in recovering from the recession (Stephens, H., Partridge, and Faggian, 2013; Stephens and Partridge, 2011)? What did we learn from the recession? What policies aided resilience and recovery (Deller and Watson, 2016)? There is movement away from extractive industries to retirement/tourism based economies in rural areas, a trend partially offset with opposite effects in, for example, fracking areas; how will this effect community resilience in the face of future shocks? What contexts increase the likelihood a rural community will benefit from retirement-, tourism-, or recreation-based economies as they consider moving away from extractive industries (Hill et al. 2014; Lim, 2016)? d. The impact of changes in federal policies affect land and water use in rural areas (Chen and Weber, 2012). For example, transfer of ownership of federal lands from federal to state government has been proposed, which might affect income, employment, and taxation at the local/state level. Other issues include changes in public land policy and forest resource management. e. Understanding the Impacts of changes in the retirement system. For example, the current generation of retirees is the first to experience a shift from traditional pension plans to personal retirement accounts, with implications for intergenerational wealth transfer. f. Understanding the impact of policies regarding climate change and efforts to support alternative forms of energy on rural areas. What impacts does the renewable energy sector have on rural jobs, income, and household and community well-being? Are some locations better equipped with transport infrastructure, land and forest resources, and human and social capital to support the expansion of this emerging sector? What is the effect of clean energy development on rural counties? Increased focus on sources of renewable energy has raised questions of aesthetic damages, issues of regional vs. local energy, and storage capacity for solar generation. How can rural areas participate? g. Understanding the impact of policies geared at reinvigorating or encouraging fossil fuels on rural areas. How do rural residents value this development which brings jobs but also can damage natural resources and affect long-term amenity-led growth? h. Considering the interplay between traditional sources of energy and renewables. How do higher oil prices factor in? How do the interaction between weather and output in solar power link into/with “traditional” energy suppliers? For example, much of the coal fired power of eastern Montana which went to Seattle has been supplanted by other sources. What are the local/regional effects of renewable energy pipelines, powerlines, and other energy infrastructure requirements (Coon et al. 2015; Fortenbery, Deller, and Amiel, 2013)?

Methods

Methods

A primary motivation of this project is to continue and redirect the work performed under Regional Research Project NE1049, reestablishing the multi-state research effort in the context of the USDA REE Action Plan and its vision of using impact-driven agricultural science to expand economic opportunity, and the goals of the Interagency Task Force on Agriculture and Rural Prosperity established by Presidential Executive Order.  NE1749 will continue to build on the many past and current outreach and multi-state activities. While the project has two, arguably broad, objectives, research questions and methods for each overlap and complement the other.

Two important forms of cross-state cooperation are evident in our proposed research. First, a large share of the research will be conducted collaboratively across states. Second, research methods and approaches which have been developed in one state have historically been subsequently employed by researchers in other states. Although many challenges are the same, states also differ. This interstate variation helps to statistically identify relationships between dependent and explanatory variables. Thus, interstate collaboration provides more suitable cross-section time series databases. Multi-state collaboration also lends valuable support to innovation, which is by definition the application of an existing invention to a new purpose. We will build on our knowledge base, better use our resources through the synergies of collaboration, help create more efficient rural policy, and help improve the sustainability and vitality of rural communities. Additionally, rural areas in the United States are not homogeneous and the impact of policies may vary across regions. By conducting analysis in various types of rural regions using similar methods we can improve our understanding of the impact of policies on various types of rural areas which can be used to improve policymaking.  

Researchers within the group have the expertise and are conducting research in each of the proposal's focus areas and are poised to extend this work. For example, members have and continue to work on issues such as sustainability and resilience of communities and local governments in periods of crises (Arkansas, Idaho, Iowa, Michigan, Minnesota, Missouri Ohio, Tennessee, West Virginia, Wisconsin); rural change and migration (Arkansas, Iowa, Ohio, Oregon, Pennsylvania, West Virginia, Wisconsin); and local/regional foods and agri-tourism (Colorado, Tennessee, Texas, Wisconsin, New Hampshire). The researchers in the group will employ a variety of social science methods to address the research objectives, bringing to bear the appropriate methods for different topics, and allowing for triangulation across methods and states for broader interpretation of findings. Surveys, interviews, and focus groups allow for in-depth examination of particular issues; for example, surveys of consumer behavior regarding local food purchase. Quantitative methods include regression analysis, input-output modeling and spatial econometrics. Expansion of use of GIS methods will allow the group to expand analysis of the spatial evolution of municipal government structures, of community capitals, and of workforce supports such as access to child care. The collaboration of researchers with research and Extension appointments will enhance cross-fertilization of ideas on methods and relevance to rural concerns.  Examples of specific methods being used by project members are presented in the following two sub-sections. 

 

Objective 1.  Enhancing Rural Economic Opportunities and EntrepreneurshipSupporting the goals of USDA’s REE Action Plan, the methods employed to meet the research objectives of this project will increase understanding of the changing determinants of rural prosperity and develop indicators to measure specific community and regional assets and outcomes.

 

In our long-run community sustainability focus we take a community capitals or community assets framework approach. There are, however, primarily two methodological challenges with the approach. First, the comprehensiveness of the capitals or community assets can drive the research agenda in several different directions at the same time. Second, many of these capitals are fairly straightforward to describe from a theoretical perspective but extremely difficult to quantify.  On-going research by Penn State, Kentucky, Tennessee, Wisconsin, and other project members use various types of data to build a range of social capital measures. From a methodological perspective, this follows the extensive work that has been undertaken exploring the relationship of natural capital and rural economic growth and development as well as the role of the creative class, one interpretation of human capital, in rural economic growth.

 

Social capital theory, which focuses on networks, norms, and trust (Halstead and Deller, 2015) will provide the basis for much of the work on enhancing entrepreneurial stock in rural communities, with particular emphasis on the network component.  Social capital broadly defines social influences and how, taken together, human interaction can shape economic choices. Networks, however, specifically focus on the social connections between actors. Because networks must first form before repeated interaction leads to behavioral norms and mutual trust, they are the most fundamental component of social capital. Networks also provide a mechanism through which social capital can lead to enhanced entrepreneurial outcomes, namely as information transmission mechanisms (Conroy and Weiler, 2017).  Network channels are important because they provide access to information for entrepreneurs.   The information about resources, market demand, feasible financing, and other factors that entrepreneurs can access and leverage through networks has been shown to help entrepreneurs identify new opportunities, assess risk, develop successful strategies, and ultimately, enhance productivity and profitability (Bauernschuster, Falck and Heblich 2010; Bhagavatula et. al., 2010; Westlund, Larsson, Olsson 2014). Access to broader networks can also increase a firm’s visibility and reputation within the community (Podolny, 2001) as well as help them gain legitimacy (Elfring and Hulsink, 2003, 2007; McKeever, Anderson and Jack 2014).  

On researching the links between child care availability and local labor markets, we need a greater understanding of child care markets, and how they function in rural areas. In Minnesota and other states, the research team will develop measures of child care accessibility based on the spatial distribution (travel time) between families and child care providers. We will examine how policy changes, including funding for child care assistance and early learning scholarships, as well as quality improvement grants to providers, affect the supply of child care over time and across rural areas. Examining areas with low levels of child care accessibility, we will identify strategies that work to increase supply of child care. The access measures developed project can be applied to other states, and examined in the context of state and local policy differences. 

 

Regarding financing issues, which are certainly key when discussing the nation’s massive infrastructure investment shortfall (ASCE, 2016), researchers at Missouri and Wisconsin with a colleague at the University of Nebraska-Omaha have published research results on the impact of tax and expenditure limitations (TEL) on economic growth, state budgets, credit ratings and infrastructure quality.  There is a long history of states placing limits on the taxation powers of local governments.  Proponents argue that government is too large and as a result is inefficient and impedes economic growth.  These are testable hypothesis (e.g. Deller et al. 2013a; Deller et al. 2013b).   Overall TELs seldom have the intended outcome their proponents promise, neither limiting expenditures nor revenues because governments shift to other revenue streams to maintain services. The limited evidence also suggests that TELs do not foster economic growth and development and may, indeed, hinder economic performance. The literature also indicates unintended consequences such as lower credit ratings and less robust infrastructure (e.g. Amiel et al. 2014; Maher et al. 2016). 

In a natural progression of rural entrepreneurship via local agricultural development, researchers at the University of New Hampshire, Maine, and North Carolina A & T are examining the role of intermediate actors in the local food network (e.g. restaurants, grocery stores, food hubs).  This somewhat neglected area will identify and close information gaps between local farmers and intermediate channels. The next major step is to construct and implement a survey of NH restaurants and grocery stores to examine the potential for marketing local produce in these venues. Researchers will construct and pretest this survey using information obtained from face to face surveys previously conducted. Researchers will also seek to include NH Seagrant in this effort, to incorporate fresh local seafood into the study. Previous survey results in New Hampshire and Massachusetts also indicate that consumer demand functions for different types of produce may differ substantially even within relatively small geographic areas (Pyburn et al. 2016; Shi et al. 2016), so a spatial econometrics component will be added to previous modeling efforts.  The multistate research project will allow the findings from this type of research to be applied to other rural areas. 

 

Researchers in West Virginia are starting a project to examine the impact of entrepreneurship, both in total and by industry, on employment and other measures of growth.  They propose to measure entrepreneurship using census data to consider the number of non-employer firms (total and by industry), the number of small businesses (total and by industry, and using various size cutoffs), as well as births (total and by industry) as measures of entrepreneurship. These measures will be used to examine the impact of entrepreneurship on growth using various definitions of communities, including census tracts, townships, or other geographically-defined areas. In addition to looking at changes in employment or changes in the total numbers of firms in the same area, they will use difference in difference (DID) approaches, or changes in the growth of employment or changes in the growth of firms, to difference out many of the unobservable factors thus reducing endogeneity concerns. They will also include measures such as educational attainment of the population that might affect the relative supply of entrepreneurs. Spatial spillovers of economic activity will be addressed using spatial variables or spatial econometric methods. The new multistate research project will allow this type of research to expand to a multitude of rural areas and to address how entrepreneurship can be supported to enhance rural opportunities. 

 

Objective 2. Factors and Policies Affecting the Resiliency of Rural CommunitiesOur objective here is to identify and analyze policies and strategies contributing to the viability and resiliency of communities in responding to economic and policy changes as well as natural and human-made shocks. Our focus is on long-run socio-economic sustainability and ability of communities to respond to changes and to develop economically. The challenges that communities have faced, and will continue to face, have come from natural disasters such as floods, hurricanes, and tornados, as well as human-caused shocks such as major changes in tax and health policy, and regional and national recessions.

 

An often-overlooked area is the impact of recessions on local government budgets, since these governments provide many of the day-to-day goods and services that affect resilience of local businesses and families.  Using a panel of 15 years of data from the budgets of 89 rural counties, researchers at Missouri propose to focus on the effects of recessions on local government budgets.  Using trends in fiscal ratios, they are attempting to identify counties 1) in which fiscal stress is related to long run trends, prior to the recession, and trends beginning with the recession, 2) tax and/or expenditure budget structures that lead to faster and slower budget recovery.   Missouri is also working with Iowa State, Kansas State and Michigan State Universities to identify state policies that have helped and hindered county government recovery from the recession, and to identify innovative responses to fiscal stress.  This project is in progress and will continue as data collected from both on-line surveys and telephone interviews with the executive directors of state associations of counties are analyzed.  

 

Researchers in West Virginia are commencing efforts to identify how energy development affects rural economies, and its prospects for enhancing community resilience.  Using data on the location and timing of shale gas development, they propose to examine the impact of drilling on various definitions of communities, including census tracts, townships, or other geographically-defined areas. To control for the fact that communities with shale development may be quite different from those without, the project team will follow Heckman et al.’s (1997, 1998) recommendations to combine matching techniques with difference-in-difference (DID) methods. The change or difference in the economic outcomes of communities which experience drilling will be estimated, focusing on changes in overall employment growth rates, changes in employment growth in specific industries, and changes in the number of new establishments created or closed both total and by industry.  Spatial spillovers of economic activity across communities and within certain distances of drilling activity will be addressed using spatial econometric methods and/or by interacting key variables with spatial weight matrices. 

 

Climate change and the growing exposure to climate-related extreme events present another major challenge for rural communities not only on agriculture but also on health and poverty.  Synthesizing county-level socio-economic data with climate-related extreme events data from NOAA and applying quasi-experimental design methods, researchers at Oregon propose to modify the community economic resilience measure in Han and Goetz (2015) to better quantify rural community resilience to climate-related extreme events. The researchers will also explore how rural community resilience to climate-related extreme events are associated with ecological/environmental, socio-economic, infrastructural and social-capital related factors. Impact of future climate change on rural community resilience will be simulated. This project is in progress and will help to shed light on how to incorporate climate change in the development planning of rural communities. It will also help to promote the climate-resilient development strategies of the United Nation Development Program because the climate-resilient development is not only about climate-friendly development but also about the communities’ ability to adapt to climate changes and the related extreme events. The latter might be a more pressing concern considering the first-ever period (2010-2015) of rural population decline in America.

 

As noted in Objective 2, health issues are of special concern to rural communities, and may affect their ability to plan for or react to external shocks.  West Virginia researchers propose to study problems of drug abuse in rural areas using health and drug use data through West Virginia University’s School of Public Health and the West Virginia University Health Care System. While drug use (or abuse) has received the most attention, other health issues may also lead to lower economic growth.  Using housing data and business data as proxies for overall economic conditions in an area, and incorporating socio-demographic data and other community-level variables from the U.S. Census and from other state, local, and federal datasets, they will consider the relationship between health outcomes and changes in economic conditions such as changes in employment, number of firms, or housing prices. Causality issues will be addressed using DID methods, instrumental variable methods that explicitly test for reverse causality, and granger casualty tests. This state level effort is the type of project that has provided the basis for multistate-level collaboration to expand the study area via external funding. 

Measurement of Progress and Results

Outputs

  • Policy Relevant Information Dissemination Comments: Measurement of Progress and Results Outputs: 1. Journal articles, extension publications, popular press articles, edited books, and book chapters. These publications will communicate research results and synthesize findings across themes and states. 2. Integrated analyses of cross-cutting issues such as the interrelationships between community capitals or assets and residential choice, labor markets, businesses and economic growth. 3. Timely information for policymakers to use in developing policy to deal with changes occurring in rural communities with an eye toward infrastructure, health, and economic recovery from natural and human-made disasters.

Outcomes or Projected Impacts

  • Relevance of Project Research • Increased knowledge of the forces impacting rural communities in terms of labor markets, industry, governance, and quality of life. • Improved understanding among community leaders and citizens of the dynamics of labor markets and businesses and their impact on rural communities, and the role of entrepreneurship. • More informed discourse on the role and organizational structure of government and the public sectors investment in community capitals for economic resiliency, growth and development. • Better understanding of the causes of local fiscal stress and the implications of tax and expenditure limitations on rural communities. • Stronger synergies between participating rural development scholars via collaborative research and outreach activities. • Economic and workforce development policies that account for recent economic structural and labor market changes and that may reduce rural poverty and improve economic outcomes for rural families. • Better use of public resources. • Better strategies to take advantage of non-agricultural development opportunities. • Better understanding of the role of infrastructure in economic development, and the funding issues that accompany it • Better understanding of the impact of policies that affect rural areas on the range of types of rural communities

Milestones

(1):Organize the technical committee, develop and share specific research methodologies across states, identify data sources, and conduct preliminary analyses. At the first year technical meeting we will discuss and compare research methodologies for each objective and develop a framework for understanding local food markets and community capitals.

(2):(Years 2-4) Conduct analyses for each objective, with particular focus on producing results that are comparable across the participating states. Build stronger synergies across rural development scholars. Conduct outreach activities including input from stakeholders on objectives and results.

(5):Synthesize results across states and across objectives, complete comparative analyses, and identify policy implications and next steps. Continue outreach activities.

Projected Participation

View Appendix E: Participation

Outreach Plan

Educational/Outreach Plan


 


The project will engage in outreach to the scientific community, the policy community, and local citizens and decision makers. Project investigators will present the research results and seek professional input into their research at professional meetings of the American Agricultural Economics Association and of regional science associations (Southern Regional Science Association, Western Regional Science Association, North American Meetings of the Regional Science Association International), and through associated professional journals.


 


Outreach to the policy community will be facilitated by close affiliation of various project members with the four Rural Development Centers (Northeast, North Central, Southern, and Western), Rural Policy Research Institute, the Rural Poverty Research Center, the Farm Foundation, and the Federal Reserve Bank of Kansas City’s Center for the Study of Rural America. Project investigators have strong links to the Cooperative Extension System through the state and local offices of the university Extension Services. Technical committee members will also share information in local forums. Results will be summarized in publications like extension bulletins, policy briefs, and mass media to increase awareness and understanding of the forces impacting change in rural communities.

Organization/Governance

The project will be organized and governed in the standard way by a Technical Committee. Each participating state or agency will have an official representative appointed by the Experiment Station Director and an administrative advisor will be designated by the Experiment Station Directors. The Technical Committee will meet at least once per year, usually in the winter or early spring to coincide with professional association meetings (usually the Southern or Western Regional Science Associations). The committee will evaluate work plans to ensure adherence to the project outline and accomplishment of projected outcomes.


A chair and secretary will be elected annually by the Technical Committee. The secretary also serves as the chair-elect. The chair, in consultation with the administrative advisor, calls and presides over the meeting of the Technical Committee. The chair is responsible for preparing the annual report of the project. The secretary records and distributes the minutes and performs other duties as assigned by the Technical Committee.

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