Headwaters Economics: Real Solutions for a Changing West

By Alison Grey, 10-11-07

The Gallatin Valley is home to over 200 non-profits. These organizations do not hinge on metropolitan amenities, and are often created to preserve wild places and stimulate communities of the West. As part of our New West economy, NewWest.Net/Bozeman is highlighting Gallatin Valley organizations in a weekly series.

Created in 2005, the developers of Headwaters Economics were frustrated by the lack of reliable information on vital Western land use topics, particularly growth and development, and the changing economic role of our public lands.

As an independent research organization, their mission is to improve community development and land management decisions in the West. Most recently, they have conducted research delving into the potential for future development on fire prone lands and the implications this growth will have on future firefighting costs.

With 20 combined years of experience, the staff of six and board of five, blend research and field experience working with communities, businesses, landowners, public land managers and elected officials.

This high-tech non-profit conducts research to understand demographic and socioeconomic trends in the West, and works to see how those trends impact land use patterns. Using this information, they create solutions to assist a broad array of individuals, organizations, businesses and communities understand and benefit from their own competitive advantages. Associate Director, Ben Alexander, expands on Headwaters Economics and their efforts.

NewWest.Net: Why and how did your organization come into being?

HE: We have seen a huge economic transition take place in recent decades, yet community development and environmental policies have been slow to respond.

Along with the national economy, the Western economy has become service based and quality – in the workforce, landscape and community – are increasingly important to the ability of individuals and businesses to compete today.

Yet, our development emphasis too often fails to protect or advance these qualities, and instead trades them for investments in uncompetitive industries or short term growth. This is particularly true in the rural West, a place where community development and land use are closely entwined.

We created Headwaters Economics to better understand the evolving competitive advantage of the region, outline costs and benefits of various choices, and help develop broadly compelling solutions.

We care deeply about this region and are frustrated by the lack of credible information on important topics such as energy development, sprawl, fire, recreation, rural development and the changing economic role of public lands.

We want to be more engaged with public issues than most universities, more responsive than consulting companies to the needs of under-served groups and less constrained by single issues and solutions like many non-profits.

NewWest.Net: Why is this organization in Bozeman? What are the advantages and challenges of operating in this area? Are there other non-profits in this area that you partner with or would like to?

HE: I grew up here. My family and my wife’s family are here. We’re here because of the quality of the environment – the people and the land.

There are very few constraints to living here. Commercial air service is crucial for us since we work across the West. Fast internet is a must, and easily available. We also enjoy a growing community of thinkers who are concerned about the future of this region.

Bozeman is developing a “cluster” non-profit expertise, further strengthened by the university, which is rich in intellectual capital and allows for a lot of cross fertilization.

Our board is a good example of this. We had no trouble recruiting talented and experienced individuals to help guide our organization right here.

Our approach is to analyze issues as unbiased researchers first and then, in partnership, craft solutions. We are working today with the major land management agencies in the country, community groups, conservation organizations and charitable foundations.

NewWest.Net: Where are you directing your resources?

HE: Here’s how we work: We take the time up front to identify the right issue to work on and build partnerships with folks who can make a difference on that issue. We then conduct thorough research involving rigorous peer review.

Finally, we translate our findings so that something happens as a result of a partnership and research product. This often takes us on the road. Everything we do has these three aspects: set up, research, translation.

NewWest.Net: What is your annual operating budget, and can you please break that down between administrative and fund-raising versus program expenses?

HE: Today it is approximately $500,000, but we have ambitions to grow the organization into a social science think tank of national significance.

Our fundraising is a mix of diversified grants and contracts. The niche we occupy is unique enough and we’re good enough at what we do that we have not had to devote significant resources toward fundraising and our overhead is low.

NewWest.Net: How are you fulfilling your mission statement?

HE: We fulfill our mission by giving the right people credible information they can use to identify and solve problems. We are very practical in this sense.

NewWest.Net: What is your most recent success story?

HE: Two important issues to westerners are urban sprawl and forest fires. As more and more homes are built in the woods – in harm’s way, where they can burn – the expense to the taxpayer is skyrocketing, totaling over $1.3 billion every year. 

Unfortunately the approach to dealing with the problem has been to treat the symptom rather than the underlying cause.

Most of this fire fighting effort goes toward protecting homes built in fire prone environments, and little effort is expended on land use planning that prevents homes from being built in fire prone areas.

People who are causing the problem are not paying for the problem, and agency budgets are diverted to the detriment of all other programs. These trends are getting worse.

We analyzed the extent of building in the “fire plain” and found that it is only 14 percent built out. We then mapped these areas in detail for the entire West and calculated, based on current fire fighting expenses, what it would cost to protect these homes if the “fire plain” were 50 percent built out.

The answer is that it would take the entire Forest Service budget. With this research we made a concerted effort to highlight the problem in the media and with decision makers at the Forest Service, Bureau of Land Management and elsewhere.

The response has been encouraging. The major regional newspapers picked up the story, federal land mangers are asking for briefings and fire professionals are requesting that we attend their conferences to work through solutions.

This is a great example of how independent research on a timely topic of importance to the West can translate into pubic interest and renewed discussions about solutions. 

NewWest.Net: Thank you.

For more information, visit Headwaters Economics.