In-state Economic Impacts of the Virginia Coal Industry and Potential Coal Production Declines

Production and transportation of coal make a significant contribution to the Virginia economy. Several recent reports, however, indicate that Virginia coal production appears vulnerable to substantial decline in the near future (Milici and Campbell, 1991; Energy Ventures Analysis, 1994; Crabtree, 1995). This report provides an estimate of the in-state economic impacts of the Virginia coal-mining industry during the year 1993. This analysis also addresses the potential economic impacts of declining coal production. This analysis was conducted prior to the April, 1995, enactment of coal tax credit legislation by the Commonwealth of Virginia; neither the effects of that legislation, nor those Virginia tax credits available to coal purchasers in effect prior to that legislation, are considered in this analysis. Virginia coal production in 1994 (38.8 million tons, according to Virginia DMME) was over 16.5 percent below peak 1990's production levels. Virginia Employment Commission data show that coal-industry employment declined by well over 2,000 jobs (approximately 20 percent) between 1990 and 1993. Preliminary data from the Virginia Department of Mines, Minerals, and Energy indicate that, during 1994, approximately 830 additional coal-mining jobs have been lost. The impact of declining coal-mine employment has been especially severe in southwestern Virginia's coal-producing countries. In 1994, five of southwestern Virginia's seven coal-producing counties had unemployment rates which were among the state's top eight, out of 136 jurisdictions statewide (Figure 1). Two of the major coal-producing counties ranked first and second for having the state's highest unemployment rates: 16.2% in Dickenson County and 15% in Buchanan County. The state average for 1994 was 4.9%.