BY TONY SKRELUNAS AND KARL CATES grand canyon trust
One point of agreement evident during a recent policy summit between Hopi and Navajo leaders was that the economy of northern Arizona can—and must—transcend its 20th-century past.
Since the 1960s, Hopi and Navajo alike have benefitted in some ways from the presence of a major power plant and a companion coal mine on lands that, in retrospect, could have been much better managed in accordance with traditional values that prioritize harmony with nature and reverence for the Earth.
Navajo Generating Station (NGS) and Kayenta Mine are finally closing this year, victims of a market-driven shift away from coal-fired electricity generation. Their shutdowns are creating economic trauma that is being felt in a myriad of ways, including the loss of household paychecks, less activity for small businesses, and lower lease and tax revenues for tribal coffers.
The closures also serve as a stark reminder of how both were built on less-than-complete disclosures around the harsh effects they would have on land, air, water, and Indigenous culture. Tribal governments were at a distinct disadvantage at the time the deals were sealed, not completely in the know about the power-generation or coal-mining businesses and therefore not sure whether bargains struck for usage of tribal land were even fair. In a way, the resulting extractive economy, one that by definition disproportionately benefits outside interests, was forced upon the tribes.
Granted, tax revenues from the plant and the mine over the years have supported public services that range from programs for children to those that help the elderly. Yet those services have not kept pace with need, and the two tribes are overly reliant on the plant and the mine, which combined have meant more than $40 million to Navajo, or 23 percent of the tribal general fund budget annually, and $16 million to the Hopi, or roughly 85 percent of that general fund budget.
Nor has job creation kept pace with population growth during the era of coal-fired power, with regional unemployment persisting at over 40 percent for the past generation.
There are glimmers of hope, however. While regional economic development faces challenges, the possibilities are tremendous. On Navajo, a full 71 percent of $880 million in local income is lost through “leakage” with locals buying supplies, groceries, and other goods and services beyond tribal boundaries. Local communities recognize already that the major intersections that run through Tuba City and Moenkopi offer perhaps the best retail opportunities on tribal lands anywhere and are starting to pursue better shopping options more in tune with the rhythm of the Navajo and Hopi cultures. World-class attractions abound locally, with over 6 million visitors to the Grand Canyon last year and hundreds of thousands who travel to the area to see Antelope Canyon, raft the Colorado River, and take selfies in Monument Valley. In these communities, more tribal entrepreneurs than ever are starting tour companies, hotels, gas stations, and food establishments. These businesses complement the traditional livelihood traditions that remain: Hopi farmers still plant heirloom seeds using time-tested techniques while Navajo sheepherders tend tenaciously to their flocks in the face of a changing climate.
Diversification will be crucial to responsible management of the transition toward a post-coal economy. Ever since the closures of NGS and Kayenta Mine were foreshadowed over a decade ago by the 2006 shutdown of Mohave Generating Station and the Black Mesa Mine, a dedicated group of Hopi and Navajo professionals has been working with a variety of like-minded partners, community leaders, and tribal governments toward better economic diversification. This work has proven fruitful in relationships with business owners, cultural and political leaders, non-profit organizations, financial institutions, small and utility-scale renewable energy companies, and others. Such efforts have been well received in communities like Shonto, Moenkopi, Monument Valley, Cameron, Bodaway Gap, and Sipaulovi.
Momentum is building around initiatives that offer hope and lay out strategies to seize the day around real opportunities, both immediate and long-term.
These initiatives promote diversification from four major angles:
Community readiness
This means understanding both the challenges and the opportunities created by closure, some of which are detailed in a recent “Navajo-Hopi Transition Impact Investment Fund” report. Owners of the plant and the mine can and should offer local contractors openings to bid on decommissioning work now. Creating an investment fund to support such bids would help these contractors assemble the requisite equipment, insurance coverage, and workforces.
Community readiness for transition also involves showing local leaders how communities around the world have weathered and adjusted to similar closures. Just such an event occurred in May, with a steering-committee gathering of Hopi and Navajo community leaders that demonstrated a common desire to address change head-on. Key, of course, to such engagement is mutual respect.
Entrepreneurial development
This can and should include cultural assets such as sheepherding, hogan and village life, and traditional foods. Businesses centered on such assets usually are not on the radar of economic-development leaders and financial institutions and are often completely left out of the conversation.
Yet entrepreneurs who embrace such assets see them rightly as unique opportunities to create novel types of businesses and build local wealth in new ways. Gains have been made among culture-based entrepreneurs to structure their ventures in a fashion that markets them successfully. Examples include navajolamb.com and bighoganenterprise.com. The Change Labs coworking hub has made a difference, having recently opened an office in Tuba City.
Decommissioning and reclamation
Proper decommissioning and reclamation of NGS and Kayenta Mine, once they close, will create jobs for years to come, as described in a recent report, “Long-Term Opportunity in Post-Coal Reclamation Economy.”
A successful transition will require that the responsible parties be held accountable for their cleanup obligations. Public pressure may be required for proper reclamation of Kayenta Mine, which is owned by Peabody Energy, part of an industry that is not especially well-known for its track record on cleanup.
It will require also that other opportunities be explored around the post-coal repurposing of NGS infrastructure, which can be retooled, for instance, for utility-scale solar power generation of the type already being developed on local Navajo lands and for which there is a growing market.
Utility-scale solar development
Utility-scale solar can also drive a sustainable post-coal economy, especially in communities that have served as hosts to the plant, mine, and infrastructure for so long. Many of these assets will be left for the tribes and communities to benefit from, such as using the transmission systems to sell replacement renewable energy. Policy at the federal level can help on this front, as we detailed in a proposal published in May titled “Extending the Full Federal Solar Tax Credit by Four Years (Through 2024) for Coalfield Communities.”
A tax credit of the type we suggest on Hopi and Navajo tribal lands—and across coalfield communities nationally, for that matter—would likely bring local and regional benefits by helping drive new utility-scale solar projects on sites like NGS and its companion Kayenta Mine, both of which are to be closed this year. Utility-scale solar can help replace some lost jobs, and the lease and tax revenues it generates can help local economies during the transition.
Several local communities have since moved forward with resolutions to select solar developers, to set aside tracts of land, and go forward in a way that ensures communities and traditional land-users control more wealth from energy projects than they have in the past. Such development is critical now as the closure of NGS will create room on transmission lines running to large markets and presents the potential to secure preference in power-purchase agreements and take advantage of still-available tax credits.
As the ancestors of both tribes have demonstrated, Hopi and Navajo people love to work hard toward success and sustainability in the desert Southwest. Complete information and know-how will be essential.
Ahéhee’ and kakwha’!
Tony Skrelunas serves as Native American Program director at the Grand Canyon Trust. Karl Cates is research editor at the Institute for Energy Economics and Financial Analysis.