CHAPTER 5

Rural and Tribal Development

Chapter Advisors

Many thanks to the advisors for this section: Leslie Cervantes, New Mexico State University (NMSU) and Cervantes Enterprises; Micaela Fischer, Thornburg Foundation; Peter Ibarbo, Office of Rep. Steve Pearce; Richard Luarkie, Emerging Equities Solutions Group (and member of Laguna Pueblo); James Peach, NMSU; Alvin Warren, W.K. Kellogg Foundation (and member of Santa Clara Pueblo); David Williams, Office of Senator Tom Udall.


The issues facing rural and tribal communities in New Mexico are significant. Migration to urban areas remains a steady trend, and some people may say that is just the way of the future. They say, let markets and new generations take their own course, and if that means the populations become centered around the cities, so be it. Other people counter that rural and tribal communities are a critical element of our state’s cultural heritage. They might point out that New Mexico is a land of multiple languages and resilient people – people who work hard, honor family traditions, instill rich values and contribute to the state as a whole – so we must retain and support our communities on tribal and rural lands.

This chapter overviews unique opportunities and trials encountered by New Mexico rural communities in general (non-tribal and tribal) as well as distinctly different issues experienced by our 23 sovereign Native American nations.

Rural New Mexico

New Mexico is a predominantly rural state. The vast majority of our land is undeveloped, and many people like it that way. Over three-fourths of our counties are classified as rural (26 out of 33), but only 33% of our people actually live in rural areas.[1] This percentage has been steadily declining for decades, though the actual number of people is slightly increasing. Similar trends exist in tribal communities. Nationally, the migration of Native Americans away from reservations to urban areas continues to increase with 70 percent of Native Americans living in metropolitan areas.[2] Less than 50 percent of New Mexico’s Native American population is working and living in or near federally recognized tribal areas.[3]

This migration of people from rural and tribal areas means that a greater percentage of our population than ever before lives in cities. Practical issues like good jobs, salaries, access to medical care, or convenience send many small town residents to the Albuquerque area, Las Cruces, or out of state.

What is Rural?

The federal government defines counties as “rural” and the related term “frontier” (which essentially means really rural) using a complex set of measurements including the number of people in a county, the number of people per square mile, and the distance of a community from a metropolitan area. (See appendix for the government’s rural classifications for each county.)

For the purpose of this report and the town hall, we will keep it simple. We are considering all New Mexico communities other than Albuquerque, Rio Rancho, Santa Fe and Las Cruces to be rural, since they face similar challenges and often rely on similar industries. We also encourage readers to bear in mind that very small rural places, such as Floyd or Roy, confront different hurdles than their less rural counterparts like Gallup or Portales. There are six New Mexico counties (Catron, DeBaca, Harding, Hidalgo, Mora and Union) that are classified as extremely rural, with populations below 5,000. By comparison, Bernalillo County has over 662,500 residents.[4]

Bottom line, as the following map illustrates, New Mexico is unquestionably rural. If we fail to tend to our non-urban areas – economically, environmentally and socially – we are ignoring the vast geographic majority of the state.

New Mexico by Population


Yellow: Extremely rural. Fewer than 2500 people
Pink: Rural: 2500-9999 people
Red: Semi-rural: 10,000-49,999 people
Brown: Urban: 50,000 people or more
Source: USDA
 

Economic Drivers

Major industrial economic base drivers in rural New Mexico include energy production, agriculture, retail and tourism. The film industry is also growing, presenting interesting opportunities for some rural and tribal communities. Each county varies considerably. The Arrowhead Center at NMSU recently published a series of economic base studies for each county. This rich source of local information shows, for example, that Curry County’s economy relies on the military, agriculture, transportation/warehousing and retail. By contrast, Lincoln’s economic base includes arts/entertainment, accommodation/food, retail, real estate and agriculture. Grant County, home to Silver City, relies on mining, tourism, retail and agriculture. The one variable that all three examples share is agriculture. (See appendix for economic drivers of each region of New Mexico.)

State Land Trust

Nine million acres of surface estate and thirteen million acres of mineral estate in New Mexico are managed by the State Land Office. Most of that land is in rural areas, and it is leased for agriculture, oil and gas, commercial uses, mineral extraction and rights of way. Revenues generated from these activities are placed in either the Land Grant Permanent Fund (for non-renewable sources of income such as oil and gas) or the Land Maintenance Fund (for renewable sources of income such as agricultural leases). The funds support New Mexico schools, universities, hospitals and other important public institutions. These funds save the average household about $800 a year in taxes. The land plays an important role in rural economies.[5]

Agriculture

While the number of people directly employed on farms and ranches is relatively small (less than 1.4 percent of the overall workforce), the overall agricultural industry in our state is indisputably growing. The number of New Mexico farms, young farmers and minority farmers increased in recent years. The number of farmers and ranchers under age 34 rose by 47 percent between 2007 and 2012 (the last date for which data is available). During that timeframe, the number of Hispanic-operated farms jumped 45 percent to almost 9,400. With over 24,000 farms, New Mexico has about 43 million acres in farmland. Total agricultural net income increased more than a third in the last five years.[6]

Consequently, according to one study, agriculture in New Mexico translates into about $10.6 billion a year, over 50,000 jobs, and nine percent of the state’s economy. These figures include three types of impacts: [7]

  • The direct effect of the sale and processing of agricultural products
  • The indirect effects of farmers and ranchers buying goods and services from local industries
  • The induced effect of those people and businesses re-spending the income they received from the farmers and ranchers

So, even though the agriculture sector is growing and its economic impacts significant, the industry faces significant challenges. Most farmers and ranchers are nearing retirement age (average age is 60). About half of all principal farm and ranch operators in the state have a primary occupation outside of the farm or ranch. In addition, land prices in the state continue to escalate, more than doubling in price per acre since 1997 for all farmland and increasing over 150% for irrigated cropland over the same period.[8]

Water

The agricultural industry accounts for an estimated 80 percent of New Mexico’s total water withdrawals.[9]Much of that water returns to rivers or other water sources and is re-used downstream. As a portion of the state total, agriculture’s reported percentage increased slightly in recent decades (from 75 percent in 1995). However, the actual reported volume of water used by the industry steadily declined, from 3.4 million acre-feet in 1995 to 3 million acre-feet in 2010. That decline may be due to changes in irrigation technology, farming practices, amount of acreage in production, or other factors.

Value-Added Agriculture

One strategy for growing the economic impact of agriculture is expanding the use of value-added products. The term “value-added” refers to activities that make a product more valuable to consumers, perhaps through marketing/branding, processing, or appealing to a specific interest. For example, some farmers in eastern New Mexico raise peanuts. To make this a “value-added” crop, the region:

  • Marketed the uniqueness of the Valencia peanut, distinctive from other seed types in both size and flavor
  • Linked the crop to a manufacturing process, where the raw produce is roasted or made into a niche brand of peanut butter
  • In some cases, raised peanuts organically, appealing to people who are willing to pay more for an organic product

Any of these activities add financial value to the basic agricultural product. The EDD points to the following industries as examples of the state’s growing value-added food and agriculture economy:

  • Dairies and cheese manufacturing
  • Chile and its commercial processing
  • Nuts and their commercial processing
  • Organic produce
  • Wine
  • Microbrewers

Local Purchasing Potential

Researchers point out that the agricultural industry could play a larger role in the state economy, create more jobs and increase the in-state benefits of its water use if consumers purchased more food from local growers. Many environmental advocates also champion the cause, pointing to energy savings when fewer foods are trucked or flown across the globe. Our state imports more than $4 billion in food products each year. One study calculated that if New Mexicans bought 15 percent of their food directly from local farmers and ranchers, incomes would increase by over $370 million. For every dollar that goes to New Mexico farmers and ranchers, an estimated 95 cents is re-spent in the local community. [10]

Differences Between Farm and Ranch Economies

There are key differences between farm and ranch operations that affect their impacts on local economies and land use including:

  • Differing values of irrigated versus non-irrigated land
  • Much more land needed to ranch than farm, generally
  • Totally different types of equipment needs
  • Somewhat different workforce needs (both partly seasonal but at different times)
  • Different vulnerabilities in terms of weather/water vulnerabilities

Agricultural Resiliency Project

Since Fall 2015, a statewide program organized by NMSU County Extension Services and New Mexico First has been advancing the goal of a statewide agricultural resiliency plan. With funding from a coalition of foundations and government entities, the project aims to create a consensus-driven plan that includes a strong export-oriented commodity agriculture sector as well as a robust local food system of all sizes of farms and ranches.

A series of regional forums across the state (held on non-tribal and tribal lands) identified the following top concerns about the future of agriculture:

  • Natural resources, mostly worries about adequate water
  • Regulatory challenges, creating uncertainty and inhibiting economic growth
  • Succession planning for the next generation of farmers and ranchers
  • Need for more education for all sectors (school children, general public, policymakers and within the industry)
  • Improved access to agricultural markets, locally, nationally and internationally
  • Workforce issues, including immigration policies, the need to recruit and retain new farmers and ranchers, and a desire for an educated, prepared labor force
  • Financial challenges, reflecting the growing cost of farming and ranching for existing operations as well as the incredibly high start-up costs for those entering the field

All these concerns may inform future decision-making about agriculture, in both traditional rural communities and on tribal lands.

Energy and Mining

Conventional Energy

The extractive industries (oil, gas, mining) are major drivers of many rural and tribal economies, and while they may not operate in as many counties as agriculture, these energy sources create considerably larger financial impacts. Tax revenue from the oil and gas industry comprises roughly a third of New Mexico's general fund; state fiscal planners estimate that each dollar drop in the price of a barrel of oil reduces the state budget by about $6 million.[11]

 Source: NMEMRD

New Mexico is the sixth-largest net supplier of energy to the nation, primarily because of oil and gas production. Much of that production occurs on federal lands. In addition, mining operations in New Mexico produce more than 20 million tons of coal per year. This extraction feeds coal-fired power plants, with almost two-thirds of New Mexico's net electricity generation.[12]

As noted above, much of the state’s oil, gas and coal mining occurs on tribal lands. For example, Navajo Nation formed its own energy company in 2013 and acquired Navajo Coal Mine from the mining company BHP Billiton. The tribe also signed a 25-year lease extension with the Four Corners Power Plant, a decision tied to over 700 Navajo jobs.[13]

The under-regulated uranium mining industry of the twentieth century left a legacy of abandoned and contaminated sites in New Mexico. Some of the mill sites have been cleaned up, but many – located on tribal and non-tribal lands – remain unremediated. Groundwater contamination is among the biggest concerns. Changes in economic and regulatory conditions prompt some energy developers to consider renewing uranium mining in New Mexico, but with much more stringent environmental and public health protection rules.

Renewable Energy

Many rural and tribal communities have developed, or are developing, renewable energy projects, including wind, solar and geothermal. Past public policies, including the Renewable Energy Production Tax Credit and other incentives, contributed to the expansion. The greatest wind potential is on the high plains and rugged ridges in the eastern half of the state. In 2014, wind energy contributed seven percent of New Mexico's electricity generation.In addition, New Mexico's abundant sunshine gives the state some of the nation's best solar energy potential. On a per-capita basis, New Mexico is among the top 10 states nationally in distributed grid-connected solar capacity.[14]

In addition, geothermal resources exist in western and southern New Mexico. The main use of geothermal energy in New Mexico had been for greenhouse agriculture, much of it supporting green chile production. Geothermal energy also has been used for space heating, district heating, aquaculture and spas at several locations. In December 2013, New Mexico's first utility-scale geothermal power plant came online in the Animas Valley. [15]

Transmission

Because our state has a relatively small population with low electricity demand, we can produce much more renewable energy than we can consume. To build renewables as a strong economic base industry, more storage and transmission capacity is required to carry that energy to power markets throughout the Southwest. New Mexico is already playing a national role in this area. At Sandia National Laboratories, the Energy Storage Systems program is collaborating with industry academia and government institutions to increase reliability and performance and market competiveness of grid storage. The lab also hosts the U.S. Department of Energy’s Storage Database that provides information on grid-connected storage projects and relevant state and local policies.[16] Previous New Mexico First town halls (2009 and 2012) called for expansion of the national transmission grid in order to grow this segment of our economy.

Infrastructure

Broadband

New Mexico ranks in the bottom quarter of states with minimally adequate broadband. Even more critical is the lack of broadband infrastructure in rural and tribal areas, where 25% of the state’s population and 39% of the businesses reside. It was estimated in 2012 that nearly half (47%) of the New Mexico rural and tribal population did not have access to adequate broadband, twice the national average.[17]

When tribal communities are separated out, the access problem appears more troubling. An estimated one in five people on tribal lands have access to wired broadband. Various activities are underway to address this challenge. For example, a $13.8 million low-interest loan was approved in March 2016 for Sacred Wind Communications to improve internet infrastructure in tribal communities.

Broadband access matters because of the changing job opportunities available to people in rural areas. There are more opportunities than ever for companies to reach a workforce virtually. For example, 45 percent of IBM’s workforce now operates remotely, often from communities of their choice.[18] Technology is also creating more solopreneurs, such as people selling on eBay, providing consulting services, blogging, etc.

“Much of the rural population wants to be able to stay where they are and make a good paycheck, and this type of virtual office employment would allow for that,” commented Las Cruces economic developer Davin Lopez. “Changing opportunities force us to think differently about the kind of infrastructure needed to support rural New Mexico. Maybe we do not need as many paved roads for large company vehicles; instead, critical infrastructure is likely in broadband.”

Not all broadband needs to be wired, however. Technology in the form of low-orbiting satellites and unmanned aerial vehicles may also make broadband more accessible to rural New Mexico than previously thought.

While access remains our state’s challenge, New Mexico’s rankings in broadband have recently improved in some areas. We ranked number one in a national survey that measured how broadband is used by individual businesses, organizations and households. The state also finished well in five research categories including availability of providers, adoption of household users, and driving meaningful use through issue awareness and training. Further, New Mexico ranked highly in growth investment through the government’s commitment to promoting broadband and fostering a “fair-minded” regulatory environment.[19]

Physical Infrastructure

Another challenge facing rural and tribal communities is physical infrastructure, including water delivery systems, wastewater treatment and roadways. In rural communities, these infrastructures may be aging, leaking or crumbling. The same is true on tribal lands, or sometimes the infrastructure never existed in the first place. There are several locations on the Navajo Nation, for example, still without running water, electricity or wastewater systems. Similar conditions exist in many colonias (Spanish for community). Colonias are government-recognized residential areas, mostly along the U.S. and Mexico border, characterized by substandard housing and infrastructure. New Mexico’s Rural Infrastructure Program, Tribal Infrastructure Fund, and Colonias Infrastructure Fund all help address these challenges.

(See Chapter 6 for information about public-private partnerships (P3s) as an option for financing New Mexico infrastructure projects.)

Tribal Development

New Mexico has about 220,000 Native American citizens, making up 11 percent of the state's population. We are home to 23 sovereign tribal nations, including 19 Pueblos, three Apache tribes and the Navajo Nation (which also spans into Arizona). Each tribe brings its own government, traditions and culture. The pueblos alone span over two million acres across eight counties.

Source: Alb. Convention and Visitors Bureau 

Almost a third (31 percent) of Native Americans in New Mexico live on incomes below the Federal Poverty Level (FPL).[20] Jobless rates contribute to this challenge, with 16 percent of Native Americans in New Mexico unemployed.[21] While most Native American people do not live on tribal land, growing tribal economies would improve the economic conditions of tribal families overall.

Some people mistakenly believe that business principles and tribal culture are inherently mutually exclusive, that if you have one you cannot have the other. In fact, strong reservation economies are vital to sustaining and developing Native American cultural identities.[22] Tribal cultural values of operating businesses at the free will of individuals and families, using resources to help others, consensus driven decision-making, and holistic approaches to economic development for long-term positive impacts are values that can be beneficial for all communities, tribal and non-tribal.[23]

Negotiating the boundaries between the culture of the tribe and the culture of mainstream business while maintaining personal authenticity is a challenge faced and met by many tribal leaders.[24] Tribal leaders who display the ability to successfully accommodate both mainstream and tribal cultures may produce good outcomes for their own tribes as well as the companies that do business in Native American communities.[25]

In addition, healthy tribal economies contribute to the state’s overall economic diversity. Tribes contribute an estimated $66 million per year to the NM General Fund through NM Gaming Compact revenue sharing, not including gross receipts taxes and severance taxes.[26] New Mexico has experienced significant job growth (for tribal and non-tribal people) in the lodging and hospitality sector due to hotels, resorts, golf courses and casinos on tribal lands.

For some, the growth in gaming revenue points to more promising futures on tribal lands. Others worry about social problems associated with rising levels of gambling. And certainly, employment remains a priority. Nationally, up to 75 percent of Indian gaming jobs go to non-Native employees. [27] In addition, hospitality and gaming industries do not exist in many tribal communities. Only 15 of the 23 tribes and pueblos in New Mexico operate casinos and, of those, 13 operate hotels.[28]

Gaming aside, tribes across the country are increasingly able to develop businesses that produce jobs, profits and government revenues. Tribes have also strengthened their self-governance, increased their control over their natural resources and food systems, and become more direct influencers of the U.S. energy sector.[29] In addition, the arts and crafts industry is a core aspect of tribal tourism revenues; it is also a main source of supplemental income for many Native American families. Between 1990-2010, per capita income for Native Americans grew by 46.5 percent.[30]

That said, overall economic health of tribal communities varies widely. Serious challenges remain. A wide array of tribal development challenges and possible solutions exist at individual, community and regional levels.

Financial Literacy

Just as financial literacy is a priority for the population at large, multiple sources point to this issue as a need for tribal members and leaders. Generations of poverty may contribute to some Native American youth and adults lacking skills to manage finances well. Advocates recommend K-12 curriculum training for children and youth, community-based training for adults, and advanced investment and business management skills for tribal leaders. [31] Such training could be financed by tribes, economic development investors, government grants or foundations. For example, the First Nations Development Institute deploys W.K. Kellogg Foundation dollars in New Mexico to run a program that provides financial literacy training to Native American parents of students in Gallup. The program also helps young people set up youth savings accounts and children’s saving accounts.

Housing

Adequate housing is important for any community, since without it one cannot attract and recruit a workforce. Further, home ownership is a major factor in our country for creating a middle class; home equity serves as the biggest source of capital for business start-ups and also a main source of funding for retirement and college.[32] These factors apply to both tribal and non-tribal communities.

However, tribal communities are far more likely to experience housing challenges. Native American families are two-and-a-half times more likely to live in an overcrowded home than the general population, 10 times more likely to live without adequate plumbing, and 11 times more likely to lack adequate kitchen facilities.[33] When high quality housing does exist, Native people who have financial resources to own their homes may encounter challenges due to tribal land status or title restrictions.[34] Most tribal land is held in trust by the federal government, so the title cannot be sold. The federal Indian Home Loan Guarantee Program (Section 184), may be used to overcome these hurdles to home ownership.

Capital, Banking and Incentives

Access to capital and financial services are key tools for economic advancement, breaking cycles of poverty and overall tribal development.[35] Tribes often have less access to bonding capacity than other communities, and those that do use bonds to raise money face higher rates or shorter periods.[36]Prior to 2009, tribes did not have the same authority to issue tax-exempt bonds as other types of governments, making it harder to finance major infrastructure or development projects such as roads or schools.[37]

Now that the law is changed, Native American governments can more effectively deploy Tribal Economic Development (TED) bonds to finance any project or activity for which state or local governments could issue tax-exempt bonds (i.e., water projects, schools, infrastructure). TED bonds are not grants. Instead they are tax-favored bonds used to raise money from investors. This type of loan must be paid back, but investors generally accept a lower interest rate since the interest is not taxable. TED bonds cannot be used to finance gaming construction.

In addition to financing public needs, tribes also experience considerable challenges in accessing capital for non-gaming related businesses. This hurdle, along with geographic location, access to markets, and limited workforce directly impact the diversification of tribal economies.

One strategy for increasing access to capital is local banks. In some cases, regulatory barriers prevent financial institutions from opening branches on tribal lands. The Borrego Spring Bank (the first Native American-owned bank in California) overcame those barriers. A case study on the institution illustrated improved financial services for tribal governments, native businesses and tribal people. The bank’s goals include fostering economic self-sufficiency among Native Americans, diversifying tribal economies, facilitating “Indian to Indian commerce,” and providing financial literacy training.[38]

On the tax side, tapping incentives may be another strategy to consider. Previous research recommended incentivizing businesses to locate on tribal land, including coordinating tribal and state tax laws. There may be opportunities to leverage existing federal and state programs, such as enterprise zones, Mainstreet Programs, or existing tax credits. Some, but not necessarily all, tribes struggle with capacity issues such as not knowing how to access existing resources. In other cases, there may be challenges in collaboration between different types of government, or questions about how to respect the jurisdictions of tribes and states.[39]

Inter-Tribal Cooperation

While it is clear each tribal community is different, with its own customs and governance, opportunities may exist to leverage greater buying power through cooperation. Some options include:[40]

  • Creation of inter-tribal loan funds for business development designed to serve multiple tribes (could be on regional, statewide or national levels)
  • Establishment of more micro-loan programs on a multi-tribe level since individual tribes and pueblos often cannot finance on their own
  • Expansion of entrepreneurial training and incubators, potentially in partnership with tribal colleges
  • Formation of a statewide organization to market and brand native products and foods

Economic Data

It is difficult to strategically plan, and track progress toward, economic development on tribal lands without good data. Like other states, New Mexico would likely benefit from more data on trends among Native-owned businesses, tribal economic growth, markets and general financial conditions. [41] Nationally, there is also some concern about the accuracy of tribal information collected through the American Community Survey, the federal government’s major tool for gathering information between U.S. Census years.[42]

Options and Intersections

Both rural and tribal communities want to preserve ways of life and traditions that are dear to them, while also seeking to embrace vibrant futures. What opportunities exist to maintain or increase rural and tribal populations? To what extent and in what ways will we support long-standing rural industries? How can New Mexico innovate to encourage new or different industries on rural and tribal lands? And what reforms can New Mexico support that will advance the economic and cultural well-being of our tribal communities?

These issues relate closely to other chapters. Our rural and tribal communities contain many people living at or near the poverty level. (Ch 1) Partly for this reason, these communities struggle greatly to cultivate and retain a qualified workforce. (Ch. 2) Our rural and tribal communities also want to grow a culture of entrepreneurship and diverse economies, and they face similar struggles as those in urban areas. Practically all rural and tribal communities rely on their small business economies and they are often excellent natural cultivators of entrepreneurial goals. (Ch. 3 & 4) Another factor is the major role of federal dollars in rural New Mexico (Ch. 6), especially for those communities near military bases.


Chapter Endnotes

Short reference sources below; complete citations in the bibliography.

[1] (USDA 2014)
[2] (Williams 2013)
[3] (U.S. Department of Interior 2013)
[4] (U.S. Census Bureau 2010)
[5] (NM State Land Office n.d.)
[6] (NM Department of Workforce Solutions 2015), (New Mexico Department of Agriculture 2014), (NM Office of State Engineer 2010)
[7] (Crawford 2014) Note: The U.S. Department of Commerce calculates the agricultural sector of the NM economy at just under $1.5 million, but it only counts cash receipts
[8] (U.S. Census Bureau 2012)
[9] (NM Office of State Engineer 2010)
[10] (Crawford 2014)
[11] (New Mexico First 2016)
[12] (U.S. Energy Information Administration 2015)
[13] (Harvard University 2014)
[14] (U.S. Energy Information Administration 2015)
[15] (U.S. Energy Information Administration 2015)
[16] (Pew Charitable Trusts 2016)
[17] (NM Department of Information Technology 2013)
[18] (Harvard Business Review 2013)
[19] (Strategic Networks Group 2016)
[20] (Hollis 2012)
[21] (NM Department of Workforce Solutions 2014)
[22] (R. J. Miller 2012)
[23] (Alvarez 2011), (R. J. Miller 2012)
[24] (Stewart, et al.)
[25] (Stewart, et al.)
[26] (Warren, 2016), (NM Gaming Control Board 2014)
[27] (Robertson 2012)
[28] (500 Nations n.d.)
[29] (Economic Policy Institute 2013), (Akee and Taylor 2014)
[30] (Akee and Taylor 2014)
[31] (National Congress of American Indians 2007) (Harvard University n.d.)
[32] (National Congress of American Indians 2007)
[33] (Ludwig 2013)
[34] (Economic Policy Institute 2013), (National Congress of American Indians 2007)
[35] (Harvard University n.d.)
[36] (National Congress of American Indians 2007)
[37] (U.S. Treasury Department 2012)
[38] (Harvard University n.d.)
[39] (Warren 2016)
[40] (National Congress of American Indians 2007)
[41] (Warren 2016), (National Congress of American Indians 2007)
[42] (Economic Policy Institute 2013)


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