Improving Energy Regulation on Native American Reservations Could Help Alleviate Poverty

The land was once zoned for American Indian reservations because it was undesirable and resource-poor, but now interested American Indians could have economic leverage in the emerging clean energy industry. A team of researchers led by UW–Madison professors Dominic Parker and Sarah Johnston assessed the economic potential of wind and solar energy projects on the lands and discussed regulatory barriers to tribes seeking to use them.

“This is the first comprehensive analysis of the potential revenue that renewable energy projects can provide and an outline of the regulatory barriers tribes face in pursuing them,” says Parker, a professor of agricultural and applied economics. “But we emphasize that this is not a call to impose federal energy priorities on reluctant tribes.”

The study, recently published in The energy of naturefound that reserves are 46 percent less likely to have wind farms and 110 percent less likely to have solar farms than similar neighboring areas. Adding to this striking overall disparity, wind and solar resources are particularly abundant in the poorest 25 percent of reserves. Most of these are in remote areas that lack the income opportunities of casinos and nearby urban labor markets.

The researchers used a statistical model to determine the disparity between on- and off-reservation land available for wind and solar farms installed by 2022. The team combined those results with energy demand projections through 2050 to predict the income tribes would leave on the table if the current disparity persists until then.

In a high electrification scenario and future reliance on renewable energy sources to meet energy needs, tribes would forgo more than $19 billion in lease and tax revenues by 2050, or $11.6 billion in a low electrification scenario. The equivalent estimate of casino profits by 2050 is $67 billion.

Researchers have identified a number of barriers to development that help explain the disparity between clean energy projects on and off reservations. One of the biggest is the complexity and uncertainty of the permitting process—for both the facilities and the transmission lines that feed the generated power into the power grid.

“A previous study found that 49 regulatory steps are required to develop oil on reserves, compared with four steps for projects off reserves,” Parker says. “This regulatory mess makes energy projects almost as rare as those where they are prohibited, such as in public parks, forests and nature reserves.”

Getting a project off the ground on any private land starts with obtaining leases that generate income for the landowners. For utility-scale wind farms, which are more spatially extensive than solar farms, this usually requires multiple landowners to sign leases. Because of historical land allocation policies, reserved lands have a more extensive ownership split than non-reserved lands, with an average of 14 owners per 160-acre parcel.

That means developers planning to build a wind farm, which requires at least 5,000 contiguous acres, on 32 of those parcels must get 448 landowners to lease their land. That makes it very difficult for Native Americans—the poorest minority group in the United States—to pursue renewable energy projects, while wealthier people elsewhere enjoy federal and state subsidies, Parker notes.

Energy sovereignty—allowing tribes to pursue their own goals without regulatory steps from federal and state jurisdictions—would help reduce barriers to development, the authors say. Such sovereignty would allow tribes to exercise their right to use or not use the natural resources on their land. It could also prevent a repeat of historical mistakes, such as the attempts to build hydroelectric dams on tribal lands in the mid-20th century. Some of those dams were built without tribal consent, harming salmon stocks and causing flooding.

“Cutting red tape will be key to ensuring that tribes interested in development can realize the economic potential of their resources,” Parker says. “The key is to avoid green colonialism by not putting pressure on uninterested tribes while making it feasible for those who want the income.”