PORTLAND, Maine — Here’s a strange economic question: How much money does grow on trees?
After starting its Maine Woods Initiative 11 years ago, the Appalachian Mountain Club is taking a closer look at the calculation for parts of the 100,000 acres it owns stretching from Greenville to the border of Baxter State Park.
“There was a period of time in the ‘70s and ‘80s when people were protecting land to protect land, but there’s a sense recently that land protection really has to be connected to the local economy,” said Walter Graff, head of the Maine-based project and senior vice president for the Appalachian Mountain Club.
The focus on assessing the return on the club’s $58 million investment in its Maine Woods Initiative comes as the group looks to expand its vision for recreational use of the land and raises funds for renovation of its Medawisla Lodge on Second Roach Pond. Graff said the lodge expansion will be a major part of doubling the number of overnight stays in the next five years. Major construction would start next spring, he said, and the project cost is still undetermined.
Last year, the club logged about 6,000 overnight stays in its two lodges, the result of 23 percent year-over-year increases in stays since it opened its Little Lyford Pond camps in December 2003 and since it renovated the Gorman Chairback Lodge and Cabins in 2011.
The group’s study will involve measuring the economic impact of related tourism but also “qualitative measures” such as improvements to personal health for area residents using the more than 80 miles of hiking trails and ski routes the the club has built.
It’s not a straightforward process, but Bowdoin College professor and economist David Vail said the study expected to start later this year could yield some guidance for similar projects and help answer the question of what exactly a rural community in Maine stands to gain from the project that includes managed forestry, land conservation, youth programs and investment in recreational infrastructure like lodges, trails, canoes and informational signs.
“We may be able to, through the evaluation, get a sense of whether those are investments worth replicating in other parts of the state,” Vail said.
What’s clear is the direct economic impact that the club’s investments have had. Aside from the $58 million put into its Maine Woods Initiative and the pending investment through its Greater Moosehead Initiative, which includes the Medawisla renovation, the club employs about 30 full- and part-time workers, spends about $100,000 a year on food from local and other Maine vendors and in 2012 paid about $750,000 to loggers, truckers and others involved in timber harvesting on its land, according to tallies from the nonprofit organization.
What’s not so easy to tease out is how much of that economic activity is new. Are the southern New England visitors this year deciding to try out the new lodges instead of their favorite lakeside inn in Greenville, or are they visitors who would not have thought to explore the great outdoors?
“We have to ask the counterfactual question of what they would have done if AMC’s resources wouldn’t have been there,” Vail said.
Charlie Spies, CEO of CEI Capital Management Inc. in Portland, said he thinks the type of lodging the clubs provides — in high-efficiency, LEED-certified buildings — has unique value for the region and does attract new visitors.
“What’s been seen in the recreational industry as a whole is a move away from 10 or 15 years ago, when it was fine to go tent camping,” Spies said. “Now people want to be out there and do it in a cabin like on the AMC properties … it’s addressing a new development in what people want to do in the woods.”
That February is among the three most trafficked month for the club’s lodges is perhaps an indication that its amenities are encouraging tourism that might not otherwise occur.
Vail agreed that type of investment in outdoors recreational infrastructure is rare.
“The investment that they’re putting in infrastructure to access the outdoors is something special about the period that we’re living in right now,” said Vail, who is also a board member at CEI.
That for-profit subsidiary of Wiscasset-based Coastal Enterprises Inc. has invested and had returned about $32 million in the project through the New Markets Tax Credit program, a federal tax credit that aims to spur investments in economically depressed areas. It is the same investment group, a federally designated community development entity, that recently withdrew about $20 million from Cate Street Capital’s Thermogen project in East Millinocket.
Spies said the club project is “creating more depth in a shallow economy,” which attracted CEI to the investment.
Diversification is a key strategy in the club’s effort to make the Maine projects self-sustaining, Graff said. The Maine project recently got its first payment — an undisclosed amount — for carbon offsets through a program with the state of California and is looking at ways that it could add a commercial-scale maple syrup operation.
Forestry adds about $200,000 each year to the club’s coffers, according to Graff.
Graff said the recent decision to invest more in club’s third lodge has pushed back its break-even point to 2016, but he said he’s “fairly confident” the Maine project can support itself financially by that time.
That would be a landmark achievement for showing such investment can pay off, though Vail said investments like club’s aren’t necessarily a salve for struggling rural economies.
“The cliche in the demographic analysis is that people follow jobs,” Vail said. “So however great the AMC project may be at cultivating interest and knowledge, there’s no guarantee of something to do if they come back to the area. This is one tactic in a much larger rural development strategy, and whether that will be put in place is one question.”