What is the drone industry really worth? by Clay Dillow @FortuneMagazine March 12, 2013, 6:36 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons FORTUNE — The drones are coming, according to the world’s largest unmanned systems industry organization. And they are likely to bring high-tech jobs, millions in tax revenues, and tens of billions in economic impact with them. A report released today by the Association for Unmanned Vehicle Systems International (AUVSI) forecasts that if the Federal Aviation Administration meets its 2015 deadline for integrating unmanned aircraft systems (UAS) into the national civilian airspace, the total domestic economic impact will reach more than $82.1 billion between 2015 and 2025 — creating more than 100,000 high-paying jobs in the process. In the near term, says AUVSI, the outlook appears even rosier. More than 70,000 of the total 103,776 new jobs forecast nationally by 2025 will be created in just the first three years after airspace integration is completed, along with $13.6 billion in overall economic impact in the same span. Meanwhile states where the UAS industry is strongest will begin collecting what will eventually amount to $482 million in tax revenue in the decade following full airspace integration. That’s assuming integration happens at all. Under the 2012 FAA Reauthorization Act, Congress ordered aviation authorities to develop a regulatory framework for the testing and licensing of commercial drones by 2015, a deadline that the FAA may not meet. The process of naming six federally approved UAS testing sites necessary for developing the kinds of technologies that will enable safe airspace integration was delayed indefinitely last year while the agency dealt with various public privacy concerns (the process resumed last month), and a variety of critical technical problems — not least of which involve “sense and avoid” technologies, which allow unmanned systems to maintain safe distances between each other as well as manned aircraft — have yet to be resolved. For every year the FAA delays the integration of UAS into the national airspace, the economy loses $10 billion in potential economic gain, the report claims, a number that’s not lost on states vying not only to play host to the FAA’s UAS test sites but also to woo UAS-related companies. The drone economy won’t be spread evenly; the AUVSI report names California, Washington, Texas, Florida, and Arizona as the states most likely to reap the economic rewards of a domestic drone boom. Other states are scrambling to capture a piece of the industry as well. Oklahoma has been noticeably visible at various industry trade shows of late, while Indiana and Ohio have partnered in an effort to make their shared economic region a more attractive place for the FAA to place a test site, which both states expect could generate thousands of jobs and billions in economic activity between them. MORE: Drive my Porsche, please Who exactly will be buying all these domestic drones? It’s probably not who you think. While legitimate privacy concerns surround the proliferation of small UAS in the civilian airspace, sales of small surveillance drones to state and local authorities are only expected to make up a small portion of that spending. Agricultural applications dwarf all other categories, the AUVSI report claims, accounting for $75.6 billion of total national economic impacts by 2025, whereas government authorities like police, firefighters, and other first responders will generate just $3.2 billion. All other applications — which range from weather and environmental monitoring, to oil and gas exploration, to aerial imaging and mapping — will also result in a $3.2 billion impact over the same period. This domestic drone boom would rest on the bedrock of an already thriving UAS industry largely bankrolled by the U.S. government. Monrovia, Calif.-based AeroVironment, for instance, does a brisk business outfitting the Pentagon with the majority of the tens of thousands of small UAS fielded by U.S. troops in the wars in Iraq and Afghanistan over the last decade, but last year unveiled its Qube quadrotor, the company’s first small UAS specifically targeted at law enforcement and first-response applications. Others in the defense space have likewise been busy developing and acquiring small UAS technologies over the past 18 months, largely in anticipation of the development of a domestic drone marketplace that the FAA predicts will add 30,000 UAS to American skies by decade’s end. All of that is to say that if the AUVSI report is any indication — and those in both industry and government seem to think it has some merits — the skies over America will soon be a very crowded place. As will the UAS marketplace.