Using IMPLAN to Understand Economic Change in Your Region

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Using IMPLAN to Understand Economic Change in
Your Region

• Martin Shields
• Associate Professor of Agricultural and Regional
  Economics
• Director, Penn State Center for Economic and
  Community Development
• The Pennsylvania State University
• http//cecd.aers.psu.edu

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IMpact analysis for PLANning

• (www.IMPLAN.com)

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IMPLAN is a User Operated Input-Output Model

• Provides a snapshot of a regional economy
• County
• Multi-county
• State
• Examines the relationships between and among
• Industries
• Households

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Its Primary Use is Economic Impact Analysis

• Multiplier analysis is of special interest to
  most applied modelers
• The role of a business or industry in a regional
  economy
• The effects of a shock on the local economy
• It provides information on a number of important
  local economic indicators
• Employment
• Output
• Value added
• Employee Compensation

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In its Most Basic Form IMPLAN is

• A spreadsheet that models relationships in the
  local economy
• As the name suggests, it examines how changes in
  output (final demand) affects the use of inputs
  in an economy
• IMPLAN itself looks at more than 500 industry
  sectors and 9 household categories
• Central to the model are industry production
  functions (Leontief)

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The IMPLAN Data

• Uses data from BEA, BLS, Commerce and other
  sources
• Gross State Product accounts
• ES-202
• Economic Censuses
• Uses coefficients from the 1997 national IO table
• Localizes them to the greatest extent possible

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Strengths of the IMPLAN Model

• Highly disaggregated industries
• County level analysis is possible
• Its a user operated modeling package
• It can be opened up and augmented with local
  information
• Good technical support from the Minnesota IMPLAN
  Group

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Weaknesses of the IMPLAN Model

• Leontief production function means no
  substitution among inputs
• Prices are fixed
• Scenarios must be expressed as a change in final
  demand
• Policy scenarios must be modeled exogenously and
  expressed in terms of output

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The Lake Erie Steelhead Fisherys Contribution to
the Erie County Economy
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The Purpose of the Analysis

• To document the role the fishery plays in the
  local economy, emphasizing jobs and income

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The Fundamental Issue

• How do we properly model final demand?
• The important thing to determine is the total
  amount of money that would not otherwise have
  been spent in the economy

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Scenario, Scenario, Scenario

• Data was obtained from an intercept survey of
  anglers
• We consider two sources of new demand
• The impact of expenditures by people from outside
  the region
• The impact of expenditures that otherwise would
  have leaked outside the economy

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Two Basic Steps

• Determine how much new money comes in (or does
  not leave) due to a typical, unique angler day,
  by category
• Lodging
• Food
• Transportation
• Bait and gear
• Determine how many typical, unique angler days
  occur each year

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Key Survey Questions
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Tabulating Unique Angler Expenditures

• We suggest two types of anglers of interest
• Type 1 Anglers that live outside of Erie County
  who would otherwise not have fished there
• Type 2 Anglers from Erie that would otherwise
  have left the county to fish that day
• We determine local daily expenditure profiles of
  typical anglers from each of these classes
• The zip code allows us to determine place of
  residence

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Average Angler Day Expenditures by Type and
Category
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Total Anglers and Total Expenditures

• From angler counts, we have an estimate of the
  total annual number of angler days (201,000)
• From the survey data, we calculate the proportion
  of sample angler days for each angler type
• We apply these proportions to the total angler
  counts, to get an estimate of total annual angler
  days, by type
• Type 1 153,990
• Type 2 1,634
• With expenditure profiles for each type, and the
  number of anglers of each type, we can calculate
  total annual unique expenditures, by category

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Unique Expenditures by Category for Erie
Steelhead Fishery Anglers
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Total Expenditures and IMPLAN

• We shock the four relevant sectors by this
  amount
• We use the household margins for the retail
  sectors
• Then IMPLAN works its magic

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The Erie Steelhead Fisherys Estimated
Contribution to the Erie County Economy, 2003