Standard Procedures and Methods for Economic Impact and Contribution Analysis in the Forest Products Sector

Abstract

Economic contributions from forestry and forest products help define the importance of this industry to a state or regional economy. IMPLAN input-output modeling software has proven helpful to conduct this analysis and is commonly used in the United States. However, input-output modeling and the results of economic impact or contribution analyses can vary substantially, depending on the modeling assumptions of the analyst, creating confusion among end users as comparisons are made among studies. Southern Regional Extension Forestry and the Southern Group of State Foresters invited forest and regional economists from the Southern Region to a summit in Little Rock, Arkansas, in 2015 to discuss concerns and issues with respect to collection, calculation, and delivery of information on the economic role of forestry and the forest products industry to the southern region. This article discusses major issues identified and recommendations suggested at the Little Rock Summit. Management and Policy Implications The recommendations from the Little Rock Summit participants have strong policy implications. Economic contribution analyses of the forestry and FPI (Figure 1) are used by economic development agencies and policymakers as they strive to support sustainable economic development in their region, particularly as it relates to workforce development and industrial recruitment and enhancement. Inconsistent model assumptions that provide different results might confuse and misguide policymakers as they often consider findings from the scientific community for policy decisions. Most inconsistencies created among economic impact or contribution analysis could be easily identified by stakeholders with more thorough and consistent reporting from the analyst(s). Inconsistent results also affect the credibility of these analyses. When results are inconsistent, decisionmakers can see the data as unreliable and choose other criteria to make the decision. Most of the results of input-output analysis are presented in concise fact sheets or brochures, and, thus, it is not possible to provide a detailed explanation of the methods used. In such cases, the Little Rock Summit consensus was to produce a detailed report that could be listed as a source or reference in the more abbreviated or concise reports.