Search this site:

3 Methods

The Assessment region consists of the 13 Southern States, covering 583 million acres with a 2000 population of 91,776,331. The region represents 24 percent of U.S. area and nearly 33 percent of U.S. population. Division of the region into subregions is important for understanding and displaying the data. States were chosen and are used in the remainder of this Chapter, because State laws and policies influence overall and sector-specific economic growth.

Methods include time trends, means, correlation coefficients, average annual percent change, and an input-output model, IMPLAN. With the exception of the IMPLAN model, techniques can be found in any basic statistics textbook.

IMPLAN was developed to analyze impacts of forest plan alternatives on the national forests. It is currently maintained by the Minnesota Implan Group in Stillwater, MN (1997). The model evaluates the effects of a change in demand for a good or service, taking into account imports to and exports from a region, local production efficiency, and spending by households. For this analysis, supply and demand were pooled to estimate trade. This method assumes that local purchases of a commodity are purchased from local suppliers, to the extent possible, with excess purchases imported from outside the region. Supply/demand pooling results in larger multipliers than the alternative method (regional purchase coefficients). In our opinion, however, pooling yields are more representative of actual southern trade flows for the forest-based sectors. Because we are modeling the entire South, larger multipliers are of less concern than if we were modeling only a small subregion.

For the IMPLAN analysis, the nonforested portions of Texas and Oklahoma were excluded, and the remainder of the South was treated as one region. Analysis of one large region resulted in larger multipliers, and thus larger economic impacts, than would result if smaller regions were used. Multipliers for the wood products sectors were previously developed for each State by Aruna and others (1997), also using IMPLAN.

Input-output models are based on a description of the economy as an interrelated system of equations, where output of each commodity or service is the sum of demands from households (final demand) plus demands from all industries or services that use the commodity for further processing (intermediate demand). Inputs into production include labor (jobs and income), capital (inventories, property, and proprietor income), and cost of materials. The values of inputs of labor and capital sum to value added, and value added minus indirect business taxes is the value of gross industry production. When summed for a State, region or nation, this value is gross State, regional or national product, our most commonly used measure of general economic welfare.

Input-output models implicitly assume an economic- or export-based economy, and therefore that exports are the sole drivers of economic growth. However, there are several concerns with economic-base models, and the relationship between growth and economic well-being or quality of life is still unclear (Niemi and Whitelaw 1997). Input-output models do not provide a complete evaluation of the links between the economy and well-being. However, they do provide insights into one important dimension of this relationship -- the link between forests and jobs and income. Other aspects of well-being are addressed in Chapter SOCIO-6 and Chapter SOCIO-7.

Analyses of the effects of forests on local economies, particularly comparisons between wood products and recreation/tourism, are complicated by the determination of the actual user of the forest or forest product. The user of timber would be a logging contractor, who is the first, though not the last, user of the timber produced in the South. The user of forest-based recreation is the consumer, who is the end user of such services. Thus, the impact of timber includes the effect of growing and logging timber, and may also include subsequent processing by sawmills, pulpmills, other mills, and furniture manufacturers. The analyses presented below allow the reader to assess the impacts through mill processing, or to stop at any earlier processing stage. Recreation impacts were developed for both resident and nonresident users, where residents were defined as those recreating within 50 miles of home.