Southern Forest Resource Assessment led by the USDA Forest Service's Southern Region and Southern Research Station in collaboration with the USEPA, US Fish & Wildlife, TVA, and state forestry agencies of the Southern United States

Broad Category: Social and Economic

Question SOCIO-5: What role do forests play in employment and local economies in the South?

1. Include all sectors of the economy related to forests when answering this question (e.g., timber products and recreation and tourism).
2. Define sub-regions for economic analysis so that they correspond with fine scale economies.
3. Examine the history of change in economies and the relative contributions of different forest-based sectors.
4. What are the economic consequences of anticipated future land use and timber harvesting?
5. Examine the distributional consequences (spatial and income distributions) of these economic consequences.
6. Examine public (federal and state) investment in the forest sector.
7. Define tax revenues generated by forest and wood products operations

Question Manager: Karen L. Abt

Overview:

Though many other factors are important in determining quality of life, the subset that is standard of living is still important in our society.  The contribution of forests to the local and regional measured economy, including jobs, income and gross regional product is often used to influence policy decisions regarding use of our forests, both public and private.  How the economies have changed and are expected to change, the relative contribution of different economic sectors, the impacts on different demographic groups, and the value of government contributions are aspects of the local economic structure that will be addressed in this question.  Because the traditional measure of economic activity, gross regional product (akin to gross national product), does not fully measure the level of economic welfare derived from economic activity, new measures of welfare have been proposed.  Although neither the data nor models are available to incorporate these aspects of the non-measured economy, this question will discuss available theory and research on the impacts of forests and forest activities on the non-measured economy, including impacts on stocks and flows (services) of air, water and carbon sequestration.

Methods:

• Develop response coefficients from the IMPLAN model. This is a county-level input-output model, developed by the US Forest Service to analyze one-time changes in an economy.  Subregions will be used (aggregations of counties), and response coefficients will be developed for the major forest sectors, including timber (sawmill, furniture and pulp/paper), recreation/tourism and National Forests.  These response coefficients will represent the direct, indirect and induces impacts of these sectors on the economy.  Note that the model must be used with caution for evaluating major or continuing changes in the economy.  IMPLAN is a static model and does not readily incorporate adjustments such as migration, new industries, new technologies, etc.
• Analyze of Bureau of Labor Statistics data by 4-digit SIC (smallest sector level data available) using trends, charts and maps.
• Develop diversity indices using entropy and linkage methods, and correlate these with various standard of living measures.
• Discuss benefits and costs to public treasuries of various forest sectors.  Conduct statistical analysis where adequate data is available.
• Discuss relationship of standard of living to forest condition.  Conduct statistical analysis where adequate data is available.
• Discuss relationship between recreation/tourism activities and forest condition.  Conduct statistical analysis where adequate data is available.
• Discuss relationship between location decisions (industrial and individual) and forest and demographic conditions.  Conduct statistical analysis where adequate data is available.
• Discuss externalities of economic activities, natural resource accounting, and distributional impacts (intergenerational, interregional, demographic).  Provide data if available.

Data Sources:

Bureau of the Census (Population and Housing, Manufactures, Agriculture)
Bureau of Labor Statistics
IMPLAN Database
Bureau of Economic Analysis (REIS, County Business Patterns)
USDA Forest Service Forest Inventory and Analysis
Recreation data (S/E question 6)
National Forest System harvest, expenditures, payments to counties
Harvest projections (Timber question 1)
Land use projections (S/E question 1)

Products:

• Response coefficients by forest sector for two dates, probably 1982 and 1996 (date of latest available data, 1997 will be used if available)
• Statistical results if generated, data summary tables if available.
• Diversity indices.
• Tables and charts of BLS data.
• Tables and charts of public expenditures and revenues in forests.
• Table of contribution to gross regional product by sector.
• Table of information on natural resource accounting, including available and reliable data.

Collaborators:

Susan Winter, USDA Forest Service, Inventory and Monitoring Institute

John Wagner, Assistant Professor, SUNY

Ken Cordell, Jeff Prestemon, David Wear, other question managers in the assessment

Unresolved issues:

• Available data on externalities, recreation/tourism, non-measured economy, state and local industrial location incentives.
• Sector definitions do not isolate chip mills
• Needs a small area study, but waiting until October to begin will seriously limit data collection and analysis.

Related Literature:

Abt, K.L. and F.W. Cubbage. Economic Diversity and Wood Products Dependency in the Rural South. In review.

Alward, G. 1996. “Database of economic diversity indices for US areas”. Unpublished manuscript. Available from the author at the USDA Forest Service, Fort Collins, CO.

Aruna, P.B., F.W. Cubbage, K.J. Lee and C. Redmond. 1997. Regional economic contributions of the forest-based industries in the south. Forest Products Journal 47(7/8):35-45.

Attaran, M. 1986. Industrial diversity and economic performance in U.S. areas. Annals of Regional Science 20(2):44-55.

Bender, L.D. and others. 1985. The diverse social and economic structure of nonmetropolitan America. Rural Development Research Report No. 49. Economic Research Service, USDA. Washington, DC.

Bliss, John C., Tamara Walkingstick, and Conner Bailey. 1998. Sustaining Alabama's Forest Communities: Development or Dependency? Journal of Forestry 96(3):24-31.

Costanza, Robert.

Deavers,K.L. 1989. Rural America: lagging growth and high poverty...do we care? Choices 1989(2):4-7.

Joshi, Mahendra L., John C. Bliss, Conner Bailey, Larry J. Teeter, and Keith J. Ward. 2000. Investing in Industry, Under-Investing in Human Capital: Forest-Based Rural Development in Alabama. Society & Natural Resources 13 (5). (Forthcoming July-August 2000.)

deVilbiss, J. 1992. Economic diversity and dependency assessment. Rocky Mountain Region, USDA Forest Service

Malizia, E. E. and S. Ke. 1993. The influence of economic diversity on unemployment and stability. Journal of Regional Science 33(2):221-235.

Minnesota Implan Group, Inc. 1995. User’s, Analysis, Data Guide for IMPLAN Professional. Stillwater, MN.

Niemi, Ernest.

USDA Forest Service, Forest Inventory and Analysis. Web page. “www.srsfia.msstate.edu”.

USDA Forest Service. 1999. Annual Report of the Forest Service. Washington, DC.

USDA Forest Service. South’s Fourth Forest.

USDOC Bureau of the Census. 1970 and 1990 Census of Population and Housing. Census of Manufacturing.

USDOC. Bureau of Economic Analysis.

USDOL. Bureau of Labor Statistics.

Wagner, J.E. and S.C. Deller. 1998. Measuring the effects of economic diversity on growth and stability. Land Economics 74(4): 541-546.

 modified: 23-MAR-2000