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Use of IMPLAN data and model for estimating

Updated 06/09/2005

Regional Impacts for the Turkey Creek Watershed, NE-KS.

This report summarizes the use of IMPLAN to calculate regional economic benefits for the recommended alternative for the Turkey Creek Watershed Plan. . Since the proposed project would be paid primarily from state and watershed district funds from outside the watershed, Pawnee Co., Nebraska and Nemaha Co., Kansas were used as the IMPLAN area. The regional effects were developed from the project construction and the NED analysis.
The project construction expenditures of $5.6 million for the five large and 70 small dams would create 73 person-years of construction employment directly, and another 40 person-years of employment as the funds circulate though the two county region. The $5.6 million in construction would leave $3.7 million dollars of Value-Added within the watershed.
The NED flood damage reduction benefits of $529,100 were modeled as increased income for medium income households. This would create another $260,000 of spending, 5.3 additional permanent jobs, and $153,500 of additional annual value-added in the local counties. The NED recreational benefit of $24,400 was calculated from the P&G tables at $4.52 each for the 5,400 visitor days. Awaiting better information, this impact was calculated with $20 per day expenditures divided between $10 retail purchases and $10 of eating and drinking. This $108,000 annual expenditures creates 4 jobs and $75,000 in local value-added annually. Better recreation expenditure information will be used in the final analysis.

The National Economic Development Account (NED) has average annual effects as follows:

National Economic Development Account(NED)  
Beneficial Effects $ Dollars Adverse Effects Dollars
Reduced Flood Damage 529,100 Average Annual Installation Cost 125,200
NED Recreation 24,400 OM&R Costs 47,000
Totals 553,500   172,200
Net NED 381,300    

The Regional Economic Development Account (RED) has average annual effects of

Within Pawnee and Nemaha Counties Regional Economic Development Account
 
Beneficial Effects $ Dollars Adverse Effects Dollars
NED Reduced Flood Damage 529,100 AA Landrights Costs 7,200
Local value-added from NED Reduced Flood Damage 153,500    
NED Recreation 24,400    
Local value-added from Recreation expenditures 75,000    
Annualized Local Value-added from Construction Expenditures 102,000    
Totals 884,000   7,200
Net Local RED     876,800

Rest of United States Regional Economic Development Account
 

Beneficial Effects $ Dollars Adverse Effects Dollars
    AA Other Installation Cost 118,000
    OM&R Cost 47,000
Totals 0   165,000
    P & G Adjustment Factor 330,500
Net Rest of US RED     498,500

NOTES

IMPLAN (Impact Analysis for PLANning) was originally developed by the USDA Forest Service in the mid-70s. The current IMPLAN input-output database and model is maintained and sold by MIG, Inc. (Minnesota IMPLAN Group). The Natural Resources Inventory and Analysis (NRIAI) and Social Sciences (SSI) Institutes are supporting development of IMPLAN within NRCS. NRIAI has the data and a NRCS site license for all 50 state models. You can obtain county models upon demand within a day from MIG, Inc. Each NRCS region has a trained economist with the IMPLAN model.
In most older PL-566 projects, the Federal Government pays most of the cost. In this project, most of the cost is borne by the Nebraska Natural Resources Commission and Nemaha Natural Resources District. This study area was designed to separate the benefited area (local watershed) from the outside cost bearing area. The watershed also crossed the state line. In most PL-566 studies, the local region for IMPLAN analysis would be the state. Using state instead of county IMPLAN regions would provide large multipliers, since there would be less leakage outside a larger region..
NED is National Economic Development as defined in P&G. RED is Regional Economic Development as defined in P&G.
Value-added is payments made by industry to workers, interest, profits and indirect business taxes. These can all be considered as net benefits to a local area, similar to NEDA benefits. Total expenditures or sales also include payments for imports and other fund flows outside the region.
The reduced flood and sedimentation damages to agriculture result in little change in normal agricultural expenditures. If a cornfield is flooded out; most land, labor, and input costs have already occurred. The gain is primarily in increased farm income. Likewise, reductions in road and bridge damage should ultimately be reflected in lower tax rates, thus higher personal income. This approach cleanly allows the IMPLAN value-added figures to be added to the NED benefits for RED benefits.
P&G refers to Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, 1983, the guidelines for NRCS, USACA and TVA water resource economic analysis. These guidelines are also consistent with Circular A-94 for OMB analysis of federal projects.
The default method for estimating recreational benefits uses consumer surplus work done in the early 70s to develop a table estimating NED recreational benefits by user day by type and quality of the recreational opportunity. This is used in lieu of better localized information using the travel cost method or contingent valuation methodology. This 1983 table is indexed by CPI to current dollars. These benefits seem conservative when compared with other methods.
Installation Costs annualized at 0% interest for 50 years, according to Nebraska Water Resources Board guidelines. The projects are evaluated on a Internal Rate of Return basis, not the Maximize Net Benefits internal criteria for NED determination or the Benefit/Cost ratio.
Land rights are donated by the local landowner. Maintenance costs are the responsibility of the large Nemaha Natural Resources District.
P&G requires that the Local RED plus the Rest of US RED = the NED benefits. An adjustment factor is added to the rest of the US account to make the accounts balance. The assumption is, if this investment had been spent in a different location, then that other region would have obtained similar Regional Economic Impacts. This is why the RED accounts are useful to local decision makers within the region, but less so to national decision makers outside the region. In other NRCS projects, regional economic impact analysis has been used to drum up local and state support because of the high local benefits to costs.
Please contact Keith Sheets, NRCS, Economist, Nebraska State Office; or Dr. Constance Miller, NRCS, Management Analyst, Northern Plains Regional Office, for information on this particular study. Please contact David Buland, CNTSC, Fort Worth, TX ; or Kevin Boyle, SSI, Portland, OR; for additional information on using IMPLAN for your analysis.