Industry Spending Patterns can also be imported from IMPLAN's library using the Activity Options. Like custom created spending patterns, Labor Income and direct effect will still need to be figured and added to the total impact. This is the first example that does not begin with creating a new Activity.
5c. The county wants to know what the effects of spending $8MM on rebuilding bridges and highways will have on the economy. Sector 56: Construction of new highways and streets is most appropriate. Import the Industry Spending Pattern for Highway and bridge construction to model the effects of the $8MM impact.
- Return to the Setup Activities screen.
- Import the Industry Spending Pattern for Highway and Bridge Construction.
- At the top of the Activity portion of the screen, select Activity Options>Import>Industry Spending Pattern.
- Select the Sector 56 and import.
- Once the Import Success screen appears, click OK.
- An Activity 56 Construction of new highways and streets will appear in the Activities screen.
- Click on the Activity. The Events list will display.
- Edit Activity Level to show the investment value for the project.
- Select Edit Activity at the top of the Setup Activities screen. Change Activity Level to Output: $8,000,000.
- Notice that the total Event value is 0.47 and that LPPs are set to the SAM model values.
- The Event value indicates that only 47% of spending of highway bridge construction goes to purchasing goods and services used to build highways and bridges. Therefore, the remaining 53% is the Value Added portion of the impact. For this simplified example, we will assume 3% of output goes to Tax on Production and Imports and Other Property Type Income overall. We will account for the remaining 50% in our Labor Income impact. In a real study it would be wise to try to determine the actual Labor Income Value and use that instead.
- Modify the Spending Patten if necessary:
- The LPP fields are set to SAM model value but can be modified if you are provided with more specific information about how the commodity will be sourced locally. LPP is modified using the Event Options menu.
- The coefficients on each Event indicate what percentage of Output that goes to purchase each commodity. If you have more specific information these coefficients can be modified. Note, changing a single Event commodity coefficient will change the total Event Value from .47 to some new ratio. Coefficients are modified using the Event Options menu.
- Create a Scenario to analyze the effect of the construction.
- Click New Scenario. Name the Scenario "Highway and Bridge Construction", leave Level at 1.00, and save. Select the 56 Construction of new highways and streets Activity.
- Analyze for Single Region
- View Results
Of the $3,760,000 (47% of $8,000,000) spent on purchasing goods and services for building highways and bridges, we can see that approximately $2 million was spent outside the Study Area as imports. Since these purchases are sourced on a commodity basis, we can also see the $2000 sourced from Institutional production.
Again, the indirect effects of spending patterns are the first round of spending, which we can see by comparing the spending pattern to the direct effects in the results.
Create a Labor Income Activity to model the remaining effects.
- Return to the Setup Activities page.
- Create a Labor Income Activity to model the impact of 50% of the Highway and Bridge Construction Spending being on Labor.
- Click New Activity. Select Labor Income from the Activities list, and name the Activity " Highway & Bridge LI". Save. The county has not indicated where their workers reside, so we will assume that all construction workers for this project live within the Study Area
- Choose Sector 5001 Employee Compensation, and set the Labor Income Value to $4,000,000 (or 50% of Output).
- Create a Scenario to model the impact of the Employee Compensation.
- Click New Scenario. Name the Scenario "Highway & Bridge LI", leave Level at 1.00, and save. Select the "Highway & Bridge LI" Activity.
- Analyze for Single Region
- View Results. Like all Labor Income impacts, we are tracking the spending of compensation, so we are tracking only induced effects.
This tells us the value of the applied to the labor income impact.
If we combine the two Highway and Bridge Construction Activities (the spending pattern and the Labor Income Activity) into a Single Scenario, we get approximately the same effect as adding the two Scenarios demonstrated above.
Remember that we still need to add in the effect of the actual construction output and employment. In this instance if Washington County did not provide us an employment number, we could estimate the direct employment impact by entering $8,000,000 into Sector 56 and using IMPLAN's employment estimate.