The IIA/ICA Trick for Detailed Contribution Analysis

INTRODUCTION

Standard Industry Contribution Analysis (ICA) Events typically only allow for a single input (Output). However, we may possess granular data, such as specific Employment counts or Labor Income totals, that we wish to utilize while maintaining the restrictive buyback linkages of a contribution study.

In this article we’ll look at how to leverage both the Industry Impact Analysis (IIA) (Detailed) Event and the ICA Event to accomplish both objectives. We’ll explore why we might want to use this "trick," how to use it, and how to interpret the results.

THE INTUITION: WHY RESTRICT FEEDBACK LINKAGES?

In a standard IIA model, IMPLAN assumes that if an industry grows, it will buy more from its local supply chain, including other firms within its own industry classification. This creates a "feedback loop" where the industry's own growth triggers more growth within itself. 

This is okay if we’re modeling a smaller portion of an industry. However, as we start to model a larger portion of an industry, or even the entire industry, this is no longer appropriate. 

In these cases, we restrict these linkages for two reasons:

1. Avoiding Double Counting 

If we are already accounting for 100% of an industry's current Output in our Direct Effect, we cannot allow that Industry to appear again in the Indirect or Induced effects. Intuitively, if the industry “buys from itself” and we include those purchases as Indirect Effects, we are counting a portion of the industry twice. 

2. Conservative & Defensible Modeling

This method is preferred when the goal is to show how much the rest of the economy depends on an already existing industry.  It’s a conservative approach and is more defensible, particularly if you aren’t modeling new growth. 

The intuition to remember is that in these cases we aren’t showing how the industry could grow. Instead, we are taking a snapshot of how other regional industries depend on our Industry of interest. 

By being conservative and “freezing” buybacks, we freeze our specified Industry’s size. This prohibits our model from pushing our Industry beyond its existing size through Indirect and Induced effects. 

THE IIA/ICA "TRICK"

The IIA/ICA trick is a simple model implementation where we use:

1. One or more IIA (Detailed) Events to input our project data. 
2. One ICA Event with a $1 input for each Industry for which we want to restrict buybacks.

This trick works because ICA Events restrict buybacks to the specified Industries across all events in the same Group as the ICA Event. 

WHY THE IIA/ICA IMPLAN TRICK?

The ICA Event restricts buybacks and allows us to capture Industry contributions. However, it only supports the Industry Output as an input. There are many cases where we have additional information, such as employee headcount or intermediate inputs. In these cases, the IIA (Detailed) allows us to input multiple inputs and rebalances the Industry’s underlying production function, accordingly.

The IIA/ICA trick allows us to take advantage of:

1. The production function rebalancing of the IIA (Detailed) Event.
2. The buyback restriction of the ICA Event.

EXAMPLE: THE BERKSHIRE SPECIALTY PAPER MILL 

STUDY OBJECTIVE

For this study, we will examine the economic contribution of Berkshire Specialty Papers in Bennington, New Hampshire (Hillsborough County). This paper mill is the oldest paper mill in the country and the only paper mill in Hillsborough County. 

We have the following information about the operations of Berkshire Specialty Papers:

• Employee Compensation: $15,000,000
• Total Output: $75,000,000
• Wage and Salary Headcount: 90

MODELING CHALLENGES

Given that this is the only paper mill in Hillsborough County, we should focus on an Industry Contribution Analysis. However, we also have detailed information about Berkshire's operations. We want to be able to take advantage of this information, particularly because this is a legacy paper mill whose production structure may differ from the representative paper mill in IMPLAN. 

This scenario is the perfect situation for pairing an IIA (Detailed) Event with an ICA Event.

MODEL OVERVIEW

Event 1 - IIA for Berkshire Paper Mill Operations

 Event 2 - ICA for Berkshire Paper Mill Operations

IMPLAN SETUP

Now that we have a clear overview of our model, it’s time to get this running in IMPLAN! Our first step is selecting our Region, Hillsborough County, NH. We’ll do this using the Region Search Bar. 

Now that we’ve added Hillsborough County, NH, to our Selected Regions, taking a look at our Region Details helps us understand why we need to restrict buybacks. Examining the STUDY AREA DATA > Industry Summary tables lets us see the state of the entire paper mill industry in Hillsborough County, NH.

From the Region Details, we can see that the Berkshire Specialty Paper Mill makes up nearly the entire paper mill industry in Hillsborough County, supporting the necessity of restricting buybacks.

Once our Region is selected, we can move to the Impacts page and set up both Events. 

After setting up our Events, we drag them to our Hillsborough County Group and click Run. Note that IMPLAN will indicate when an ICA event is added to a Group as a warning that buybacks will be restricted.

UNDERSTANDING OUR RESULTS 

There is one key step we need to take when considering the results of our analysis. Since the ICA Event is only meant to restrict buybacks and doesn’t reflect true economic activity of the mill, we should filter our results on the IIA Event only. 

After filtering the ICA Event out, we see that the economic activity of the Berkshire Paper Mill supports roughly 220 jobs earning nearly $26 million in Labor Income. It also supports value added of nearly $40 million and generates a combined tax revenue of $8.7 million at the federal, state, and county level. 

In addition to these total results, the Industries by Impact table highlights the effect of our ICA Event. In particular, note that in our specified Industry, Industry 37 - Paper Mills, there are only Direct Impacts. Because buybacks are restricted, there are no Indirect or Induced Impacts for Industry 37 - Paper Mills. 

CONCLUSION

The IIA/ICA trick provides a powerful, yet conservative, method for conducting detailed contribution analysis within IMPLAN. By pairing an IIA (Detailed) Event, which incorporates granular data and rebalances the industry’s production function, with an ICA Event, which restricts Industry buybacks, analysts can achieve the best of both worlds. 

This technique is particularly valuable when modeling the contribution of an entire or near-entire industry within a region, ensuring the results accurately reflect the dependency of the rest of the economy on the existing industry.
 

RELATED ARTICLES

Industry Impact Analysis (Detailed) Events

ICA: Introduction to Industry Contribution Analysis 
 

Written February, 20, 2026