crop change analysis
Hello
I'm setting up an analysis of changes in crop acreages and production. The crops would be in various ag sectors, such as grain, vegetable and melon, and other. I have detailed crop production budgets for each crop that is changing. To use this local data to estimate the impact, could I:
1. change the production function coefficients for the ag sector using the cost data for each crop, then input the direct impact in that sector? What effect does this have if I am only considering one crop in the category and not, say, all the grain crops that are in the region?
or
2. use the reductions in input purchases as my direct impacts and put them in each relevant sector (wholesale trade, machinery repairs, household income, etc.). Would I need to change anything in the grain sector if I do it this way?
Do either of these options work or is one way better?
Also, I need to include forward linkages, such as transportation or milling. For this, I was going to include the change in appropriate industry and make the grain sector coefficient zero. Is this correct?
Thanks in advance for your help!
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1. You are correct that this method would change all producers in the region to behave like yours. An alternative would be to create new ag sectors for yours, but then you would need to subtract their employment, output, etc. from the existing sectors, so that would be fairly complicated and time-consuming. 2. This is the approach I would recommend. This is known as analysis by parts, for which there is a tutorial (http://implan.com/V4/index.php?option=com_docman&task=doc_download&gid=108&Itemid=7) and numerous forum discussions. Basically, you would: a. Import the Industry Spending Pattern for the dairy sector (Activity Options > Import > Industry Spending Pattern), then go to Event Options > Change All > Normalize Events. At this point, the coefficients sum to 1.00 and represent the proportion of the non-payroll budget that is spent on each input. Edit these coefficients as necessary. After making the edits, you'll need to normalize again: go to Event Options > Change All > Normalize Events. Finally, click Activity Options and set the Activity Level to the non-payroll portion of the expenditures. This will give you the indirect effects. b. Run a Labor Income Change Activity for the payroll portion (you can sum the payroll for all crops together into one Activity - the results will be the same). This will give you the induced effects. c. The lost crop sales and associated employment and labor income are the direct effects. As for the forward linkages, if you zero out the coefficient for ag (I'm assuming you mean in the production function of the forward-linked sectors) that only gets rid of the double-counting from the first round of spending; there would still be double-counting from the other rounds of spending. What you need to do is go to Customize > Trade Flows > and set the RSC for the ag sectors to 0. This ensures that none of the ag output will be purchased locally. After doing this, you will need to re-construct your multipliers via Options >Construct > Multipliers. -
Thanks Jenny. I have another question... I have two crops in the grains sector. If I import the industry spending pattern for grains and change the coefficients to reflect my rice production budget, then can I just import the industry spending pattern for grains again and change it to reflect a corn budget? Are the activities separate? What happens to the other crops in the grains sector? Thanks. -
Hi, I have a few follow up questions - 1. The industry spending patterns for the crop sectors have a high coefficient for real estate, buying and selling, leasing, etc. What exactly does this mean? My analysis is considering temporary changes in crop production, so this would be 0 in my modified spending pattern. I just want to make sure I am not missing anything since the IMPLAN coefficient is so high. 2. I asked about forward linkages earlier, but wanted to double check a different method. Can I add a commodity to the spending pattern for grains (say Grain Milling) and include my own coefficient to represent a forward linkage? If this is correct, how do I do it? Or is it better to run a separate impact to grain milling in addition to the effect to the grain sector and add them togehter for the full effect? Thanks! -
If you set LPP to 0, this means that 0% of the purchase is made locally; thus, there will be no local impact from the purchase (i.e., a value of 0 will be applied to the multiplier for that sector). However, this only gets rid of the double-counting from the first round of spending; there would still be double-counting from the other rounds of spending (i.e., other indirectly affected and induced sectors may still make purchases from that sector), which is why you need to set RPC/RSC to zero.
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