gross absorption coefficient

jamesy111

February 26, 2013 02:30

Hi I just have a quick question. I have been looking at gross absorption coefficient for water commodity. My understanding is that if gross absorption coefficient is 0.04 for grain industry, it means water as inputs represent 4 % of cost of producing output related grain industry. Is this correct? Also, I notice that the sum of it within industry is not equal to 1. How could this be posssible? Does this mean I have to adjust the value of gross absorption coefficient? Are these numbers reliable?

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IMPLAN Support
February 26, 2013 04:38

Hi James, The Gross Absorption Coefficient does reflect the total amount of any commodity or service required for the production of the selected industry’s products. So if the coefficient is .04 or 4% that means total commodity purchases for water for your region are approximately 4%. The reason this value is less than 1.00 is that goods and services only represent on portion of an Industries total Output value, the Intermediate Expenditures, part of the industry Output is also their payment to employees, proprietors (in AG Sectors these are the farmer’s themselves) and payment to profits and Taxes on Production. These are the Value Added elements. If you click on the Value Added tab, you will see these remaining elements, and the remaining percentage distributed there.

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