Forestry and Timber Tract Production

I am working on an analysis that is examining the impacts of changes to forestry harvest restrictions in Wisconsin. I am focusing on a few select counties, as well as larger regions within the state. Based on my conversations with the experts in this area, they feel that the primary group that would be impacted by changes to harvest restrictions would be the forest land-owners. We assumed that most of these individuals would be categorized in sector 15 - Forestry, Forest Products, and Timber Tract Production. However, upon examining the data for the three focus counties, all of them have zeroes in that sector - no employment, no output, etc... We have the names of some of these large private landowners, and we have been searching online to determine their NAICS classifications. It appears that they are classified in a wide variety of sectors (Wholesalers, Hotels, Manufacturing, Building materials, etc). It seems that most of these large private landowners probably earn some of their income from timber sales, but they have other businesses that they consider to be their "primary" source of income - often related to forestry products but often not. My first question is... how are the employment and output numbers in IMPLAN calculated? If a business classifies itself under multiple industries, are employment and output numbers divided amongst those industries, or are they all distributed to the primary classification? Secondly, in this case, would I be advised to impact sector 15 regardless of the fact that it doesn't "exist" in the region? I don't know how else to model the additional dollars. Thank you in advance for your help! Monica
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  • Sorry about the delay in getting back to you. After considering this we see a couple of different questions we think would be helpful to ascertain to help us provide you clearer direction on how you might approach this. To model potential losses, we need to qualify the following: 1. Are the forest land-owners in question actually doing anything to produce the harvest (e.g. planting the trees or doing the actual logging) or is this simply a loss of income for those owners? 2. If if just a loss of income, are they primarily corporate owners or local individuals that are the property holders? It sounds like mainly larger, non-local corporations from you description, but we would like to verify that. 3. If these are outside corporations and aren't doing their own harvesting, do they have any local purchasing or investment activity such as hiring a local contract logging company that could be impacted? IMPLAN will link Employment, Labor Income, Value Added and production data to the Industry associated with the NAICS code. This should be reported by the company to reflect their specific type of activities in the region, but this is dependent upon proper reporting of the organization to the federal government. There are a few cases, such as hotel casinos where splits are made for the basis of production function alignment (hotels from casinos) in the data, even though the same NAICS is reported for their activities. If you use Sector 15 as it stands now, there will be a zero Multiplier and so you will have no results. We are hoping based on the questions above we can help you to more clearly classify the type of Sector that would be the most appropriate. One other thought: IMPLAN looks backward through the supply chain so reducing the harvesting won't have any forward linkage effects such as reducing sawmill output. This may not be a consideration for you, but we just wanted to be sure that you weren't looking for that kind of information to emerge from the study of forest harvesting. Hopefully this helps --Implan Support Staff
  • To respond to your questions: 1. We suspect that most of the forest land-owners are probably not actively planting or harvesting the forest land, but simply gaining/losing income as a result of changes in restrictions. 2. We looked at 86 large land owners to try to identify their classification. About 36 of them were local companies (i.e. located in Wisconsin). We were not able to find the remaining companies locally. This could mean that they are large national corporations, or simply that we couldn't find them in the database we were searching. Speaking of that, do you know of a good resource for finding companies' NAICS codes? We have been using Reference USA, but it's not a sure-fire solution. I should also mention that there is a sizable portion of landowners that are just individuals - private households - that own maybe 100 acres. 3. The experts I've been working with do believe that the property holders are likely contracting with local companies for the harvesting. So, just to clarify the way companies are classified within IMPLAN... if a company reports itself primarily in sector 321113 - Sawmills, but secondarily in sector 115310 - Support Activities for Forestry, their employment, labor income, etc. would show up in the industry related to their primary classification only - Sawmills? Is that correct?
  • Hello, 1. It sounds like the landowners are simply benefiting from owning the land and aren't putting in any production to it, so there will be no change to them expect not receiving income from the property. If this is so, that means there would be no Intermediate Expenditures associated/no Industry production so the only impacts could be loss of Household Income (in the case of local small landowners, or potentially corporate profits. 2. We suggest trying to search them on your preferred internet search engine. Another option is Dun & Bradstreet, but they may not be cost effective. In order to Model either landowning households or corporations you would need a sense of how the spending decrease would affect the area. Will it result in reduction of savings? Will it result in lower overall household purchases? For local corporations, it is always challenging to defend how loss of profits for corporations will affect them - unless it can be tracked to a reduction in the Employment, wages or production, in a given year, there's not much to Model. For non-local corporations this is largely probably leakage anyway, unless they can quantify some buy back. IMPLAN Classification: if they are split in two classifications they should be represented/split between those two classifications. If you want to try to determine the impact on local harvesting or sawmills that presents some additional challenges because there is a not a strict tie from local timber to local sawmills, or local harvesters, although the latter is likely a little easier.
  • Hello again, I have a follow up question related to this project. For reference, the basic purpose of the analysis is to estimate what would happen if timber harvest constraints/restrictions were relaxed or eliminated. The experts I'm working with in the industry feel that the main effect of relaxing these restraints would be an increase in timber harvest resulting in more $ for loggers and land owners. I had planned on performing the analysis in three parts: (1) by doing an industry change activity to the logging industry (2) by increasing household income representing the private landowners and (3) by increasing $ to the government representing the government landowners My questions are as follows: 1. Upon discussing this project with one of my fellow researchers, he suggested using a commodity change activity rather than an industry change. Do you think this is more appropriate than the method I had intended to do? 2. How should I shock the government landowners? They are a mix of federal, state, and county. I see that there is the option to import an Institution Spending Pattern for various government branches. Would this fall under non-defense or investment? Or should I use some other method altogether? Thanks, Monica
  • Hello, 1. We threw this idea around, and decided that it would not be the best fit for what you are modeling. If you are looking at logging, we recommend staying with sector 16 Commercial Logging as it best fits your analysis and who produces logging. 2. We don't typically recommend shocking governments unless you are sure that those funds would be spent in the same year and know exactly how they are spent. This is especially true because governments don't have a strong tie between income revenue and spending, even more so in the federal government because where the funds are collected may have little, if any relevance, on where they are spent. This same principles hold true for all governments. If you aren’t able to clearly identify how the funds would be spent, we presume they would be likely be spent in non-education or investments. You can view the different institution spending patterns in the different Utility Models as mentioned above. In addition, there is a caution about the Household Income Change. Before you model increases of Household Income you should verify the following: 1. The households receiving the funds are local to the Study Area (Regions used to build model) 2. That these funds will be spent in the local Study Area, as opposed to going into savings, investment, vacation/travel. Often extra funds go to auxiliary spending that is non-local, even when recipients are residents. Typically these funds are going to higher income groups, since lower income groups are not likely land investment holders – which causes a stronger than average possibility that these funds, because they are auxiliary, are used in other investments or go to savings. 3. Typically it is best not to use Household Income Change for these Activities because the spending pattern associated to additional funds of this nature, like those for a tax return, are not typically spent in a traditional household spending pattern, i.e. in most circumstances this new money won't increase mortgage payments, utility payments, waste management payments etc. We recommend, if you choose to model these funds, removing the taxes and savings from the income values, then using that remaining value with a modified and normalized Household Spending Pattern. Also, we suggest removing items not likely to increase as a result of these funds from the spending pattern. Please let us know if you have any additional questions. IMPLAN Group Staff


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