LPP and Non-local purchases
Hi there I am working on an analysis where IMPLAN identifies the LPP for the sector as ~24% within the study area. Therefore, IMPLAN estimates that almost 75% of purchases for the sector would likely be from sources outside of the study area. I am wondering if it is possible to determine the backward linkages of a sector, regardless of study area, to determine what industries may be lacking/missing in the study area (for 75 percent of purchases to be outside the study area). Or, put another way, is it possible to get more detail on the non-local purchases? Is there a way to obtain a distribution of industry sectors for these purchases? Thank you, Julianne
Hi Julianne! Thank you for your forum post. The LPP field in the IMPLAN software identifies how much of the impact is taking place in the study region you selected. For example, a LPP value of 24% means that only 24% of the impact is happening in your study region and the remaining 76% is occurring outside of your region. However that would be considered leakage and would not be counted towards your study. By default the LPP value is 100%, as this means that 100% of the impact is occurring in the study region. It sounds as if this setting was changed to reflect to Set to SAM Model Value. Are you using an Industry Change Activity or a spending pattern? This does not mean that the supplies are local as the value represented for this is RPC (Regional Purchase Coefficient). The RPC value is already built into the Multipliers. RPC is the amount of X Commodity that can be produced in a region based on local demand. The Explore> Social Accounts> Balance Sheet (Tab), and select View By: Industry Balance Sheet and the Commodity Demand tab will show you the first-round of backward linkages their required % to meet production (Gross Absorption) and their regional ability to be obtained locally (Regional Absorption). Beyond this though, the Model is only able to provide a limited sense of the local sourcing of commodities based on a separation of domestic (sourced from outside the region but inside the U.S.) or foreign (sourced from outside the U.S.). This information is found in the Explore> Social Accounts> Commodity Trade tab. If you do mind providing additional information, we can be more specific in our response!
Hi there Thank you for your response! Yes, I had set LPP to the Sam Model Value for an industry change activity. It sounds like I was mixing up LPP and RPC. So, looking at the Industry Balance Sheet, if gross absorption is the first-round of backward linkages required to meet production, why would the gross absorption for total commodity demand be lower than 100%? And what are the gross inputs showing? I am also trying to understand the difference between RPC and Regional Absorption. RPC is the amount that can be produced in the region, whereas regional absorption is backward linkages of what can be obtained locally? For the commodity trade tab, I am not understanding which columns are showing what is sourced outside the region or outside of the U.S., as you were describing. There is a foreign export proportion, but that is what would be exported, correct? Thanks so much!
Hi Julianne! Thank you for your follow up questions. Regional Absorption will tell you the % amount of that commodity that is produced in that study area. As Gross Absorption is the total % amount that is needed of a specific Commodity to make that industries production (regardless of location, in or outside of the study region). Regional Absorption is the 1st round of Indirect Impacts. The Total Gross Absorption will always be less than 100%. This due to the equation of Output (Intermediate Expenditures or Gross Absorption) + Value Added). The other component is the total Value Added % which can be found next to the Commodity Demand tab called, Value Added. If you add both of those total values, it will be 100%. The Gross Inputs is the dollar value to the corresponding Gross Absorption %. The RPC (Regional Purchasing Coefficient) % is how the Regional Input is derived. If you take the Gross Input and multiply that by the RPC, you will get the Regional Input. The RPC tells how much of the Gross Input is occurring the Study Region. Domestic Exports- This would the Commodities that are being Exported out from your study area to other parts in the US. Foreign Exports are the Commodities being exported out from your study area outside of the US. I hope that this helps. Thanks IMPLAN Staff
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