I am working with a group that is assessing the economic impact of the 2012 drought on cow-calf operations in our state. We just finished collecting data from beef farmers and we have some good data on how the drought has effected the farmers' income. We collected data around two main parts: 1) cost of hay (higher this year in our state due to the drought) and 2) loss of value of the cattle due to selling cattle early because of lack of forage or water and depressed prices due to these sell-offs. With the data were we able to estimate the loss per cow (per head) in our state. We used the per head loss and multiplied it by the total head of cattle to get the total state losses. Using a made up number, let's say we estimated that cattle farms lost $100 million due to the drought this summer, due to forage and production (marketing) losses. I would like to calculate the total economic impacts off of this data and would like some advice on the best way to get at this. I'm thinking that the way we have set this up that I could enter the entire -$100 million as a negative labor income change to proprietor income. Or should I be handling the loss that is due to increased input prices (increased hay prices) differently than the marketing, or losses to value of output? I could break it down and say $20 million in losses are due to increased hay prices and (fake number) $80 million in losses are due to diminished value of production (via lower cattle weight and lower prices). The $80 million could be entered as a negative impact to output; then the $20 million could be entered as a separate event as a negative impact to proprietor income. Any thoughts on the best way to get at what I am looking to estimate? As always, thanks for your guidance. Nathan
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