Bill-of-goods approach (direct effects)

Hi Zach, Thank you for your post. Since you are using the Industry Change Activity Type, you would need to add your Direct Impact Results into the Indirect Impacts. In addition you would also need, when you are setting up your Events, be sure to set LPP = SAM Model Value. An alternative is to model your impact in an Industry Spending Pattern, however this would require you to create the coefficients for the items in your spending pattern. But does increase the flexibility of the spending pattern if you will be using this spending pattern again in the future or looking at different total spending amounts. In regards to your Labor Income Change, you would add the Induced impact of this as well and, in fact add the Direct employment, Labor Income, and Output into the IMPLAN results. If you need to calculate a value of Direct Value Added you can do so based on this equation (Output = Intermediate Expenditures + Value Added).

Thank you for the response. I actually already know the portion of intermediate inputs that are purchased in my study area, so I am including only intermediate inputs purchased locally and set the LPP = 100%. I wanted to clarify on your statement "Since you are using the Industry Change Activity Type, you would need to add your Direct Impact Results into the Indirect Impacts." I am concerned that the direct output of the company is not reflected in IMPLAN's results. Is that true? Thus, would it be appropriate to manually add the direct output to the total effects from IMPLAN? For example, let's say the company has $100 in output and 5 employees. And they pay $40 to suppliers in the study area and $20 in employee compensation. I am modeling the $40 as industry changes in the relevant supplier sectors using the bill-of-goods approach, and I am modeling the $20 as employee compensation. Do I need to add the $100 in direct output and the 5 employees to the IMPLAN results using the approach above?

Hello Zachary, Sorry for the confusion/omission. You are correct that you will need to add the Direct Effects in as well. Since you are implementing a bill-of-goods approach you are actually estimating the first round of Indirect spending as your Direct Effect, that's why you should transfer IMPLAN's estimation of Direct results to the Indirect row. Once you've done that you can then add the company's revenues (Output), Value Added, Labor Income, and Employment to the Direct row. This will allow you to account for the Direct Output of the company in a way that is consistent with IMPLAN reporting. You will also need to re-sum your Total row. Thanks for checking back in and we hope we've answered your question.