Multi-region Analysis

Hi Kathleen, Thank you for your post! What you will need to do is to change the RPC to reflect the % of commodities that will be purchased from your study area. The RPC for a given commodity represents the proportion of the all local demands (industrial and institutional) for that commodity that is supplied locally (i.e., by the region to itself). For example, an RPC of 0.8 for the commodity "fish", indicates that 80% of the demand for fish (by fish processors, fish wholesalers, foreign exports, and all other demands for fish in that region) are met by local fish producers. It also indicates that 20% (1 - RPC) of the local fish demand is imported. RPC can be customized in 2 ways: 1. You can change the RPCs for commodity purchases for a specific industry through Customize>Trade Flows>Industry/Institution RPC. The model will be permanently changed until you recreate social accounts a second time (it will do a new calculation of RPCs). This also means that you need to make all your RPC edits in a single session. Creating a new model with the same data will restore the original calculated RPCs. In addition this method will change the RPC of Commodity production not just for your Industry (first-round Indirect Effects) but all additional rounds. 2. Conducting Analysis By Parts method: https://implan.com/index.php?option=com_content&view=article&id=730:case-study-analysis-by-parts&catid=264:KB43 (the basics of Analysis-by-Parts article is probably as if not more useful). This method allows you to control just the first-round Indirect Effects as regards RPC. However, with either method you'll need to know what commodities are experiencing the uptick of local production as there is no way within the software that you can just increase the overall commodity LPP to increase their local production such that the total RPC value will increase by 10%. Likewise it is important to consider whether or not your region actually has the capacity/capability to produce the increase commodity requirements and that competitive pricing with imports could be overcome. IMPLAN can tell you the impact assuming that those inputs could and would increase locally, but it can't tell you whether Another option is to do an MRIO analysis: http://www.implan.com/index.php?option=com_content&view=article&id=832:multi-regional-analysis-wiki&catid=222:KB5 This will give you the opportunity to see how the x% of imports out of state effect the rounds of spending that are happening in that state, onto you study area. (I'm not entirely sure what you are saying here... are you trying to say that if they can identify a sub-state region for the Industry they can see the impacts on the ROS and ROS on the local region, or that with multiple state files they can see how domestic imports might also contribute to their local economy?) You have different options for the manner in wish to approach your study!

I am trying to see how supply chain management for mining industry will impact on local economy of Missouri. Assuming when operating mining industry, 70% of backward linkages(commodities) is from out of Missouri, 30% of them is provided in state. What I have done is: 1. Aggregate all mining industry sectors, 21 through 27 as "Mining Industry" 2. Identify backwards linkages of mining industry. 3. change the RPC of one or several of the backward commodities, after reconstruct the model, run a single industry contribution analysis of Mining Industry 4. repeat Step 3 for all commodities based on the capacity of them I would like you to help me validate. I am not sure what I did follows the concept of the software. Beside this I have some questions concerned with editing RPC. 1. If RPC of "Commodity 20 Oil and natural gas" is 8%(assumed local commodity demand is $8, Gross commodity demand is $100), I want to raise sector 60 Poultry processing's local commodity demand for fish to $9. I just change the PRC to 9%? 2. while editing the RPC, do I have to change RPC for all industries that demand Oil and Gas? Like you mentioned I need to make all RPC edits in a single session. If I just want to increase the mining industry's local demand for oil, how should I edit the RPC. Thank you very much

Hello Could you please provide us some additional details on what you mean by looking at supply chain management for the local economy? What is the goal of you analysis to see what the current contribution to the local economy is for mining and then see how that changes if you increase/decrease certain commodity availability in the local economy that will be used in mining, or something else? The assumption that all requirements for mining are met by the state and county would be highly disparate from the actual data and likely a questionable assumption if published. Currently the data shows at the state level for MO that the average Regional Absorption is 20.6%. So unless your county’s RPC values are significantly higher than the states you may want to be cautious about this assumption. In regards to the steps you are trying to perform, again we apologize but we are not sure what specifically you are trying to accomplish with this. Is there a reason that you are trying to run impacts on the commodities instead of the mining Industry itself? Another issue with the methodology is that the way you are describing it here, it appears that you are modifying the Commodity RPC not just for mining but for the entire economy so every iteration of a purchase of electricity by mining, every other Industry and Households in the Induced Effects will now be purchased at your increased RPC rate. There are two ways that you can adjust RPC without affecting the remaining Intermediate Expenditures in the Model. One is by using the Analysis-by-Parts methodology the other is modifying the RPC’s in the Industry/Institution RPC screen. With the aggregate mining Sector Commodity selected in the drop-down menu you would modify the RPC’s of purchase for the Commodities of interest in this screen. You are correct that the RPC is determined by the value of Regional Inputs/Gross Inputs. In regards to your second question you only want to change the RPC’s you know on the commodities purchased by the mining Industries. If you are looking at mining and you see a Commodity purchase of oil you could change that purchase if you feel that the RPC for that should change for your Scenario. But again you don’t want to modify the RPC through the Trade Model screen for oil as this will change the ability of the entire economy for their purchases from this Sector. Additionally oil is a downstream of forward linked product of extraction and thus will not be affected by making changes to mining in the region as regards the software since IMPLAN looks at backward linkages. Hopefully this helps, and please let us know if we can offer additional assistance, and we would be happy to assist further with further clarification on some points and we apologize if we are misunderstanding.

Thank you so much for your patient. And sorry for my poor English didn’t make it clear. My research is to see “Impact of a strong local supply chain on regional economic impacts of mining”. My assumption is: by increasing/decreasing backward commodities of mining, there will be an impact on local economy. Then by comparing the impact results, I will be able to figure out changing which backward commodities will have the greatest impact. If this assumption can be proved, this method can be used as a supply chain management strategy for mining. in other words, I am trying to run impact of mining industry when its supply changed. I looked through the forum and came up with this thought. Is it possible for IMPLAN to solve this? 1. The steps that I was trying to perform in the last post is just what I think it may work. I am a new user of this software and a non-economist. If what I did doesn’t follow the concept of IMPLAN, then what kind analysis should I use? Contribution analysis or economic analysis? 2. What do you mean the county’ RPC should be significantly higher than the states? Thanks, I do appreciate.

Hi Kathleen, Thank you for the clarification. The software really isn't designed to be able to do the type of analysis that you are looking to do. The method I described before would basically be the closest thing to a best option. In effect you will need to use analysis by parts to change the LPP value for the mining Sector to a new value (0-100%) for each RPC you are interested in changing. You could also run a 100% RPC to show the maximum supply chain possibilities (assuming the current static Industry mix) that could theoretically be achieved, but it would be only theoretical. Additional information on Analysis-By-Parts: http://implan.com/index.php?option=com_content&view=article&layout=edit&id=373 However, if you are trying to specifically isolate which commodities are most impactive based on their supply chains; you can model impacts from these specific commodities (as a Commodity Change if you want to see market shares or as an Industry Change if you want to see specifically industrial production increase). In this case you would need to determine what the increased value of local production above current production would be in order to allow the mining Sector to increase it's local purchase of the product, and then enter this value as (Commodity Change or Industry Sales) and see what each of those Commodities would need in order to increase their local supply to meet the increased demand for local mining supplies. Each commodity would need it's own Activity in order to keep results from getting intermixed. In this case, you would not want to modify any of the Trade Data at all. If just a pure evaluation of commodities against each other is desired, the comparison could also be done by saying if I increase the value of production in each of the following 10 commodities by $1MM, which commodity provides the largest impact. Again RPC/LPP would not be modified for this type of analysis. In regards to the second question, RPC is the basically the local use of local supply. Typically the larger the Study Area Region the more local supply is available to meet local demand, so the RPC is typically larger at a multi-county or state level. Occasionally this is not the case though, such as when the demand for a commodity greatly exceeds the increased supply when the region is enlarged (such as occurs when their are concentrations of production in a certain area of the state).