Arizona Forest
Restoration Products Inc.
|
|
|
Arizona Forest Restoration Products Inc. |
|
|
|
Northern Arizona University W. A. Franke College of Business Impact Analysis of AZFRP's Oriented Strand Board Facility
To validate its own economic impact analysis, AZFRP asked a team of researchers at the Northern Arizona W. A. Franke College of Business’ Center for Business Outreach to conduct a Business Impact Analysis of Arizona Forest Restoration Products Oriented Strand Board Facility.
Methodology
Input-Output (I-O) The Input-Output (I-O) model is an important tool used in assessing the potential economic impacts of specific activities, and was the primary economic modeling framework used for the economic impact analysis. The I-O model is classified as a conditional predictive model, designed to predict changes in an economy resulting from a particular stimulus and is considered one of the best methods for analyzing the interactions of various industries of an economy and linking these industries to their sources of economic stimuli. The I-O model incorporates transaction tables to keep track of inter-industry sales and purchases, as well as exogenous sectors of final demand such as households, government, and foreign trade. The name, “I-O Model,” is a result of each industrial sector in the model being both a buyer and a seller of inputs and outputs.
IMPLAN Professional 2.0 IMPLAN Professional 2.0 is a Forest Service-created, operationalized I-O model that uses aggregated databases to construct a picture of the regional economy. Economic impact analysis involves applying a final demand change to the economic I-O model, and then analyzing the resulting changes in the economy. Impacts can be one-time impacts, such as the construction of a new building, or they can be recurring impacts, such as the arrival of a new industry.
Multipliers Often, the impact analysis is concerned with multiplier effects, or the amount of money that is re-circulated through the economy after an initial expenditure. The social accounting matrix (SAM) is the basis for our input-output predictive model. This predictive model was used to estimate changes in the regional economy due to proposed/planned EIS: AZ Forest Restoration Products’ OSB Facility expenditures related to the construction and operation of an OSB facility. These multipliers capture the backward linkages associated with final transactions. Backward linkages are the goods and services purchased by an industry in order to produce a final product. With wood products industries, backward linkages are represented by the proposed transactions of AZFRP Inc. with local suppliers of raw material, utilities, services, and other necessities. Multipliers are a measure of the extended economic activity generated by an initial injection of capital. There are three main multipliers typically used in regional impact analysis to measure: 1) the effect on regional output, 2) the effect on household income, and 3) the effect on regional employment. The resulting multipliers delineate three separate components of regional economic activity. These components are direct effects, indirect effects, and induced effects. Direct effects are the changes in the industries to which a final demand change was made. Indirect effects are the changes in inter-industry purchases as they respond to the new demands of the directly affected industries. Induced effects typically reflect changes in spending from households as income increases or decreases due to the changes in production. These effects show the circular flow of goods and services in a region. The economic impact analysis performed measured the potential effect of the OSB facility and AZFRP’s harvesting divisions on the following economic indicators: 1. The direct, indirect, and induced effects on regional output, employment, labor income, and taxes; 2. The multiplier effects on regional output, employment, and labor income; 3. The overall number of affected industrial sectors, including a list of the most affected industrial sectors; and 4. Site-specific extrapolation of impacts and findings. (Source: Evan Hjerpe, Ph.D. NAU School of Forestry and Ronald J. Gunderson, Ph.D. NAU W. A. Franke College of Business)
Results The study concluded that an annual production capacity of 680 million square feet of OSB would support a total of 589 direct, indirect, and induced jobs and inject a total of $170 million (taxes included) annually in Northern Arizona's rural economy. In addition, the construction of the facility in Winslow will contribute another 455 Northern Arizona jobs for a period of 18 months to 2 years, and will inject another $74 million in Northern Arizona’s economy, essentially in the construction sector.
|
|
| Home | ||
| Back to top | ||
|
© 2006, 2007, 2008 Arizona Forest Restoration Products, Inc. Site Designed & Maintained By Arizona Forest Restoration Products, Inc. |