IMPLAN Pro: Multi-Industry Contribution Analysis

 

Introduction:

When more than one Industry is being examined in a contribution analysis in the same Activity, different steps are required to perform the contribution analysis.

Detailed Information:

The procedure is illustrated using:

Model: Washington County 2014

Subject: All agricultural industries (1-19)

This approach to a multi-industry contribution analysis involves model customization.

Process

1: Setting Up Your Software

• If you do not have this menu at the bottom of the Tasks list, you can turn it on in User Preferences.
  

  

• To turn on the Customization menu, Select File > User Preferences.
  

  

  

• Select the Analysis tab and Advanced Modeling. Check Enable Model Customization.
  

  

• It may be helpful to have Start Excel on Export checked in the General tab.
  

  

2: Determining Current GRP for Reference

• Select the Model Overview screen under Model in the Tasks menu.
  

  

• Note Model Gross Regional Product: In the Model Overview screen, note the total GRP (Value Added=$7,860,389,913). This number should be unchanged after model modifications.
  

  

3: Modifying Commodity Production

For each agricultural industry, edit commodity production so that each industry produces only its primary commodity.

• Under the Customize menu, click Commodity Production.
  

  

• For each agricultural industry (1-19), highlight the Coefficient cell for the primary commodity and enter 1. Click Balance. All other commodity coefficients will change to 0. Click Save. Proceed in like manner for all agricultural industries. This step is necessary since trade flows apply to commodities rather than industries.
  

  

• Once Saved, you will find to following message in the bottom of the software window.The model now must be reconstructed.
  

  

• On the top menu, select Options>Construct>Multipliers.
  

  

4: Modifying Trade Flows

• Under the Customize menu, click Trade Flows.
  

  

• For each agricultural industry (1-19) highlight the Local Use Ratio (RSC) cell and enter 0. Proceed in like manner for all agricultural industries. Note: if you are using the Econometric RPC method, you will instead need to go to the "Total RPC" tab and change Regional Purchase Coefficients to zero for the sectors of interest. Click the Save button.
• Editing the by-products and changing the RSC is done so that no one will purchase from these industries beyond the amount specified in the Event Set-up.
  

  

• Reconstruct the model again through the Options menu.
  

  

5: Verifying GRP

• Verify Changes: Compare total GRP in Model Overview with the original value. They should be identical.
  

  

6: Verifying Industry Accounts

• Under the Explore menu, click Industry Accounts.
• In the Institution Industry Demand grid under the Reports tab, all agricultural sectors should have sales to only Domestic and/or Foreign Exports if that sector exists in the study area.
  

  

• Use the drop-down menu to select the Industry Ouput/Outlay Summary grid.
  

  

• For all agricultural sectors, there should be no Intermediate Output.
  

  

7: Setting Up the Multi-Industry Contribution Analysis

• Select the Setup Activities screen under Analyze in the Tasks menu and create an Industry Change Activity.
  

  

• Select New Activity.
  

  

• Select Industry Change.
  

  

• Add one event for each agriculture industry (19 total), including industries that do not exist in Washington County. Select New Event.
  

  

• Enter the Agriculture sectors (1-19) as individual Events. Please note this model was created with 2014 data; it is important that you change your Event Year to reflect the Data Year set you are using.
  

  

• Using data from the Explore>Study Area Data grid, enter the total Output for each industry as Industry Sales in the corresponding Agriculture event located in Setup Activities.
  

  

  

• Select Analyze Scenarios under the Analyze menu.
  

  

• Select New Scenario.
  

  

• Name your scenario and select Save.
  

  

• Select the Activity to be analyzed in the Available Activity box and click Select. This will transfer the Activity from the Available Activity box to the Selected Activity box.
  

  

• Select Analyze Single Region.
  

  

• Select Yes to view your Results.
  

  

Alternate Semi-Automated Option for Building Events

Instead of entering all values by hand, the following approach may be used:

• Export to Excel the model Study Area Data grid. It will default to the Documents > MIG > Implan > Reports folder.
  

  

  

• Export to Excel the Industry Change Activity in Setup Activities. It will default to the Documents > MIG > Implan > Reports folder.
  

  

• Copy the Output for all 19 agriculture industries from the Study Area Data Excel file. Paste the Output in the Industry Sales column in the Activity Excel file. Because all 19 industries are included as events in the Activity file, there should be a perfect match.
• Save and close each of the Excel files.
• From the Setup Activities screen in IMPLAN, import the Activity Excel file.
  

  

  

• Locate the file and select Import.
  

  

8: Verifying Results

• Direct Output should match the sum of agriculture industry production for the model area. Note: some variations will happen due to rounding errors in the IMPLAN software.
  

  

• This can be located at the very bottom of the Setup Activities screen.
  

  

• Return to the Scenario Results screen and select the "Detail Results" tab. Select the drop down menu to View By: Employment, Labor Income, Value Added, or Output.
  

  

• The Total Effects for Output, Employment, and each component of Value-Added for each of the agriculture sectors should equal their current values found in Study Area Data. The Total Effects across all sectors provides the complete contribution of these industries to the model area. Note: The Dollar Year for View was set to 2014 to show that Employment, Output, and Value-Added (Employee Compensation) match to the Study Area Explorer.
  

  

• However when you report on your study, you want to express your results in the current year to show current dollars; the example below is expressed in 2016 dollars.
  

  

• Note that Direct and Indirect effects cannot be interpreted literally from the Results display because model modifications have changed: all agriculture production switched from a mix of intermediate demand and final demand to only final demand (exports). Direct effects are customarily regarded as sales to final demand and Indirect effects as the supply chain consequences of those sales. However, because intermediate sales have been changed to final sales in the edited model, the Direct and Indirect effects relate to all sales, not just final sales as shown in the unedited model. If reporting them separately, Direct Effects should be interpreted as all sales by the Ag industry and Indirect Effects should be interpreted as all sales by the Ag supply chain. Induced effects and their customary interpretation are not affected by the protocol.

Usage:

Contribution analysis is designed to prevent overstating of results; thus it:

• • Should be used whenever the entire Industry (as opposed to a single firm) is being examined.
    • For single firms, the actual contribution lies somewhere between the results of a contribution analysis and an impact. Thus we typically recommend running both and reporting values in a range.
  • Is specifically designed so you cannot make additional purchases from Industries included in the Direct Effect.
    • Since the Industry Sales and thus the Direct Effect equals the entire value of production for the region, any Indirect Effects or Induced Effects would be increasing the total volume of production for the Sector over its total annual production, which is contradictory to the purpose of contribution.
  • Results in the total column for each view being equal to the the value of the Study Area Data for that Industry.
  • Should be used when considering the loss of a Sector from an area (as reporting a greater loss of production value than the current value of production does not make sense).
  • Should always be run with Event Year equal to the year of the data set.
    • Results can be viewed in desired year's dollars.

For the multi-sectoral method, you need to zero Trade Flows from the V3 System for every Sector that will be included in your Event.

• • This is done regardless of whether or not there are strong backwards linkages between the Sectors
  • It is important the every Sector included in the Event be removed because purchases occurring anywhere in the various rounds of Indirect or Induced purchases could result in overstating of the results.
    • Overstating will occur not just in the Directly effected Events, as an increase in any Sector's Output, anywhere in the supply chain, will yield additional local purchases overstating potentially through the entire result set.

Related Topics:

Single Industry Contribution Analysis

Contribution vs. Base Analysis