import substitution question: fossil fuels vs. oth

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    IMPLAN Forum
    Hello, Since you are looking at making changes in what requirements are being used to produce electricity rather than at a change of demand in electricity itself. In this case you would want to modify the inputs to the electricity sector itself and then run comparative analyses of these two types of electrical production (fossil fuels vs. biomass). You could certainly take the current electricity sector and examine a straight 10% reduction for the decrease in fossil fuel based electrical production, or you could import the spending patter for Sector 31 and modify the inputs to reflect just fossil fuel based production and examine a 10% decrease in this more specific production using the [url=http://implan.com/V4/index.php?option=com_multicategories&view=article&id=730:case-study-analysis-by-parts&Itemid=71]analysis-by-parts methodology[/url]. For the positive biomass electrical production, you will definitely want to modify the spending pattern to reflect biomass production, and if you are certain/ stating in your report that the biomass would all come from local sources you could set the LPP for these specific sectors to reflect 100% local production. You would not want to modify trade flow, especially for the entire energy sector, because this would change how much electricity was obtained locally, rather than affecting which inputs were available locally. Let us know if you have more questions. Thanks
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    Thomas Lester
    Thanks. This is very helpful. In reading the linked article about [url=http://http://implan.com/V4/index.php?option=com_multicategories&view=article&id=730:case-study-analysis-by-parts&Itemid=71]analysis by parts[/url] (written by Andy Manshel), there was a discussion of using specific study data to model a Wind Power Facility. The data was drawn from the NREL ((http://www.nrel.gov/analysis/jedi/download.html) and the author then created Table C-1 in the example. This data is ideal for my project since NREL also created data for Biomass plants. My question for you or Mr. Manshel is how were these sector specific coefficients created from the NREL excel files. I don't see any sector codes in their files and the descriptive names and dollar figures don't seem to match up. I know this may be a bit out of scope, but any help is greatly appreciated.
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    IMPLAN Forum
    Hi Bill, NREL tables use 2-digit aggregated IMPLAN sectors for multipliers, and we were unable to locate a bridge table. We would recommend using the Sector search function, in an disaggregated model, and using keywords associating the sectors as close as possible to the JEDI descriptions.
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    Thomas Lester
    Hello, Thanks very much for your help. I will do so to get a better industry definition for my biomass burning power plant. However, I'm still stuck on one conceptual question. Essentially, I'm trying to figure out the impact of a new bio-mass burning power plant in a given county in NC. However, I want to additionally know the statewide impact from import substitution (from imported fossil fuels). I want to be able to break out these impact separately. Here is what I'm proposing to run. 1) New Industry Spending in (NREL defined) custom Biomass Plant (say $X of output) 2) Construction impacts of building said plant. 3) Expanded farmer's proprietor income from switching to higher valued crops (I have a handle on how to calculate this). Then separately, I'd like to know how much additional induced or indirect spending would occur throughout the state through the import substitution effect. I.e. if we spend x% less on imported fossil fuels to make electricity (because it is now made in the proposed new plant above). These are essentially dollars that should now not be counted as leakage in the State's economy. Any help on the conceptual level is greatly appreciated. Thanks.
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    IMPLAN Forum
    Hi Bill, Your methodology on 1 and 2 look fine. It seems like from the setup of these parts of the analysis, what you are looking to do is run the construction impacts in a single scenario and then examine the biomass impacts as an analysis by parts method described in the paper with steps 1 and 3. If our understanding is correct, then what you want to be looking for in step 3 is actually the labor payments to workers of the biofuels energy plant. The increase in farmer's income will be captured in the backward linkages of the crop sectors that are incorporated into the biomass plants operational expenditures. If you examined this again you would double-counting the income to farmers. As regards his import substitution effects, you have already captured those by looking at the operations of the biomass plant. The dollars that used to import fossil fuels have simply moved over to purchasing local biomass, which is already included in the pattern.
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    Thomas Lester
    Hi, Thank you very much. I now see your point about the backward linkages for farmers income. This is something we will specify in the analysis by parts. However, I'm still stuck on the logic of the import substitution question. Particularly because we will be analyzing two options for the plant. 1) Make biomass for electricity production in the State (NC), or 2) sell biomass pellets to export to Europe. So, in my min, with a similarly sized plant, the two options should have different effects due to import substitution. How does a demand increase in biomass plant operations (done by analysis by parts) factor reduced spending on fossil fuels. Its seems like I should have to specify this somehow. Any additional help is greatly appreciated. Thanks.
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    IMPLAN Forum
    If I understand correctly you are asking what is the added affect on the local economy of replacing imported fossil fuel with local biomass? The answer depends on how it affects the local farmers behavior. I see 3 situations: 1)There is no increase in farmer activity, but the farmers now sell to local consumption rather than export. In this case there is no added impact. 2)The above is true, but the prices (profit) farmers receive is greater. So the new question is, do the farmers increase their household spending (impact), increase their savings/investment (no impact) or some combination? 3)Farmer production increases (impact for the change in production) with perhaps an overall price increase as well. Standard IO assumptions say that inputs rise to meet demands without limit - case 3. However, a thoughtful analysis would recognize that there may be natural resource (farm) limitations.
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