LPPs set to SAM values equivalent to EBP?



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    IMPLAN Support
    Hello Elizabeth, We are unfortunately not very familiar with REMI or its products, however, based on the information from your linked article, as posted below, we do not feel that these two concepts are related. “As shown in Table 3, the REMI model has default estimates for the export base percentages for the higher education and health care. For example, the 75 percent export base percentage for higher education in Grand Rapids means that, for every dollar of new spending by a Grand Rapids-area college or university that is induced by a public policy change, 75 cents are new spending that would not otherwise have occurred in the Grand Raids metropolitan area, while the remaining 25 cents would have been spent in the metropolitan area even if the public policy change had not occurred” The wording here seems to suggest that the REMI has a substitution factor that they have endogenized into the model, and that this factor provides a split of the Direct impact to new monies to the region and existing monies in the region (e.g. For you example above the college draws 75% of non-resident student tuition, and 25% resident student tuition, or another way to describe it would be to say an art fair occurs in Ramsey county and we only want to count money from non-residents because resident spending at the fair would likely have been spent in another local venue (art store, movie theatres, etc) if the money hadn't been spent at the art fair.) When LPP is set to SAM Model value there is a leakage from the Direct effect, but it is not based on a substitution factor as described above. Instead is based on ratio developed from knowing the amount of local commodity supply from all sources and the amount local commodity demand from all sources, with considerations for customer spending trends like cross-hauling built in (i.e. A person purchases Kemps milk from the store because it’s less expensive or more desirable to his palette than the locally produced Land O’ Lakes milk). In effect when you set the LPP = to SAM Model value you are telling the model that your Direct production is produced (for manufacturing or sold for retail/services) on the same basis as typical local demand is purchased of local commodity/service supply. The LPP also does not suggest that the leaked production will be taken over by other firms in the region. You could however model that by shifting the direct effect from one firm to another during the impact set-up process. Likewise, if you feel that there is a substitution factor that should be taken into account for your project, you would need to determine that factor outside the model and then either reduce the value of Industry Sales or set the LPP = to User LPC Where the SAM model (aka RPC) comes into play automatically in the model is in the multiplier calculation. When multipliers are calculated, local use of local supply are built in and therefore leakages are removed at each round of the Indirect and Induced calculation. Please let us know if this helped answer your questions.
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    Elizabeth Scott
    Thank you for your detailed response! It is very helpful. I have observed the LPP = SAM diminishing direct effects, so I did wonder if there might be some sense in which it could be equivalent. It is not!

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