Economic Impact of business On County and State

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    IMPLAN Support
    Hello Sydney, Thank you so much for your forum post. I wanted to start by letting you know that the State Package you purchased does include all of those individual county level files located in the state. You do have all of the IMPLAN data that you need for this project. To clarify my understanding, it sounds as if you are trying to determine the existing economic contribution of the racing school. Not an increased level of additional jobs or revenue but what is the racing school currently contributing to the county and state. We define this as a Contribution Analysis as opposed to an Impact Analysis. Impact Analysis and Contribution Analysis http://support.implan.com/index.php?option=com_content&view=article&id=390 If the racing school you are studying makes up less than 50% of the total industry Output for that sector in the region, then you can use the standard economic impact analysis method but refer to it as a contribution. Standard Impact Analysis- Quick Start Guide: http://support.implan.com/index.php?option=com_content&view=article&layout=edit&id=444 Having the specific NAICS code for this Sector will make your sector selection much easier. I have attached our bridge table that will bridge your NAICS code to the appropriate IMPLAN sector number. However, if you do not have the NAICS code, the IMPLAN Software has a look up feature (Help menu > Sector Search).   As far as the approach to modeling this impact - since you would like to see the impact both at the state and county level - you would need to build both Models. We do suggest that you make use of IMPLAN Pro's advanced Multi-Regional Input/Output (MRIO) analysis method. This method will allow you to see the impact on both the county and state while maintaining the specific regional identity of the county. [i]*Do not use a state total file as a linked model if the Direct Effect region model resides within the state model. If you would like to use the county as your Direct Effect study region and the Rest of State (ROS) as your linked model, you will need to build the ROS model using all the counties in the state less the Direct Effect region.[/i] Multi-Regional Input/Output Analysis http://support.implan.com/index.php?option=com_content&view=article&id=463 MRIO FAQ http://support.implan.com/index.php?option=com_content&view=article&id=438   If your automobile racing school is more than 50% of the entire industry's Total Output, there is a specific contribution analysis technique that you should consider employing (as this method is intended to estimate the contribution of an entire industry, your results will be conservative). I have included the article below on how to use this method. [i]*Note: Unfortunately, MRIO is not compatible with the Contribution Analysis methodology. If your target industry's Output makes up more than 50% of the Total Industry Output for the industry, then you will need to look at the impact at both the county and state level individually.[/i]   Using IMPLAN Pro to Estimate the Contribution of a Single Industry: http://support.implan.com/index.php?option=com_content&view=article&layout=edit&id=211   Your methodology may change when looking at the state level as your firm's total output may be less than the Industry's Total Output.   In regards to looking at tourist impacts. Since there is no industry/sector in IMPLAN that is specifically for tourism, you will need to know how tourists are spending in the region (restaurants, hotels, gas, transportation). Use this regional spending as your Direct Effect. This will show you the impact of tourism in the specific model region. You will only want to use the spending of tourists from outside of the model region, so as to only count new money.   This is a recorded webinar for our Online Platform however it is on "Sporting Event Tourism Impact". The same base principals can be utilized in the Pro platform. 07/12/2016 - Intro to IMPLAN Live Demo: Sporting Event Tourism Impact https://www.youtube.com/watch?v=294gEKNLKmU   Depending on the level of detail you have about tourist spending, you may want to consider the use of margins. Margining: When the Item Being Purchased Is Unknown http://support.implan.com/index.php?option=com_content&view=article&id=226 Margining: When the Item Being Purchased Is Known http://support.implan.com/index.php?option=com_content&view=article&id=203 Please let us know if you have any additional questions! Regards, IMPLAN Staff [attachment=723]h9eb7060.xlsx[/attachment]
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    SrichGSBS
    Thank you so much! I have a few follow up questions. Where I am at currently: The count I am looking at is indeed within the state I will also be looking at. I have set up an activity within that county with just the revenue of the racing school as the Industry Sales. The industry code is 474, NAICS Code 611620. I then connected the model with the ROS model I created with every other county from the state for an MRIO analysis. I didn't change anything else. I am wondering if I am missing any other steps to get a scenario to show how this racing school effects these economies. Do I need to mess will the local purchase percentage? Do I need to somehow incorporate the knowledge that 99% of the customers of this school are coming from out of state. Should I allow the proprietor income to autofill or does that need to be set differently? Deflators should be fine because my data and my year of interest are the same. The next thing I would like to do I figure out is how the resulting tourism effects these economies. I would like to see what it looks like when the assumption is that 20% of tourists are spending their money in the county and 80% are going outside of the County (into the state) to spend their money. I would then like to see what it looks like when the spending is split 50/50. I have the number of customers for the year 2015, which is my year of interest, and I have estimated the amount of spending that they would have done in 2015 in these categories(based on tourism spending percentages in the state as well as overall spending numbers) : Auto Transportation (Gasoline, car rental, parking, etc.) Public Transportation (airfare, train, bus, taxi, etc.) Lodging Food/Beverage/Dining (excluding groceries) Shopping/Gifts/Souvenirs Groceries Entertainment/Admissions Other Amenities (golf fees, spa, health club, ski passes, etc.) I know that each of these sections would be made up of multiple different sectors and so I am unsure of how to input these as activities as I don't know the breakdown of spending any more specifically than above. Is there a way to utilize industry codes for this? I think I would have to run each assumption (20% of visitor money/80%/50%/50%) separately with the respective model, unlinked. But I am really quite unsure here. Looking through some work that was done on this project previously, for another year, the only input I see being used for seeing how tourism spending effects these economies is the total visitor spending amount. How would that work? I really appreciate your time! Sydney
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    IMPLAN Support
    Hello Sydney, You are most welcome. Regarding Operations: You did it correctly. You can see the impacts from the linked region by selecting the ROS on the lower left corner. The results from the Direct region do not include the linked region. You would be perfectly fine to add those to results together to get a total impact. You would not be double counting.   Regarding LPP: No. You will want to leave LPP at 100% as this is to mean that 100% of the direct impact is taking place in the study region. Setting it to less than 100% would indicate the event is not all taking place in the region. Here is an article that will further discuss LPP: http://support.implan.com/index.php?option=com_content&view=article&layout=edit&id=469   Regarding Customers: No, in fact you want to make sure that those students are from outside of the region so as to only count the "new" money into the region. The 1% that is from the region, can you make an argument that the only reason they stayed in the area was because the racing school is the only one in the region? If not, then I recommend not including that 1% in your study.   Regarding Proprietors: If you know that this racing school does not have Proprietors and is a Corporation, you can customize this field by zeroing out PI.     Regarding Tourism:  You are right in that to see the different spending percent’s (20%, 80%, 50%) you will need to run separate Activities. Separate Models if they are in different geographies. You can perform an MRIO on analysis on this type of spending. You will need to identify which region you are interested in seeing the additional impacts – as your linked region. The previous study that you mention, was this a previous analysis conducted using IMPLAN? If so, is there any information in the methodology regarding how that tourism value was applied to the model? As there is no "tourism" sector in IMPLAN, that spending would have been split in some way if the previous work was conducted with IMPLAN. As far as assigning Sectors for those tourism categories, this is a common issue with tourism studies. Unfortunately, there's no perfect way to make this split without further outside information. Consider looking around for information regarding how tourists to the region split their purchases. Absent additional information, you can assign a weighted split based on Industry Output in the region. Splitting the total value amongst the respective industries based on industry Output will split the value based on the general relative economic activity of the different industries in the set. For example: Auto Transportation. Your tourist spending includes: gasoline, car rental and parking- these are all different sectors in the Model. Car Rental -442 Gas Station- 402 Parking- 512(parking lots and garages) Sum the Output value for these three industries (found in the Study Area Data) and then divide each sector's Output by the sum. Finally, multiply the tourist spending value for this category by the industry ratios arrived at above. Note, however, this split is based on relative industry size and is not technically equivalent to how tourists would actually split their purchasing amongst those industries. We recommend this method only after exhausting other options. Regards, IMPLAN Staff
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    SrichGSBS
    Would the original analysis where I have input the business revenue and connected the ROS model to the county model capture the tourist spending impact on the county and state, considering that all customers are from out of state? My employer has suggested that that information is already present in the original model making it unnecessary to run more analyses. Also, as I go to interpret the results of the analysis, is there a way to calculate the total economic benefit of the school overall and then for the two communities separately? I am also concerned with making sure I only capture the tourist spending that impacts the final demand in the the area. Is the way to ensure that involved with altering the multipliers that Implan is using? Or is it in the margining process? According to the margining resource you linked me to, I believe it is saying that I only need to change the LPP to reflect the SAM multiplier for those categories that have margins. Is this the case? I am still not entirely clear on the story that this action is telling. Another way to say that would be, I a still not sure what the LPP denotes in regards to margins and why I would only alter it for those inputs that have applicable margining. All the above about margins and LPP ^ is in regards to tourist spending. I am still working under the assumption that for my original scenario where I am just looking at how the revenue of the school affects the to different areas, I do not need to make any changes regarding multipliers, LPP, margins etc. Sorry for all the edits. I've been doing a lot of research. TY!
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    IMPLAN Support
    Hello Sydney,   Thank you for your follow up post. To clarify, if the original analysis was the operations of the racing school, then tourism impacts would not have been captured in that analysis; creating an event for the racing school industry would have only captured the operational component of the racing school and the resulting economic impact effects are because of the school's operations. To capture the impact of tourists spending their money at other local businesses, you will need to run a tourism impact separately. Example: Tourists to a region spend $5 Million at a theme park and another $2.5 Million across other tourism focused local industries. If I impact the sector for theme parks for $5 Million, the resulting impact does not account for the other $2.5 Million of tourist spending. It only measures the economic impact of the theme park's operations.   In terms of reporting your results, if this is your MRIO Model, you can use just the results from the ROS to talk about the economic benefit to the state less the direct region. You can look at just the impact to the direct region to see the impact of just the direct region. Finally, you can combine the two to see the impact to the full state. This is one of the advantage to the MRIO method; it allows you to easily see a complete impact and individual impacts. For your school operations analysis, you do not need to change the LPP or worry about margins. In general, tourism analyses focus on known local tourist spending; in other words, the expenditure amounts brought to the model are already altered if needed to reflect only those purchases made within the study region. As for margining your tourism study, you only need to worry about properly applying margins when working with retail/wholesale sectors and if you are trying to apply a margin to a producer of a specific commodity (assuming you know the commodity purchased). Example: My tourism spending survey has two results. Tourists purchased locally: Groceries: $2M Gasoline sales: $1M For groceries, I know that tourists spent $2M on local grocery purchases, but I don't know if these purchases were for processed meat, vegetables, canned goods, etc. Therefore, I would apply the purchasing amount to the grocery retail sector as a Gross Retail Sales value (the system will prompt you to select Gross Retail Sales or Gross Retail Margin when entering a sales value for a retail or wholesale sector). IMPLAN will margin the sales amount so that the only impact I'm capturing is the margin of the sale that the retailer keeps for their operations. I cannot take credit for the rest because I don't know what was purchased. For the Gasoline, I know exactly what was purchased. Because I know what the tourists purchased, I can margin the producer in order to capture more of the value chain associated with that purchase. I can select the petroleum refinery sector, enter the purchase price paid by the customer ($1 M), and then go to Event Options > Edit Event Properties > Margin. This will split the purchasing price across the producer, transport sectors, wholesaler, and the relevant retailer (gasoline stores). While I know that the sale took place locally (from a local gas station), I don't know that the production (refining) took place locally, how much transportation would be local, etc.; therefore, I also need to set LPP for this event to SAM. This allows the model to determine how much of the production, transportation and such (if any) would have taken place within the region. In the edit margins window (Event Options > Edit Event Properties > Margins > Edit), you can edit both margin percentages and %local (LPP) if you have better knowledge about these rates. For example, if I know that the tourist value I'm using represents purchases of gasoline from local retailers but the %local presented by the model is less than 100%, I would change the %local for gasoline stores to 100%. Regards, IMPLAN Staff
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    SrichGSBS
    I suppose then, what I mainly don't understand at this moment is why I would set the LPP to SAM for situations as with the gasoline purchase but not for the groceries purchase. As you have explained it, the reason for changing the LPP is because while you know that the sale occurred locally, you do not know how much transportation would be local or where the production took place. Could you not say the same for the groceries?
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    sstauner
    HI Syndey! I apologize for the confusion on Margins, this is one of those topics that is never straightforward. The difference between the grocery example and gas station was knowing specifically what was being purchased. For the groceries, we didn't know what food items were purchased but just that they were all purchased from a local grocery store. For that example, we impacted just the Retail Grocery Store- as we couldn't impact the specific producing sector as we didn't know what food items were produced. Just impacting the retail sector, only gives the analysis credit to the store and since we know that purchase was local, we can leave LPP at 100%. In regards to the gasoline sale, since we specifically know it was gas being purchased, we can take that back to the Producing petroleum sector and margin the sector. When you margin the producing sector you will open up the Value Chain (Producer, Wholesaler, Transporter and Retailer). Since you do not know if the Value Chain is local, you will need to set LPP to SAM to let the Model decide.
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    IMPLAN Support
    HI Syndey! I apologize for the confusion on Margins, this is one of those topics that is never straightforward. The difference between the grocery example and gas station was knowing specifically what was being purchased. For the groceries, we didn't know what food items were purchased but just that they were all purchased from a local grocery store. For that example, we impacted just the Retail Grocery Store- as we couldn't impact the specific producing sector as we didn't know what food items were produced. Just impacting the retail sector, only gives the analysis credit to the store and since we know that purchase was local, we can leave LPP at 100%. In regards to the gasoline sale, since we specifically know it was gas being purchased, we can take that back to the Producing petroleum sector and margin the sector. When you margin the producing sector you will open up the Value Chain (Producer, Wholesaler, Transporter and Retailer). Since you do not know if the Value Chain is local, you will need to set LPP to SAM to let the Model decide.
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