Economic Contribution Analysis of the Forest-Product Industry: A Comparison of the Two Methods for Multisector Contribution Analysis Using IMPLAN

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Abstract
State agencies and universities often use IMPLAN software and data to quantify economic contributions of forest-product industries in specific regions. Since IMPLAN software is designed to estimate economic impacts rather than economic contributions, adjustments have to be made to the direct effect values to avoid overstating the results of the analysis. Two economic contribution analysis approaches are most common: internal adjustments to the IMPLAN software and external adjustments of the input values by using output multipliers. Results suggest that both methods of contribution analysis produce similar total effects, but their approaches of handling direct effects are substantially different. The strengths and weaknesses of each method are discussed, and the importance of adjustments to obtain economic contribution estimates as opposed to economic impact estimates is highlighted. Furthermore, practitioners are cautioned to follow the steps carefully and explain which, between the two contribution analysis methods, was used in their analysis.