316
tifying entry of a new mill, and the employment
multiplier is 2.60, then we would expect 145 X
2.60 = 377 total jobs in the economy because of
the utilization of this additional timber.
21.6.2 Forecasting Future
Production Based on
Environmental Conditions
Another important type of forecasting is that of production levels of all goods and services, given expected environmental conditions. This is based on
the relationship, introduced earlier,
If we accept the inverted Leontief inverse matrix
[(/ - A)-I] as representative of economic linkages
over the forecast period and are able to specify a
schedule of expected final demands (Y), then a future production schedule (X) may be calculated.
However, note that the ecological feasibility of
meeting such a production schedule must be appraised using side calculations, because supply
constraints are not included in the input-output
model. This can be done readily if we can forecast
resource use per unit of product and if resource inventories can be forecasted. These calculations can
be completed for all years in the forecast period.
Note, however, that we should be wary of forecasting resource use per unit of product. The natural inclination is to assume no change in the future. History indicates that it is difficult to
accurately predict resource use per unit of product
in the long run. Technological change has resulted
in fuller use of natural resources (i.e., less waste or
residuals) and lower resource use per unit of product (i.e., less material is needed to fulfill the function of the good), and the introduction of new materials.
21.6.3 Forecasting Future
Distributions Based on
Environmental Conditions
If the input-output relations as expressed in the direct coefficients table [A] can be expected to be
maintained over the forecast period, the model can
be used to allocate future production to the various
sectors of the regional economy. This can be shown
by remembering that
x-.
[A] = aij = ;.
J
Methods of Economic Impact Analysis
Therefore,
Assuming stability in the production coefficients
(ai) and the production schedule for the forecast
year (X), it is possible to allocate the intersectoral
flows (xij)'
However, note that it is implicit that the sum of
the payments sectors, which are exogenous, also
will be assumed to remain stable for each sector.
Therefore, it is important to check for resource
availabilities, even those included in the economic
accounts (e.g., labor) that may become scarce and
hence higher priced in the future.
21.7 Major Problems in Impact
Analysis Modeling
Specific problems include the following:
1. Lack of theory or existence of widely divergent theories regarding operation of the realworld system, both in terms of economic and
ecological linkages.
2. Difficulty in achieving appropriate aggregation
(temporal, spatial, and activities). When secondary data from various sources are used, it
is difficult to maintain consistency in aggregations. A major problem of estimating economic
impacts is that the smaller the region considered when using secondary data, the less reliable are the estimates. Also, there are major
problems in collecting primary data for the region (particularly related to disclosure rules).
Also, less than ideal sampling may be required
by funding and time limitations. Because of
these problems, aggregation error may be
large.
3. "Input-output models focus primarily on
flows of dollars between sectors of the economy, and stock relationships are generally
handled by variables that measure changes in
the stocks during the time period covered by
the model. In [biological] productive enterprises, especially those that are long term
such as forestry, there are a number of stock
relationships that need to be considered over
a longer period than is covered by the short
period covered by the input-output model
(generally a single year)" (Chappelle, 1988,
p. 18). Normally, it is safe to assume that multipliers and percentage distributions are stable over a fairly long period (e.g., ten years),
tifying entry of a new mill, and the employment
multiplier is 2.60, then we would expect 145 X
2.60 = 377 total jobs in the economy because of
the utilization of this additional timber.
21.6.2 Forecasting Future
Production Based on
Environmental Conditions
Another important type of forecasting is that of production levels of all goods and services, given expected environmental conditions. This is based on
the relationship, introduced earlier,
If we accept the inverted Leontief inverse matrix
[(/ - A)-I] as representative of economic linkages
over the forecast period and are able to specify a
schedule of expected final demands (Y), then a future production schedule (X) may be calculated.
However, note that the ecological feasibility of
meeting such a production schedule must be appraised using side calculations, because supply
constraints are not included in the input-output
model. This can be done readily if we can forecast
resource use per unit of product and if resource inventories can be forecasted. These calculations can
be completed for all years in the forecast period.
Note, however, that we should be wary of forecasting resource use per unit of product. The natural inclination is to assume no change in the future. History indicates that it is difficult to
accurately predict resource use per unit of product
in the long run. Technological change has resulted
in fuller use of natural resources (i.e., less waste or
residuals) and lower resource use per unit of product (i.e., less material is needed to fulfill the function of the good), and the introduction of new materials.
21.6.3 Forecasting Future
Distributions Based on
Environmental Conditions
If the input-output relations as expressed in the direct coefficients table [A] can be expected to be
maintained over the forecast period, the model can
be used to allocate future production to the various
sectors of the regional economy. This can be shown
by remembering that
x-.
[A] = aij = ;.
J
Methods of Economic Impact Analysis
Therefore,
Assuming stability in the production coefficients
(ai) and the production schedule for the forecast
year (X), it is possible to allocate the intersectoral
flows (xij)'
However, note that it is implicit that the sum of
the payments sectors, which are exogenous, also
will be assumed to remain stable for each sector.
Therefore, it is important to check for resource
availabilities, even those included in the economic
accounts (e.g., labor) that may become scarce and
hence higher priced in the future.
21.7 Major Problems in Impact
Analysis Modeling
Specific problems include the following:
1. Lack of theory or existence of widely divergent theories regarding operation of the realworld system, both in terms of economic and
ecological linkages.
2. Difficulty in achieving appropriate aggregation
(temporal, spatial, and activities). When secondary data from various sources are used, it
is difficult to maintain consistency in aggregations. A major problem of estimating economic
impacts is that the smaller the region considered when using secondary data, the less reliable are the estimates. Also, there are major
problems in collecting primary data for the region (particularly related to disclosure rules).
Also, less than ideal sampling may be required
by funding and time limitations. Because of
these problems, aggregation error may be
large.
3. "Input-output models focus primarily on
flows of dollars between sectors of the economy, and stock relationships are generally
handled by variables that measure changes in
the stocks during the time period covered by
the model. In [biological] productive enterprises, especially those that are long term
such as forestry, there are a number of stock
relationships that need to be considered over
a longer period than is covered by the short
period covered by the input-output model
(generally a single year)" (Chappelle, 1988,
p. 18). Normally, it is safe to assume that multipliers and percentage distributions are stable over a fairly long period (e.g., ten years),