Recipient Organization
WEST VIRGINIA UNIVERSITY
886 CHESTNUT RIDGE RD RM 202
MORGANTOWN,WV 26505-2742
Performing Department
Forestry
Non Technical Summary
The hardwood forests of West Virginia have been a vital resource to the state throughout its history and have played a fundamental role in its economic development. The forest resource of the state is therefore an important economic driver to its economy. In fact, West Virginia's forest products industry (FPI) has long been viewed as an important industry to the state. Over the previous decade, assessments of the economic contribution of forestry-related industries across the country have become increasingly prevalent. The information gained from these analyses are often used to advocate for the industry and as a resource for policymakers, industry decision makers, and others. As other states with substantive forestry industries regularly perform such research, West Virginia has not kept pace with this trend. Until recently, West Virginia did not have any up-to-date quantitative measure of what portion of the state economy is supported by its forest products industry, while other states have continued to conduct periodic assessments of their forest products industry. Periodic assessment of the performance of the forest products industry is important with changing economic conditions. The housing market collapse, subsequent recession, continued increasing global competition, natural gas boom, trade policies, and other macro-economic trends call for a continued assessment of the FPI. The continuing evolution of the global, national, and state economy necessitates a reexamination of the role the FPI plays in the state. Analyzing the industry's contribution over time is helpful in understanding important industry trends and the results of such an examination will provide much needed information to policymakers, forest industry stakeholders, private forest landowners, and others to address the critical economic issues being faced by the industry. This study will conduct a periodic assessment of the economic contribution of the FPI to West Virginia's economy. The analysis of economic contributions made by the forest products industry over time is crucial to better understand its role to the regional economy. In addition, assessing the contribution of the major sectors that make up the forest products industry will identify those sector/s of the industry performing well relative to other analyzed sectors. This information can then be used to identify sectors of the industry where government efforts should be focused in terms of providing industry assistance and economic development support.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Goals / Objectives
The overall goal of this project is to examine the economic conntribution of the West Virginia Forest Products Industry (WV FPI) to the state's economy. The specipfic objectives are to:1. Estimate the contributions of the West Virginia's forest products industry to the state economy periodically.2. Estimate and compare the economic contributions of the forest products industrry in five separate regions of West Virginia periodically.
Project Methods
The Impact Analysis for Planning (IMPLAN) economic modeling software will be used for all economic contribution analyses that will be performed. Through the construction of unique input-output economic models, IMPLAN allows for the estimation of the impact or contribution of potential, foregone, or existing economic activities in a user-defined region. The strength of the IMPLAN software lies in the ability of the user to customize the model construction as they see fit. Model customization is done through IMPLAN dataset selection, the modeling approach with which the regional purchasing coefficients are constructed, and the customization of the Social Accounting Matrix (SAM) which underlies the input-output model. The SAM is an input-output matrix that represents the market (inter-industry) relationships that exist in an economy as well as the non- market (institutional) relationships that are present. (Cheney 2018a). The inclusion of institutions allows IMPLAN to not only account for the economic activity brought upon by inter-industry activity, but also that which is brought upon by institutional (e.g. household, governmental) spending. Once the custom model is built in IMPLAN, the user then defines the industry of study. Users can choose any number of 536 individual IMPLAN sectors with which to define their industry. Each IMPLAN sector corresponds with one or more North American Industrial Classification System (NAICS) sectors (Cheney 2018b). When defining the industry to be analyzed, the user may aggregate sectors in order to build the industry as they understand it exists in their region. IMPLAN is then able to model the combined economic effects of the industry as well as the effects of the individual component sectors.When using IMPLAN to conduct economic contribution analysis, steps must be taken as to differentiate the analysis from that of an economic impact analysis. Using economic impact analysis methods to estimate economic contribution will result in an overestimation of the economic reality through the double-counting of portions of the industry's contributions (Henderson et al., 2017). While there are two generally accepted methods for accomplishing an economic contribution analysis, this study will use Method 1 as detailed in detailed in Parajuli et al. (2018) and Henderson and Evans (2017) and is also a built-in command in the new IMPLAN Online softwareResults of economic contribution analyses are reported by IMPLAN in a number of economic measures by direct, indirect, and induced effects. In terms of economic contribution analyses, direct effects are those contributions that are made through the primary industry of study's operations in order to meet final demand for its output. Indirect effects are those contributions that arise through inter-industry activity which occurs as secondary industries respond to the demand for inputs by the primary industry's operations. Induced effects are those contribution that arise from the spending of personal income by the employees and proprietors of businesses within the primary and secondary industries. The sum of these effects, therefore, makes up the total contribution, or the gross change in a region's economy that can be attributed to the primary industry of study. The relationship between the primary industry's direct effects and its total effects can be illustrated through a SAM multiplier value, which is calculated by dividing the total effects of an industry by its direct effects. Type SAM multipliers are a representation of the magnitude of the "ripple effects" that are created through the broader economy by the direct industry activity. They consider the direct, indirect and induced effects of an industry's operations. Direct, indirect, and induced effects are reported by IMPLAN for the following measures of industry-specific economic activity:Employment: The number of full and part timejobsEmployee Compensation: The total payroll cost of wage and salary to the employer.Output: The value of industry production, or industrysalesValue Added: The difference between an industry's output and the cost of its intermediate inputs. This consists of employee compensation, proprietor income,indirect business taxes, and other property typeincome.Available IMPLAN datasets for the period 2020-2024 will be used for conducting periodic assessment of the economic contributions of WV's FPI. The FPI will be defined as seven individual major forest products sectors: (1) forestry, (2) logging, (3) primary solid wood products, (4) secondary solid wood products, (5) wood furniture, (6) pulp, paper, and paperboard, and (7) secondary paperboard and other paper productsbased on aggregation of 30 individual IMPLAN sectors.For objective 2, 5 regions will be used as defined by West Virginia University's Appalachian Hardwood Center (AHC) for their annual Timber Market Report.