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Multiplier analysis of MASGC projects

By: Ben Posadas / Published: Apr 29,  2015

The U.S. industries targeted by the Mississippi-Alabama Sea Grant Consortium research, education and outreach projects during the past decade were grouped under four focus areas.

Under “sustainable fisheries and aquaculture,” the following industries were listed:

  1. Commercial fishing
  2. Seafood processing
  3. Seafood wholesaling
  4. Seafood retailing 
  5. Marine aquaculture
  6. Live bait dealers

The “healthy coastal ecosystems” focus area includes:

  1. Research and development in biotechnology
  2. Research and development in the physical, engineering and life sciences
  3. Research and development in the social sciences and humanities

Under “resilient communities and economies,” these industries were identified:

  1. Working waterfronts
  2. Commercial marinas
  3. Charter boats for hire
  4. Saltwater recreational fishing
  5. Wildlife watching
  6. Coastal restoration
  7. Ship building and repair

Under the focus area “environmental literacy and workforce development,” five industries were identified:

  1. Other justice, public order, and safety activities;
  2. Administration of air and water resource and solid waste management programs
  3. Administration of general economic programs
  4. Regulation of agricultural marketing and commodities
  5. Household sector

The multiplier analysis is a suggested approach which demonstrates how standard economic impact analysis can be used to estimate the marginal economic impacts of Sea Grant projects in Mississippi and Alabama. The sales and jobs multipliers of various economic sectors were computed using economic impact analysis data and software. Two levels of marginal economic impacts of Sea Grant projects were estimated in 2012 for selected projects.

The initial marginal economic impacts estimation template (Table 1) consisted of a scenario where Sea Grant projects received $70,000 in federal funding for 2012. Initial marginal economic impacts refer to the creation of additional economic output, jobs and incomes arising from expenditures on goods and services needed to successfully complete each project.

The final marginal economic impacts template consisted of various scenarios where annual gross sales or annual labor income was increased by $1 million in 2012 due to new technology developed by Sea Grant projects. Final marginal economic impacts consist of the creation of new output, more jobs and additional income associated with the adoption of the results of Sea Grant projects by producers and households.

For example, the initial marginal economic impacts of the $70,000 federal funding for the implementation of the technical adjustment assistance program (TAAF) for commercial shrimp fishermen in Mississippi and Alabama in 2012 consisted of total sales impacts amounting to $102,718, additional 1.9 jobs, and increase in labor income by $38,781 in the two states.

Table 1. Initial marginal economic impacts (L1) of seventy-thousand-dollars MASGC funding on commercial fishing projects in Mississippi and Alabama in the year 2012  

Impact Type

Employment

Labor Income

Value Added

Output

Direct Effect

1.6

$28,866

$34,964

$70,000

Indirect Effect

0.1

$3,176

$4,896

$11,694

Induced Effect

0.2

$6,740

$12,880

$21,024

Total Effect

1.9

$38,781

$52,739

$102,718

 

The second level of marginal economic impacts consisted of a million-dollar-increase in labor income among Mississippi and Alabama commercial fishermen associated with the technical assistance from the federal government. The increase in proprietors’ income of commercial fishing vessels by $1.0 million in 2012 generated total induced effects of $0.627 million sales impacts and 5.6 job impacts.

Table 2. Marginal economic impacts (L2) of a million-dollar-increase in labor income of owners of Mississippi and Alabama commercial fishing vessels due to TAAF in the year 2012

Impact Type

Employment

Labor Income

Value Added

Output

Direct Effect

0.0

$0

$0

$0

Indirect Effect

0.0

$0

$0

$0

Induced Effect

5.6

$201,059

$384,178

$627,106

Total Effect

5.6

$201,059

$384,178

$627,106

 

Additional specific examples from Sea Grant activities used in estimating the two levels of economic impacts are described in the source document cited below.

Source: Posadas, Benedict C. 2015. Suggested Approach in Estimating the Economic Impacts of Research, Education And Outreach Projects. Mississippi State University Extension Service publication 2883 and Mississippi-Alabama Sea Grant publication MASGP-14-035. Mississippi State, Mississippi.

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