WATER MULTIPLIERS - REGIONAL IMPACT ANALYSIS1

A significant research problem is the assessment of impacts associated with growth and/or decline in a regional economy. A relevant method for analyzing such problems is the Leontief input/output model. Associated with these models are economic multipliers measuring total changes in sales, income, and employment. In this paper, the author contends resource multipliers are equally relevant. The specific form of these multipliers are defined. Water multipliers for a two-county region in central Nevada are presented and their uses described.     

LINEAR PROGRAMMING USE FOR EVALUATING WATER RESOURCES AND COST AND BENEFIT ALLOCATION1

ABSTRACT A linear programming model for a river basin was developed to include almost all water-related economic activity both for consumers and producers. The model was so designated that the entire basin or basin sub-division could be analyzed. The model included seven sectors, nine objective function criteria, and three river-flow levels. Economic basis for conflicts among sectors over incidence of cost allocation and level of economic activity can be traced to some chosen objective. The disposal of untreated household waste water, particularly from the rural household, directly into the river was consistent with maximizing net benefits and minimizing costs. The optimum resource allocation, water-treatment plants, farms and industry activities would change with flow level. For each of the three industries analyzed separately, paper, wool and tanning, public treatment of industrial waste water was the optimal treatment process in one or more of the solutions. Lake shoreline was the dominant feature determining lake-resource valuation. Implied capital value varied from $126 per shoreline foot to over $250 depending on discount rate. Implied prices on lake surface ranged from $42 to $147 per acre. Strong economic forces encouraged small lot sizes for vacation cottages.     

The relationship between mining and socio-economic well being in Australia’s regions

This paper examines the relationship between quality of life indicators and the gross value of minerals production from Australian regions. We used quality of life indicators, aggregated for 71 local government areas containing mining activities, of household income, housing affordability, access to communication services, educational attainment, life expectancy, and unemployment. We find no evidence of systematic negative associations between quality of life and the gross value of minerals production. Instead, mining activity has a positive impact on incomes, housing affordability, communication access, education and employment across regional and remote Australia. Whilst we do not establish causality between mining activity and quality of life, our analysis prompts a rethink of the resource curse as it applies within a single country. We did not find evidence of a resource curse, at the local government level, in Australia’s mining regions. Nevertheless, we note observations by many other researchers of negative social impacts on specific demographic sectors, localities, families of fly-in fly-out mining operations, and individuals. This contrast may be a scale issue, with the regional benefits of mineral wealth masking highly localised inequalities and disadvantage. We suggest that there is a need to better understand these impacts and, more importantly, the types of policy mechanisms government and industry can adopt to mitigate or avoid them.     

An Empirical Analysis of the Effects of China’s Land Conversion Program on Farmers’ Income Growth and Labor Transfer

In this article, we hypothesize that in addition to participation status and household characteristics, the impact of China’s Sloping Land Conversion Program on income growth and labor transfer is determined by local economic conditions, program range, and political leadership, and the degree of impact on income may vary among different economic sectors. To test these propositions, we have compiled a panel data set of 600 households in three counties in the Loess Plateau region, with observations for times both prior to and after the program’s inception (1999 and 2006), for both aggregate and categorical incomes, and for both participating and non-participating households. Using a difference in differences model and repeated cross-sectional data, we find that participation status, local economic conditions, program extent, and political leadership indeed have significant impacts on household income and off-farm employment. Moreover, the effects of participation on crop production income, animal husbandry income, and off-farm income vary substantially. These results carry major policy implications in terms of how to improve the effectiveness and impact of ecological restoration efforts in and outside of China.     

ECONOMIC ANALYSIS OF WETLAND RESTORATION ALONG THE ILLINOIS RIVER1

Creating and restoring wetland and riparian ecosystems between farms and adjacent streams and rivers in the Upper Mississippi River Basin would reduce nitrogen loads and hypoxia in the Gulf of Mexico and increase local environmental benefits. Economic efficiency and economic impacts of the Hennepin and Hopper Lakes Restoration Project in Illinois were evaluated. The project converted 999 ha of cropland to bottomland forest, backwater lakes, and flood‐plain wetland habitat. Project benefits were estimated by summing the economic values of wetlands estimated in other studies. Project costs were estimated by the loss in the gross value of agricultural production from the conversion of corn and soybean acreage to wetlands. Estimated annual net benefit of wetland restoration in the project area amounted to US$1,827 per ha of restored wetland or US$1.83 million for the project area, indicating that the project is economically efficient. Impacts of the project on the regional economy were estimated (using IMPLAN) in terms of changes in total output, household income, and employment. The project is estimated to increase total output by US$2,028,576, household income by US$1,379,676, and employment by 56 persons, indicating that it has positive net economic impacts on the regional economy.     

“One thing leads to another”—Commodities,linkages and industrial development

With a particular focus on low income economies in SSA, this paper addresses the nature and determinants of linkages from the commodities sectors and challenges the received view that enclave development is an inherent characteristic of resource extraction, particularly in the hard and energy commodities sectors. It argues that there has been a steady increase in linkage development and that there are significant opportunities for deepening this process. The opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high income countries which have resource intensive economic structures, the geographical specificity of many resources and the growing interest of large resource extracting firms in outsourcing the production of inputs which are outside of their core competences and in supporting local production of some inputs, it sets out a general model of linkage development which distinguishes between win–win and win–lose outcomes.     

Mining development,income growth and poverty alleviation: A multiplier decomposition technique applied to China

Mining has grown rapidly and is expected to continue to develop solidly in the future with the economic development in China. Based on this trend, how an increase in the outputs of mining sectors affects household income and poverty alleviation is an issue worthy of study. A multiplier decomposition method within a social accounting matrix (SAM) framework shows the linkages through which a mining sector's output contributes to household income growth and poverty alleviation. The decomposition applied to China reveals that mining development has more significantly positive impacts on the high and middle income household than low income household. Moreover, the decomposition incorporated with the Foster, Greer and Thoerbecke (FGT) poverty measure shows that the ‘coal’ sector contributes most to poverty alleviation and the low income household group, which has the biggest poverty rate, is the smallest beneficiary from the mining development. Thus, the policy implication is proposed that the government should give appropriate adjustment on the distribution of income between rich and poor households and help the unskilled human capital from the household group at a low income level to handle advanced technology of mining through education and training to reduce poverty more effectively.     

Total-factor water efficiency of regions in China

Water is a limited and unevenly distributed resource in China, with the per capita amount of water resource there only about one-fourth of the world's average. However, water is an essential resource for people's lives and economic development. Over the past two decades China has seen the fruit of its rapid economic growth; nevertheless, a severe water shortage is behind this prosperous scenario and is becoming worse. Efficient water supply is certainly essential for the sustainable development of human beings. This paper analyzes water efficiency by incorporating water as an input as well as using conventional inputs such as labor employment and capital stock. An index of a water adjustment target ratio (WATR) is established from the production frontier constructed by data envelopment analysis (DEA) including water as an input. The water efficiency of regions is obtained from a total-factor framework with both residential and productive water use. A U-shape relation is discovered between the total-factor water efficiency and per capita real income among areas in China. The central area has the worst water efficiency ranking and the total adjustment amount of water used there is around three-fourths of China's total. More efficient production processes and advanced technologies need to be adopted in the central area to improve its water efficiency, especially for its productive use of water.     

Development of Indicators to Assess Economic Vulnerabilities to Changes in Ecosystem Services: Case Study of Counties in Maryland,USA

We develop indicators showing the relative environmental burdens that human activities place on locales for a given level of economic benefits. The main purpose is to develop tools that allow us to examine the potential vulnerabilities within economies to changes in resource conditions. The indicators of pollution emission or resource consumption per job can be used to identify potential challenges to resource and industry managers and to compare areas in terms of their ability to adapt to change. For example, if a large number of area jobs are dependent on abundant water, this indicates a vulnerability to a reduction in water availability for industrial use. We develop a case study for 23 counties and 1 city in Maryland to examine the usefulness and limitations of the indicators. Our case study demonstrates that the indicators provide an informative view into patterns of local economic activity and use of an area’s environmental goods and services. In contrast to patterns for total environmental burdens (e.g., total SO₂ emissions) that are typically reported, the rates of environmental burden per job are not simply correlated with high or low economic output. Thus, the indicators represent distinct patterns of environmental burdens per job that reflect reliance on environmental services. The indicators have some limitations when used at this fine scale because they can misrepresent conditions in counties in which economic sectors are dominated by one or a few businesses. For this reason, the indicators are best used as a regional screening tool.     

PRIMARY AND SECONDARY IMPACTS OF A WATER RESOURCE DEVELOPMENT PROJECT1

ABSTRACT: At a time in history when water resource development in the United States is being condemned as both economically inefficient and an environmental disaster, perhaps economists need to look back at previous development to see what the fruits of water development (be they sweet or sour) have been. The Boise Project of south-western Idaho is 70 years old and to some people it represents a gross error in resource use, while to others it represents a means of livelihood and well being. A recent research project at the University of Idaho attempted to measure not only the direct economic income benefits of the project (from irrigation), but also the indirect or secondary income benefits (from the food processing industry). Periodic regional input-output tables were constructed to assess the income generated from irrigation and food processing over the period from 1946 to 1970. Input-output analysis allowed researchers to evaluate the direct and indirect impacts of both the irrigation sector and the food processing sector and to compare their growth over time.     

MANY RESOURCES,MANY USES: A SYSTEM ANALYSIS APPROACH TO RENEWABLE RESOURCE DEVELOPMENT1

ABSTRACT: Decisionmaking associated with the Nation's 1.7 billion acres of forest and range land has become increasingly complicated because of the rise in competition for resource use and in the awareness of environmental and social effects. This system analysis approach uses four models to synthesize pertinent masses of information into measures of economic, environmental, and social impacts. The system results can be used to help evaluate alternative national programs. The models are:

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Rural Households’ Attitude and Economic Strategies Toward the Conversion of Cropland to Forest and Grassland Program (CCFG): A Case Study in Qira,China

The Conversion of Cropland to Forest and Grassland Program (CCFG), which was initiated by the Chinese government in 1999, is a cropland retirement program with integrated objectives for ecological preservation and local development. The purpose of this article was to study the influencing factors of attitude and economic strategies in rural households toward the CCFG. Rural households’ knowledge, attitude and economic strategies toward the CCFG were investigated through a questionnaire survey in Qira, China. Influencing factors of attitude and strategies of households were analyzed using a logit model technique. The analysis indicated that household’s income level, environmental knowledge of the program, and program implementation were significant influencing factors in a household’s attitude toward the CCFG, while major influencing factors of household strategies were their regional background and availability of income generation sources. Meaningful association was not found between attitude and strategy choices. Rich households had more strategy choices, while poor households were usually confined to low input strategies with uncertain income. To sustain their livelihood, the poor need extra assistances in marketing, loan granting, employment training, information, and technical services.     

PUBLIC EXPENDITURE PROGRAMS IN APPALACHIA AND THEIR IMPACT ON REGIONAL EMPLOYMENT1

ABSTRACT: The reduction of regional unemployment requires a sufficient demand for regional labor and the demand pattern must parallel that of supply. Due to the interdependency of Appalachian economy with the rest of the Nation, the leakage of the final demand imposed on a subregion of Appalachia is substantial. The more capital intensive the investment the higher the leakage which will lead to less demand for labor in Appalachia. While water resource projects are generally longterm projects which aim at structural changes in a regional economy, consumption expenditures induced by welfare payments or public employment programs are basically temporary measures for the rescue of unemployment. Average consumption and private investment programs may impose on Appalachia a larger material demand but the demand for the total regional labor, off-site and on-site combined, is estimated to be less than that from water resource investments. The public expenditure program for combating regional unemployment must be discretionary based on its purpose and its potential to generate optimum demand for labor which will be created by the pattern of regional resource distribution and interindustrial and interregional interactions. An interregional I/O model is best suited for analysis of this type.     

ESTIMATING THE VALUE OF WATER AMONG REGIONAL ECONOMIC SECTORS USING THE 1972 NATIONAL INTERINDUSTRY FORMAT1

ABSTRACT: Recent growth in irrigated agriculture and metropolitan areas of the Western United States suggests that if growth continues, there will be a potential shortage in future water resources. Compound the expansion of agriculture and municipal demands with possible enaction of instream flow requirements, a method to allocate water among alternative economic sectors in the West is needed. In this study, an interindustry-linear programming model based on the 1972 national model format is used to allocate scarce water supplies among competing regional economic sectors. The shadow price of water and the sectorial value of water at different availabilities for each competing sector is derived. Also, economic sectors are ranked by value of water at different water availabilities.     

A Multi‐Scale Analysis of Single‐Family Residential Water Use in the Phoenix Metropolitan Area

Studies that evaluate determinants of residential water demand typically use data from a single spatial scale. Although household‐scale data are preferred, especially when econometric models are used, researchers may be limited to aggregate data. There is little, if any, empirical analysis to assess whether spatial scale may lead to ecological fallacy problems in residential water use research. Using linear mixed‐effects models, we compare the results for the relationship of single‐family water use with its determinants using data from the household and census tract scales in the city of Phoenix. Model results between the household and census tract scale are similar suggesting the ecological fallacy may not be significant. Common significant determinants on these two spatial scales include household size, household income, house age, pool size, irrigable lot size, precipitation, and temperature. We also use city/town scale data from the Phoenix metropolitan area to parameterize the linear mixed‐effects model. The difference in the parameter estimates of those common variables compared to the first two scales indicates there is spatial heterogeneity in the relationship between single‐family water use and its determinants among cities and towns. The negative relationship between single‐family house density and residential water use suggests that residential water consumption could be reduced through coordination of land use planning and water demand management.     

Revealing the economic channels of natural impacts: an extended input–output subsystems application to GHG gases and water use

While a small set of economic activities generates most of the direct environmental burdens, the complexity of connections within an economic system requires consideration of the effects caused by the interdependences between its different agents. To date, however, the input–output (I–O) subsystems literature has been limited to uncovering the intersectoral linkages of direct and indirect environmental impacts within an economy and the connections between sectors and private consumption have thus not attracted much attention. This paper proposes an I–O subsystems model that endogenously incorporates not only production sectors but also household consumption to capture the entire channel of environmental impacts. The empirical application focuses on carbon dioxide equivalent (CO₂-eq.) emissions and water use associated with production sectors and households defined in the I–O table for a Spanish region, Extremadura. The results highlight the key role of the effects induced by private consumption on the environmental burdens of services.     

Explaining the resource curse, with special reference to mineral-exporting countries

Recent studies have found an inverse correlation between economic growth and natural resource abundance among developing countries. There appears to be no obvious explanation for this finding, such as an important growth variable that is common in resource-poor countries and deficient in resource-abundant countries. The resource curse hypothesis is closely related to the problem of sustainability for resource-exporting countries since periods of high growth are frequently followed by long periods of stagnation. Models are examined showing how increases in export income can affect relative prices in the trade and nontrade sectors and how the changes in relative prices affect investment and growth. It is the thesis of this article that there is nothing inherent in resource-abundance that condemns countries to either low growth or nonsustainability.     

REGIONAL IMPACT OF WATER RESOURCE INVESTMENTS IN A DEVELOPING AREA1

ABSTRACT: Regional development and industrialization patterns are investigated and related via regression analysis to water resource investments for the island of Puerto Rico. Although results of this study indicate such investments have little immediate or short-term impact, significant relationships and variations in regional responses appear over longer time periods. This is shown by applying a variation of Zellner's method of performing seemingly unrelated regressions jointly. By this method, subsets of parameter coefficients of specific economic variables were restricted across regional equations while unrestricted coefficients were interpreted as explaining systematic regional variations in response to public investment. Regional differences, obtained by using this method, are frequently neglected when simply examining the overall development process. Among the more interesting results in terms of policy implications is the apparent significant relationship, over the period considered, between changes in the distribution of income and the pattern of water resource development.     

Water Prism: A Tool to Assess Water Availability Risk and Investigate Water Management Strategies

Water availability risk is a local issue best understood with watershed‐scale quantification of both withdrawal and consumptive demands in the context of available supply. Collectively, all water use sectors must identify, understand, and respond to this risk. A highly visual and computationally robust decision support tool, Water Prism, quantitatively explores mitigation responses to water risk on both a facility‐level and basin‐aggregated basis. Water Prism examines a basin water balance for a 40‐ to 60‐year planning horizon, distinguishes among water use sectors, and accounts for ecosystem water needs. The 2012 Texas State Water Plan was used to apply Water Prism to the Big Cypress‐Sulphur Basin (Texas). The case study showed Water Prism to be an accurate and convenient tool to provide fine‐scale understanding of water use in the context of available supply, evaluate multi‐sector combinations of conservation strategies, and quantify the effects of future demands and water availability. Analyses demonstrated water availability risks for rivers and reservoirs can vary within a basin and must be calculated independently, simulation of water balance conditions can help illuminate potential impacts of increasing demands, and scenario simulations can be used to evaluate relative conservation efficacy of different water resource management strategies for each sector. Based on case study findings, Water Prism can serve as a useful assessment tool for regional water planners.     

Regional economic impacts of water management alternatives: the case of Devils Lake,North Dakota,USA

Devils Lake, located in a closed basin in northeastern North Dakota has over a century-long history of highly fluctuating water levels. The lake has risen nearly 25 feet (7.7 m) since 1993, more than doubling its surface area. Rising water levels have affected rural lands, transportation routes, and communities near the lake. In response to rising lake levels, Federal, state and local agencies have adopted a three-part approach to flood damage reduction, consisting of (1) upper basin water management to reduce the amount of water reaching the lake, (2) protection for structures and infrastructure if the lake continues to rise, and (3) developing an emergency outlet to release some lake water. The purpose of this study was to provide information about the net regional economic effects of a proposed emergency outlet for Devils Lake. An input-output model was used to estimate the regional economic effects of the outlet, under two scenarios: (1) the most likely future situation (MLS) and (2) a best case situation (BCS) (i.e., where the benefits from the outlet would be greatest), albeit an unlikely one. Regional economic effects of the outlet include effects on transportation (road and railroad construction), agriculture (land kept in production, returned to production sooner, or kept in production longer), residential relocations, and outlet construction expenditures. Effects are measured as changes in gross business volume (gross receipts) for various sectors, secondary employment, and local tax collections. The net regional economic effects of the proposed outlet would be relatively small, and consideration of these economic impacts would not strengthen the case for an outlet.