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tujS 2 Dependency on Production Agriculture Degree of Dependency on Production Following the definition of "farm dependency" used by the United States Department of Agriculture, an individual county is classed as "farm dependent" if at least 20 percent of the county's total income comes directly from farming Cl and 3), Income, as used here, refers to the U.S, Department of Commerce concept of labor and proprietor income, rather than the USDA defini- tion of net farm income (see Appen- dix B for a discussion of the differ- ences). We have used the Commerce concept in order to provide compara- bility between "farm income" and Ilnonfarm income. 'I Colorado had 17 farm depend- ent counties in 1987 - counties with over 20 percent of their labor and proprietor income coming from farming, These counties are located primarily in the Eastern Plains and southern part of the state as shown in Figure 1 and have economies which are based almost entirely on farming and ranching, Figure 1 also identifies 11 coun- ties which are farm important, that is counties that obtained from 10 to 20 percent of their 1987 labor and proprietor income from farmi~g, . These counties have a more diversi- fied economic base than do farm dependent economies but the core economic activity is still agriculture. Some of these counties ~ontain trade centers, servicing the needs of people from surrounding counties, While this trade is obviously not all agricultural, it tends to be based on the needs of the people in agriculture, In addition to farm dependent and farm important counties, Figure 1 shows 26 nonmetropolitan counties, These counties have economies that are more dependent on ;mining, retire- ment populations, or tourism and are located mainly in the mountains and on the western slope, Farming and Figure 1: Farm depetUlent and important counties, 1987. . Farm Dependent m Farm Important I I [S:j Other Nonmetro ranching are significant in some of these counties but the importance of other economic activity distinguishes them from the farm important coun- ties, What is Labor and Proprietor Income? Labor and proprietor income includes the income of wage earners, self-em- ployed persons and business enterprises, It is a measure of the total income generated by economic activity. Employment is another important measUre of eco- nomic activity, The number of jobs provided by different industries is an indicator of their contribution to eco- nomic output. Other measures of eco- nomic output are also famil- iar. Gross National Product (or Gross State Product) is commonly used to measure performance of the total economy, Value Added is often used to measure the importance of one industry or sector of the economy, However, labor and proprie- tor income is the most important component of both Gross National Product and Value Added. Its simplicity and relative ease of measure- ment at the county level are reasons behind its emphasis in this report, Just as income is a key guide to private sector deci- sions, it is also an appropriate focus for public policy deci- sions, Labor and proprietor income accurately measures the contribution of different sectors to the local economy. It also provides an accurate comparison of the economic output of different counties,