9392

• UCREFRP Catalog Number: 9392
• Author: Brookshire, D. S., M. McKee and S. Stewart.
• Title: A Four Corners Regional Focus on the Economic Impact of Critical Habitat Designation for the Razorback Sucker, Humpback Chub, Colorado Squawfish, and Bonytail.
• USFW Year: 1996.
• USFW - Doc Type: Albuquerque.
• Copyright Material: NO

sectors. Sectors 1 and 2 are linked both forward and backward. That is, sector 1 provides inputs
to sector 2 and vice versa. Thus, a direct impact to sector 2 finds its way to sector 1 via two
channels. There is a flow of 200 dollars from sector 2 to sector 1 and 100 dollars to sector 2.
The table also reports other factors concerning the activity of the economy. For example, sector
2 generates a gross output of 1900 dollars. Households consume 300 dollars of sector 2's output
and the remaining final demand categories (investment, government, and net exports) take up
1300 dollars. Total payments equal gross output for each sector. Thus, the economy is in
balance. Labor earns 300 dollars in sector 1 and 500 dollars in sector 2.
Thus, a key property of I-O models is that they capture the linkages that exist in an economy.
An external shock to a particular sector, due to actions taken on behalf of the endangered fishes,
will be reflected throughout the economy. The I-O model allows identification of consequences
for each sector of the economy as well as the entire regional economy. These consequences are
measured as changes in output and employment. For example, if the gross output of sector 2
increases due to an exogenous action, this leads to an increase in the output of sector 1 and
increases in the payments to labor.4
The input-output method enjoys considerable support for its continued use in regional economic
analysis. As Dervis, De Melo, and Robinson [ 1982] have noted,
"The core around which all such applied models are built is the input-output
model pioneered by Leontief. The essence ofinput-output analysis is that it
captures the crucial element of the interrelatedness of production arising through
the flow of intermediate goods among sectors.... the simple input-output model .
represents a powerful tool for applied general equilibrium analysis." [p.6]
Indeed, I-O analysis continues to enjoy widespread use by such organizations as the U.S. Forest
Service, and many projects in developing countries have been evaluated by the World Bank
using I-O models.
°An exogenous action is an action that occurs outside of the economy, but which may have effects on
elements within the economy, such as a regulation imposed by a federal or state agency. An endogenous action is
an action that is initiated within the system.
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