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14 <br /> Aa The Economic Importance of Water in Kansas <br /> Economic Impact Analysis Method <br /> Economic impact analysis traces the full impact-direct, indirect and induced -of an economic activity on <br /> jobs and incomes in a defined economy. <br /> The availability of water in the State of Kansas affects the maximum level of production possible in each <br /> sector, and therefore the number of people directly employed by all firms operating in those sectors. <br /> These are known as direct economic impacts. Indirect effects arise, for example, through supplier <br /> purchases placed by firms as part of their production process. Induced effects occur when workers either <br /> directly or indirectly associated with the level of production spend their incomes in the local economy, <br /> when suppliers place upstream demands on other producers, and when governments spend new tax <br /> revenues. The total jobs and incomes associated with the productive activity made possible by the <br /> availability of water in the State are a multiple of the initial direct production. <br /> To estimate the economic importance of water in the State of Kansas, Apparet Analytics uses a modified <br /> version of an IMPLAN input-output model. IMPLAN is widely used for economic assessments and can <br /> provide detailed estimates of secondary expenditures and income generated as a result of a business <br /> investment or operation for a finite period of time(typically one full calendar or fiscal year). Input-output <br /> analysis is an economics term that refers to the study of the effects that different sectors have on the <br /> economy as a whole,for a particular nation or region. <br /> Apparet Analytics'method for estimating the economic value of water consists of four fundamental steps: <br /> 1. Prepare a baseline estimate of the size/nature of the economy for a defined geography: This <br /> Business as Usual (BAU) case consists of an input-output table for the year of study, in which the <br /> intermediate demand and final demand for the areas of study is described,and a distinction made <br /> between the use of water as a primary input to the production process of each industry or sector, <br /> and other water supplies that are directly consumed. <br /> 2. Develop a policy scenario: This policy scenario assumes the reduced availability of water in <br /> CY2062 for each sector listed in the input-output table. It also assumes that no other sources of <br /> water are available to compensate for the loss of water deliveries in CY2062, and the non- <br /> adaptability of producers and consumers.6 <br /> 3. Compute the baseline and policy scenario forecasts. <br /> 4. Produce the "delta" results: Differences between the BAU and policy scenario values for each <br /> sector provide the incremental economic potential of the State of Kansas, assuming an <br /> appropriate water supply can be sourced. This produces economic impact estimates for GSP, <br /> employment, and labor income for the reduced water availability scenario. <br /> 6Apparet Analytics acknowledges the unlikelihood of the complete non-substitutability of water to compensate for the reduction <br /> in water availability, and also the unlikelihood of the non-adaptability of producers and consumers. However, this type of <br /> scenario represents the best way to arrive at a comprehensive estimate of the importance of water for the State of Kansas <br /> economy. <br /> S <br /> Apparet Analytics 2015 <br />