Forestry in Itasca County's Economy- An Input-Output Analysis

98 pagesThe dominant characteristic of Itasca County and, indeed, most areas in northeastern Minnesota is change. Population has declined over the past decade in an apparent response to declining employment opportunities for old and young alike. Employment also has shifted from such basic industries as mining and agriculture to manufacturing and services. County planners, including businessmen and public officials, need improved tools for measuring the consequences of change in the economy and society if they are to control and respond to these changes effectively. One such tool is an input-output framework that describes the interdependence of activities within the county and the rest of the world. A 39 by 39 sector input-output model of the Itasca County economy of 1966 was constructed, and multipliers useful for estimating shortrun impacts of possible changes were developed from it. In this analysis, forestry-related sectors such as timber production, sawmilling, and timber operators were given special consideration, since such established activities apparently have room to grow in Itasca County and thereby may represent some opportunities for development. Of added interest is the fact that forestry-related activities in the county have high local community impact multipliers, largely because they result in high local respending of income ratios. Three basic classes of change are described and examples are developed to illustrate the use of the Itasca County input-output results in measuring the effects of change. The examples include a simple change in sales level as illustrated by timber stumpage sales changes, a change in industry structure with reference to the Itasca County resort sector, and the addition of a new business or sector to the local economy illustrated by the construction of a new chip-and-saw mill in the county. Several other kinds of examples also are developed to help explain the uses and limitations of input-output analysis. All of the cases are drawn in varying degrees from real-life concerns in northeastern Minnesota. Finally, by means of additional illustrations, guides for using the inputoutput results are provided. The illustrations point out that high multipliers are not in themselves clear signals for local development. Sales potential also must be evaluated to make effective use of input-output analysis. By illustrating the consequences of land use alternatives, two additional guides are underscored: First, relative uncertainties about alternatives must be considered, and second, income distribution effects as well as level of effect must be taken into account