Holly W. Bender, PhD

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Regional Economic Modeling and Economic
Development Energy Applications
Holly W. Bender, PhD bender_holly_at_bah.com 1/14/20
08
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Regional economic modeling (EIA) describes the
consumption and production sectors within an
economy through a series of linkages among
industries, households, and institutions

• Booz Allen has utilized IMPLAN, an input-output
  modeling tool, which combines software and
  regional data sets
• Output variables include (by 511 industry and
  institutional sectors)
• Employment
• Earnings
• Business Taxes
• Gross Regional or State Product
• Economic output
• New Trade Flows model allows for a more accurate
  estimate of economic leakages within a region

• Regional economic models need customization for
  industry-specific local data and conditions,
  modeling direct effects, leakages, study area
  data, and more

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Regional economic models translate investments,
financial injections, or revenues into direct and
downstream economic activity in terms of economic
output, GNP, employment and income

• Multipliers describe these downstream or ripple
  effects on the economy
• Multipliers range generally between 1 and 5, with
  one being no rollover impact on the economy and 5
  representing five times the direct impact on the
  economy
• Direct effects are those occurring to the
  industry that is changing its goods or services
  (final demand change).
• Indirect effects are the changes in
  inter-industry purchases as they respond to the
  new demands of the directly affected industries.
• Induced effects are the increases in household
  
  income expenditures generated by
  the direct
  and
  indirect effects

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Booz Allen has recently finished two economic
impact studies of oil and gas activities in
Colorado and Wyoming
Report available at www.wba.vcn.com
Report available at www.ceri-mines.org/CERIOilG
as.pdf
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Colorado oil and gas activities account for 6.1
of economic output (26.0B), 7.1 of GSP, and
2.1 of employment (71K). Oil and Gas average
earnings are 132 of the states average wages
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Wyomings oil and gas activities are
considerable, accounting for 31.6 of economic
output (18.6B) and 42.7 of GSP. Sixty-four
percent of economic output is associated with
extraction activities
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Wyomings economy relies heavily on its oil and
gas activities, with 20 of the states
employment either direct or indirectly associated
with oil and gas activities
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Oil and gas multiplier is 3.65 for every one
direct job in extraction, drilling and completion
activities, there is another 2.65 jobs generated
in downstream employment
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Wyoming oil and gas activities contribute to the
economic well-being of many other industries and
institutions within the state, providing for 38
of government employment in the state
EIA helps in identifying which direct and
supporting sectors are expected to experience the
highest demand and business growth.
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A key pillar of the Obama Stimulus Plan is green
job creation to reduce U.S. dependence on foreign
oil through spurring renewable energy initiatives
and investments in electric industry transmission
infrastructure

• In 2006, 8.5M new jobs were created in RE and EE
  in the US (MISI, 2007)
• Almost 90,000 jobs in Colorado associated with RE
  and EE in 2007 (ASES, 11/2008)
• During next four years, Smart Grid investments
  will yield 280,000 new jobs (KEMA, 12/2008)

Sources Global Energy, Booz Allen Analysis, 2006
Data
EIA is vital to understanding the industry and
economic linkages in a regional or state economy
Helps in planning for emerging direct and
downstream industry and workforce needs and
minimizing economic leakages
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To quantify green jobs and understand affected
industries of various federal spending policies
(i.e., taxes, cap and trade, subsidies, direct
payments, access to capital), a multi-faceted
analysis is required to estimate these jobs,
income, business tax and GNP impacts

• Not only the impacts of the investment spending,
  but the
• impacts of changes in consumer spending (e.g.
  savings on energy bills will get spent by
  households in other ways)
• impacts of changes in industry spending (e.g.,
  utilities shifting spending from fossil fuel OM
  to renewable energy technologies)

• It will be necessary to
• To customize and adjust the input-output model
  and embedded industry production functions and
  consumption patterns
• To reevaluate and recreate the power generation
  sector in IMPLAN