Economic Impact Analyses of Consumptive Uses of Natural Resources in Indiana

Dhruba Burlakoti, Purdue University

Abstract

Consumptive uses of natural resources are a major source of economic activity in an economy. Harvesting of timber and wildlife makes up a significant portion of those uses. Knowing the economic contribution from these activities could support forest and wildlife management decisions. In this study, we estimated the total economic contributions from hardwood-related businesses and the economic impacts of furbearer hunting and trapping in Indiana. Indiana is one of the leading US producers of wood products, having 4.7 million acres of forestland. The forests of Indiana provide significant economic benefits to the State through more than 4,400 hardwood-related business establishments. To estimate the total economic contribution from Indiana's timber harvesting, manufacturing, and sales of hardwood products, the hardwood industries are classified into core and supporting industries. Core industries are further categorized into Primary, Secondary, and Tertiary industries based on the amount of value they add to the production of the finished products. The input-output model was used to quantify the economic contribution. With the help of Social Accounting Matrix (SAM) multipliers, we measure the hardwood industries' connection with other sectors of the economy through input purchases, payments of wages and taxes, and other transactions. The total economic contribution of hardwood industries in Indiana in 2019 was about $ 24.6 billion, including roughly $15.4 billion of direct output. The core hardwood industries directly added about $3.5 billion in value in 2019; aggregating indirect and induced value addition, this figure jumps to about $6.6 billion. Suppliers and Pulp & Paper industries also accounted for $1.5 billion of direct and $926 million of indirect and induced value addition. These industries employed about 63,000 employees, indirectly supporting nearly 52,000 jobs. For every person employed in hardwood industries, additional 0.83 jobs were created in the state economy. Due to its abundance of furbearers, Indiana has been a significant fur producer throughout history. Hunting and trapping of these animals have been supporting the local economy with the purchase of hunting and trapping supplies, payment for transportation, processing fees, and so on. These activities directly or indirectly impact many other industries. Economic impact studies assist in estimating the values of wildlife to the locals and evaluate management activities in practice. Except for badgers and bobcats, 12 species of furbearers can be legally hunted or trapped in Indiana. This study assesses the economic impacts and distributional effects of hunting and trapping these furbearer species in Indiana. A mail-in survey was conducted to gather spending patterns of hunters and trappers across various categories, including daily, seasonal, and durable goods. Gas, groceries, fast food, and housing were part of the daily spending. Ammunition, clothing, license fees, rent, bait, conditioning, and dog-related costs were all classified as seasonal. Spending on durables included buying long-lasting things, including trailers, freezers, ATVs, canoes/boats, and freezers. Based on survey results, we extrapolated the average expenditure profile of hunters and trappers for the entire state. To determine the overall economic impact as well as the indirect and induced effects for each spending category, we performed an input-output analysis using IMPLAN. Indiana's furbearer hunters spent about $52.4 million daily, $65.8 million seasonally, and $19.2 million on durables throughout the 2020 hunting season. With $38.2 million in direct value addition, these operations generated a total value of $70.6 million. Associated industries paid nearly $46 million in wages to their 948 employees. About $1.6 million was spent by furbearer trappers on daily expenses, $1 million on seasonal expenses, and $651 thousands on durable expenses. Associated industries employed 21 people and paid $938 thousands to their employees. With a direct value of around $756 thousands, the added value is almost $1.4 million overall. Together, the two sectors generated $72 million additional value and 969 jobs. An additional $0.79 is created in the state economy for every dollar spent on hunting or trappingrelated activities.

Degree

M.Sc.

Advisors

Zhou, Purdue University.

Subject Area

Labor relations|Natural Resource Management|Wildlife Management

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