FAQ

The Toolkit assesses how to measure the local economic impacts of food system activity or a specific food system project. Through the guidance provided herein one can think critically about how to define a local region. Any sales that take place outside of the defined local region are considered export – it does not matter whether they are sold in another part of the United States or exported to another country. That being said, any product grown/processed/manufactured locally will have local economic impact already accounted for within the baseline IMPLAN data (local inter-industry linkages).

When we were creating this toolkit we looked at what was common practice for economic impact analysis not just related to local foods but also for other industries. IMPLAN is what is being used for the majority of economic impact studies. For example, the U.S. government used IMPLAN data and software to generate estimates of the economic impact of the American Recovery and Reinvestment Act. Accordingly we decided to use it in the toolkit as it allows us to compare the impacts of local foods to studies conducted in other industries.

The reasons for the use of IMPLAN lies in its ease of operation as well as the data it provides to create a complete picture of the economy. As input-output analysis requires a substantial amount of data as it tracks the flow of transactions between local industries, sales by industries to households, as well as to other “final users” of goods or services. One of IMPLAN’s great values is that it embeds much of that data, and even if sectors of key interest are customized, having the rest of the economic sectors for your area already developed will save a great amount of time. It should be noted that, in 2008, the federal government stopped producing many of the commonly used data sets to create input output models, which reduced the options available for conducting input-output analysis.

That being said, there are other options out there for conducting input output analysis such as RIMS II and REMI. Individuals can also create a computable general equilibrium model to evaluate the economic impacts but the creation of these models requires significant economic knowledge as well as a significant time commitment.

Any local foods assessment will require you to assemble a diverse project team that represents the key community stakeholders. Modules 1-4 are aimed to be accessible to that team of stakeholders, even if no one in the group has economic expertise, as long as they have experience in community development and basic spreadsheet and data management skills. However, performing a more rigorous economic impact assessment (such as what is outlined in modules 5-7) requires an understanding of economic input-output models as well as the context of economic development. In order to conduct a rigorous economic impact analysis you need to understand the assumptions underlying the analysis as well as an ability to modify the model to align with the unique characteristics of your community.

If you decide to hire a consultant to conduct your economic impact assessment the toolkit can be a helpful resource in this process and perhaps save some time and “billable hours” since it lays out a process that is already recommended by key funders, such as the USDA. The toolkit can be presented to the consultant as a guide to the best practices that you want them to follow as they conduct the analysis.

Regardless of whether or not you utilize a team member to support the analysis or hire someone externally, make sure that your team understands the assumptions in the model, and data/modeling decisions. A report should include enough methodological detail such that someone could replicate the study. One of the challenges with most local food economic impact assessments to date has been the ‘black box’ methodological approach.

Yes, there could be a role for a propensity score matching approach in evaluating the impact of food system initiatives! We have not directly addressed this in the toolkit but this is exactly the kind of approaches we would like to highlight in the case studies on our website. If your community has done this or other approaches for evaluating the impact of local foods we would love for you to register and submit your case study on the webpage. We are using the case studies to show a broader range of best practices than we could highlight in the toolkit.

Yes, there are approximations of retail leakage such as location quotient (for more information on the location quotient please refer to module 4), but they are generally embedded in programs like IMPLAN (another great value it adds to the community assessment process). The US Bureau of Labor Statistics now has a calculator you can use as well at: http://www.bls.gov/cew/cewlq.htm. It may be worth exploring for the areas and sectors you are considering, but realize that occasionally there is too little data at the county level to create accurate estimates.

These approximations are not perfect and often do not reflect the characteristics of your community, and have to be modified to reflect these characteristics. Another problem with the location quotient lies in the concept of margining (for more information on margining please refer to module 6), because the retailer often times does not actually produce the product and instead provides value-added this can complicate the interpretation of approximations of leakage.