Module 6, addressing opportunity costs in the analysis of economic impacts across local food systems
Module 6 focuses on understanding two key assumptions of input-output models, the no resource constraints assumption and the no opportunity cost of spending assumption. These assumptions are fundamental in properly estimating and interpreting the economic impact of local and regional food systems. In this module you will learn:
- What the no resource constraint assumption means and how you can think about it in terms of your local economy;
- What the no opportunity cost of spending assumption means and how it is typically considered when modeling economic impacts of local foods;
- How your team can correctly incorporate these two key concepts into your input-output model.
Video: Offsetting supply side opportunity costs
Source: Swenson, David. 2015. Modifying IMPLAN for Local Food Systems Economic Impact Assessments. Department of Economics, Iowa State University.