Analysis of Forest Development Program Impacts on North Carolina’s Economy in 2012

Abstract

KOESBANDANA, SADHARGA. Analysis of Forest Development Program Impacts on North Carolina’s Economy in 2012 (Under the direction of Dr. Frederick Cubbage, Dr. Erin Sills, and Dr. Robert Abt).

In calendar year 2012, a total of $4.2 million was spent under the Forest Development Program (FDP) in North Carolina, including $1.6 million (39%) from the state government and $2.6 million in cost-share from private landowners. While it is likely that private landowners would have reforested some portion of their land even without FDP, we calculate the impact of the FDP on the state economy by assuming that the full $4.2 million was additional spending in the state due to the FDP. Based on an economic impact analysis in IMPLAN, combined FDP expenditures in 2012 increased total industry output in the state by about $12.6 million, and total value added by about $7.6 million. That is, spending under the FDP leveraged about twice as much in value added, and three times as much in industrial output. The FDP generated 133 direct jobs in North Carolina, and a total of 197 jobs overall in 2012. As a lower bound on the contribution of the FDP to the state economy, we calculated that just the $1.6 million in state spending on the program generated 76 jobs, $4.9 million in industrial output, and $3.0 million in value added. The output multiplier effect for program expenditures was 3.0 for the state, ranging from 2.4 to 3.0 across the NC Forest Service’s three administrative regions. Thus, every dollar spent through FDP contributes 1.4 to 2.0 times as much to the regional economies. The Piedmont received the most FDP funds in 2012, and benefited from even greater proportional regional economic impacts from the direct funds spent. However, on a per acre of private land which reforestation activities being completed under FDP in 2012, the industrial output and value added were very similar for all regions. Thus, the program is reasonably equitable on impacts across the three regions, even though the Piedmont region had the highest multiplier, but at the lowest cost per acre.