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Economic Impact of Florida's Forest Industries1 Alan Hodges, David Mulkey, Effie Philippakos, and Janaki Alavalapati2 1. This is EDIS document FE 282, a publication of the Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published June 2001. [This document is an excerpt of Report "Economic Impacts of Florida's Agricultural and Natural Resource Industries." Economic Information Report EI-00-4, University of Florida, 2000, www.fred.ifas.ufl.educ/impact.] Please visit the EDIS website at http://edis.ifas.ufl.edu. 2. Alan Hodges, coordinator of economic analysis; David Mulkey, professor; and Effie Philippakos, research assistant; Department of Food and Resource Economics; and Janaki Alavalapati, professor, School of Forest Resources and Conservation, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published June 2001. [This document is an excerpt of Report "Economic Impacts of Florida's Agricultural and Natural Resource Industries." Economic Information Report EI-00-4, University of Florida, 2000, www.fred.ifas.ufl.educ/impact.] Please visit the EDIS website at http://edis.ifas.ufl.edu. The Institute of Food and Agricultural Sciences is an equal opportunity/affirmative action employer authorized to provide research, educational information and other services only to individuals and institutions that function without regard to race, color, sex, age, handicap, or national origin. For information on obtaining other extension publications, contact your county Cooperative Extension Service office. Florida Cooperative Extension Service/Institute of Food and Agricultural Sciences/University of Florida/Christine Taylor Waddill, Dean. Introduction Florida's forest industries produce products such as lumber, plywood, pulp, paper containers, and reconstituted wood products. The forest sector is part of a complex and integrated network of natural resource enterprises associated with the production, transportation, and processing of forest products. As these products progress through different market channels, value is added from labor, capital, and management, which significantly impacts the economy. Rapid urbanization in Florida has left consumers and political leaders with a limited understanding of Florida's forest industries and the issues surrounding their management. This document is intended to facilitate a better understanding of Florida's forest sector by reviewing its historical economic trends and evaluating the economic impacts associated with this industry. Industries impact an economy in three primary ways. First, as direct effects, industries generate output and value-added and provide employment and wages to employees. Second, as indirect effects, the purchase of goods and services such as inputs from other industries supports additional economic activity in these industries. Third, as induced effects, earnings by direct and indirect industry employees boost the local economy through their personal consumption expenditures. The total economic impact is the sum of the direct, indirect, and induced effects. Since exported goods introduce new money to the region (defined in this report as the state of Florida), commodity sales outside Florida are associated with greater economic impacts than sales to Florida customers. Also, inputs obtained from Florida firms rather than imported from outside the state are associated with greater economic impacts because money is retained and circulated within Florida. Methodology Economic impacts of the forest industries in Florida were estimated with economic multipliers developed using the IMPLAN PRO (IMPLAN) software and associated databases for Florida (MIG, Inc., Stillwater, MN). The IMPLAN system enables construction of regional input-output models for any county, group of counties, or state(s) in the United States based on a combination of county level and
Economic Impact of Florida's Forest Industries 2 national economic data. Industries are classified into 528 sectors, corresponding to the US Department of Commerce's Standard Industrial Classification (SIC) System. Multipliers are available from IMPLAN for the economic indicators of output, value added, employment, employee compensation, labor income, other proprietary income, and indirect business taxes. Furthermore multipliers are provided for direct, indirect, and induced effects. Multipliers for employment, output, value added, and labor income are computed in this document to estimate the economic impacts of Florida's forest industries. Multipliers for output, value-added, and labor income represent dollars-per-dollar of sales to final demand, and the employment multiplier represents jobs-per-million-dollars of sales to final demand. Total economic impacts were computed by applying the economic multipliers as follows: Total impact = Y* MD(Output, VA, Emp, Labor Income) + E* MI(Output, VA, Emp, Labor Income) + E* MIN(Output, VA, Emp, Labor Income) where E is export sales (all sales outside of Florida) Y is value of output MD(Output, VA, Emp, Labor Income) is the direct effects multiplier for employment, value added, and labor income MI(Output, VA, Emp, Labor Income) is the indirect effects multiplier for employment, output, value added, and labor income MIN(Output, VA, Emp, Labor Income) is the induced effects multiplier for employment, output, value added, and labor income. The base information on output and exports for each industry and the multipliers were provided by the IMPLAN system for 1998 (most recent available). In addition to supplying information on the economic impacts associated with Florida's forest sector, this paper also reviews economic information on timber production, employment in the forestry sector, and shipment value of timber products. Statistics were obtained from the US Department of Agriculture, Census Burea, and Forest Service. [Any data discrepancies between the IMPLAN database and other secondary data sources featured in this document are primarily due to differences in industry classifications and accounting measures.] Forest Products Florida's extensive forests are managed to produce wood and fiber products. North Florida has the world's largest concentration of intensively managed plantations of southern pines. In 1997, an estimated 543 million cubic feet of timber was harvested in Florida, of which 87 percent were softwoods such as pine, cypress, and cedar and the remainder were hardwoods such as oak, maple, gum, and poplar (Table 1). Approximately 368 million cubic feet of longleaf-slash pine was harvested. The volume of timber harvested in Florida grew slightly between 1991-95, to 510 million cubic feet in 1995. The timber products manufacturing sector produces lumber and other solid milled wood products, pulp, paper, and paperboard. In 1997, the wood products manufacturing sector shipped products worth $2.3 billion and employed nearly 15,400 persons. The paper manufacturing sector shipped goods valued at $3.8 billion and employed over 12,600 persons in 1997 (Census of Manufactures). The value of lumber and wood products exported from Florida ports increased to $177 million in 1998. The Caribbean region represented the top export destination (73 percent), followed by South America and Central America (19 percent). Paper products exported from Florida ports were valued at $581 million in 1998, with South America the top export destination (37 percent), followed by Central America (30 percent) and the Caribbean (24 percent).
Economic Impact of Florida's Forest Industries 3 The total economic impacts of the Florida forest products industry included 65,836 jobs, $7.4 billion in output, $3.4 billion in value added, and $2.1 billion in labor income (Table 2).
Economic Impact of Florida's Forest Industries 4 Table 1. Volume of timber roundwood harvest in Florida, by species group, 1997. Species Group Volume (million cubic feet) Softwoods 471.5 Longleaf-slash Pine 368.1 Loblolly-shortleaf Pine 39.6 Other Yellow Pines 33.0 Cypress 30.5 Hardwoods 71.3 Total 542.8 Source: United States Forest Service, Southern Research Station.
Economic Impact of Florida's Forest Industries 5 Table 2. Economic impacts of Florida's forest products industry, 1998. Direct Impacts* Total Impacts* Employment (jobs) Industry Output (m$) Value Added (m$) Labor Income (m$) Employment (jobs) Industry Output (m$) Value Added (m$) Labor Income (m$) Forest Products 1,19564.541.316.21,03463.342.617.3 Forestry Products 2,273476.0221.214.95,352516.7277.7101.5 Logging Camps & Logging Contractors2,853508.1199.193.46,401597.3310.1169.0 Sawmills & Planing Mills, General 2,344400.1116.880.52,142287.899.066.8 Hardwood Dimension & Flooring Mills 13810.75.24.0 12510.55.93.6 Special Product Sawmills, N.E.C. 8011.58.66.3 1318.104.22.168 Veneer & Plywood 977135.352.340.51,151143.560.940.7 Structural Wood Members, N.E.C. 5,386607.1211.0168.610,163957.5415.2297.2 Wood Containers 47731.814.712.219822.214.171.124 Wood Pallets and Skids 74760.527.922.581857.828.122.8 Wood Preserving 28594.918.310.336695.320.111.7 Reconstituted Wood Products 17639.411.75.7 21137.012.26.2 Wood Products, N.E.C. 1,222110.352.739.41,509117.357.641.3 Pulp Mills 728246.691.549.34,401564.7287.3150.3 Paper Mills, except Building Paper 1,878490.5185.1119.29,9161,106.0561.9374.7 Paperboard Mills 1,700734.3206.5107.513,4721,656.2725.8473.2 Paperboard Containers and Boxes 4,692918.6247.0195.44,143669.3210.9166.1 Paper Coated & Laminated Packaging 27056.719.311.9933107.350.633.5 Paper-coated & Laminated N.E.C. 4718.410.87.2 29036.924.413.6 Bags, Paper 616113.038.023.62,082222.998.467.8 Gum & Wood Chemicals 20779.633.913.3999133.566.937.7 Total 28,291 5,207.9 1,812.8 1,041.9 65,836 7,409.2 3,371.7 2,108.4 Impacts estimated using economic multipliers for direct, indirect, and induced effects. All values in millions US dollars (1998) except employment impacts (jobs). Source: Minnesota IMPLAN Group, 2001.