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Using Multipliers to Predict the Effect of Aquaculture Growth on Rural Arizona Communities

This study examines the potential economic impact of aquaculture development in rural Arizona communities. It analyzes the use of multipliers to predict the effect of aquaculture growth on local economies, considering factors such as local demand, local production, and non-basic markets.

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Using Multipliers to Predict the Effect of Aquaculture Growth on Rural Arizona Communities

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  1. Use of Multipliers to Predict the Effect of Growth of Aquaculture on Rural Arizona Communities Kyle VanderLugt Kevin Fitzsimmons

  2. Aquaculture Development Photos from AwF

  3. Aquaculture Development Aquaculture cages in Bay of Manila photos: Reefbase/J. Oliver

  4. Aquaculture in Arizona, USA • 40 aquaculture facilities (1995, ADA) • 10 produce > 90% of all fish • Production < 0.9 million kg • Consumption = 20.5 million kg Net Importer = Opportunity for development

  5. Aquaculture Development Out of State Non-local demand In State Non-local demand Local Production Local Demand Local Demand Local Supply = Local demand Non-basic markets Local supply = Non-local demand Basic markets

  6. Aquaculture Development Out of State In State Generate high capital inflow with minimum distribution costs. --How to make the most money? What happens to money? --multiplier effects? Local Production Basic Markets Non-Basic Market Predict the increase in economic activity for each new dollar generated by industry sales.

  7. Materials and Methods • Survey method • 10 farms • Number of employees • Fish production (Kg) • Breakdown of expenditures and receipts • Local (within home county) • Within balance of state • Out of state Out of state In state Local Production Basic Markets Non-Basic Market

  8. Multiplier Modeling • Keynesian Modeling • Propensity of industry to purchase inputs from local economy versus from the outside economy. • Tiebout’s Modeling • Propensity of firms and households to purchase locally versus from outside economy • Location Quotient • % of sales outside of home locality

  9. Multiplier Modeling Keynesian Model Tiebout’s Model c = marginal propensity of local consumption (MPC) m1 = propensity of aquaculture firms to import m2 = propensity non-local consumption p1 = propensity of the aquaculture firm to purchase inputs locally p2 = propensity of households to consume locally

  10. Results: Keynesian model Non-basic Basic market c = 0.85 m2 = 0.33 (Olfert and Stabler, 1994) m1 = 0.61 M = 1.29

  11. Results: Keynesian model Non-basic market Basic c = 0.85 m2 = 0.33 (Olfert and Stabler, 1994) X1 = 0.42 M = 1.50

  12. Results: Tiebout’s model Non-basic Non-basic Basic market Basic market p1 = 0.39 p2 = 0.66 M = 1.34

  13. Results: Tiebout’s model Non-basic market Non-basic market Basic Basic p1 = 0.58 p2 = 0.66 M = 1.62

  14. Results: Location Quotient On county base: 34% fish sold locally (66% basic) On state base: 87% sold locally (13% basic)

  15. Summary

  16. Conclusions • Multipliers increase as the definition of local is increased • Results consistently demonstrate aquaculture development in Arizona will have small multiplier effect. • Increase economic base by increasing location quotient • export more fish out of state

  17. Future Work Multiplier non-basic employment using matrix models by Vias and Mulligan

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