The Economic Impacts of the 2008 Legacy Roads & Trails Remediation Initiative in Idaho and Montana

In 2008, the Legacy Road and Trail Remediation Initiative (LRRI) provided funds for the repair, maintenance, and decommissioning of Forest Service roads and trails. In this analysis, we document the expenditures on these projects in national forests in Idaho and Montana and project the economic impacts of these projects in the counties in which the work occurred.

We confirmed the identity of 36 LRRI projects, 19 in Montana, and 17 in Idaho, and obtained detailed information from the Federal Procurement Data System. The information we obtained included: the county in which the project occurred, the dollar amount of the contract and the address of the business awarded the contract. We used this information to conduct an economic impact analysis for the county in which the project was located using IMPLAN.i

Chart 1 shows the dollar amounts of the Montana LRRI contracts, both in the counties in which the projects are located and in the counties in which the bid-winning contractors are located. Chart 2 shows the projected economic impacts of the Montana projects.

In summary, we confirmed over $2 million in LRRI projects in 12 Montana counties. Businesses in nine Montana counties were awarded more than $1.8 million in LRRI contracts.ii As contractors hired workers and purchased materials, LRRI funds resulted in $2.49 million in increased final demand for Montana businesses, $0.65 million increased wages, $0.38 million increased business income, and approximately 35 jobs. Nearly all sectors experienced positive economic impacts. The sectors with the largest increases in final demand ranged from logging, construction, forestry services, wholesale trade, real estate, food and drinking establishments, and owner-occupied housing.iii

Chart 3 shows the dollar amounts of the Idaho LRRI contracts, both in the counties in which the projects are located and in the counties in which the successful contractors are located. Chart 4 shows the projected economic impacts of the Idaho projects.

In summary, we confirmed $1.6 million in LRRI projects in ten Idaho counties. Businesses in ten Idaho counties were awarded more than $1.5 million in LRRI contracts.iv As contractors hired workers and purchased materials, LRRI funds resulted in $1.86 million in increased final demand for Idaho businesses, $0.24 million increased wages, $0.27 million increased business income, and approximately 18 jobs. Nearly all economic sectors experienced positive economic impacts. The sectors with the largest increases in final demand ranged from domestic trade, logging, construction, forestry services, wholesale trade, real estate, food and drinking establishments, environmental consulting, and owner-occupied housing.v

For more information:
Joe Kerkvliet, PhD, Senior Resource Economist, Bozeman, MT (406) 581-9826, jkerkvliet@twsnw.org

Footnotes

i IMPLAN© software (Minnesota IMPLAN Group 2004) used to project the total economic impacts of the changes in final demand. IMPLAN uses a system of linear structural input-output equations describing the purchase and sales decisions of as many as 509 economic sectors, several representative consumers, and several types of federal, state, and local governmental units. IMPLAN is widely used by federal agencies, academics, and private consultants to estimate the impacts of various projects, including proposed changes in resource management plans
ii One Montana LRRI contract was awarded to an Idaho business and one to a Washington business.
iii To project economic impacts, we ran a small sample of impact analyses for Montana LRRI projects and applied the average of the multipliers we obtained from the sample. We assumed that the LRRI funds were spent in four business sectors (proportions in parentheses): logging (.33), agriculture and forestry support (.33), maintenance and repair construction (.165), and environmental consulting (.165). The multipliers used were: final demand, 1.2 if the contractors address was in a different county, 1.45 if the contractors address was in the same county, wages, .2 for out-of-county and .5 if in-county, business income .188 for both in and out-of county, jobs per dollar, .0000176.
iv One Idaho LRRI contract was awarded to an Oregon business and one to a Washington business.
v To project economic impacts, we ran a small sample of impact analyses for Idaho LRRI projects and applied the average of the multipliers we obtained from the sample. We assumed that the LRRI funds were spent in four business ectors (proportions in parentheses): logging (.33), agriculture and forestry support (.33), maintenance and repair construction (.165), and environmental consulting (.165).There were no projects in Idaho completed by in-county ontractors. The multipliers used were: final demand, 1.2, wages, .155, business income .175, jobs per dollar, .0000176.