Thursday, 5 April 2012

Impact Modelling with REMPLAN

One of the most frequent ways that REMPLAN is applied is to model the direct and flow-on impacts on a change in a local economy.  Examples include: 'the construction of a new building', 'the expansion of a local business' and 'implications for local businesses of a change to government policy.   Within the REMPLAN “impacts’ module the flow-on industrial and consumption effects are automatically calculated from a direct change to the local economy.  
Behind the scenes REMPLAN modelling automatically calculates the multiple rounds of flow-on effects in terms of output, employment, wages & salaries, value-added and Gross regional Product (GRP).  Based on some recent feedback from a Brisbane based client we thought it would be informative to graphically illustrate how these multiple flow on effects actually work.

Industrial Effect
The following example illustrates the industrial flow on effects of an investment of $100m in the “non-residential building construction” sector within the Queensland economy. The industrial flow on effects has been calculated using REMPLAN’s impact modelling at the 111 industry sector level.
From a direct increase in output of $100 million it is estimated that the demand for intermediate goods and services (the industrial effect) would increase by $120.440 million. These industrial effects include multiple rounds of flow-on effects, as servicing sectors increase their own output and demand for local goods and services in response to the direct change to the economy.
To illustrate these multiple rounds of flow on effects, we ran the impact across 6 rounds of flow on effects. After round 6, 99.4 percent of all industrial effects had been captured. The following graph illustrates the distribution of the flow on effects:
In REMPLAN mutiple rounds of impacts are automatically calculated to capture 100 percent of the estimated flow-on effects. 

The increases in direct and indirect output would typically correspond to the creation of jobs in the economy. Corresponding to this change in employment would be an increase in the total of wages and salaries paid to employees. A proportion of these wages and salaries are typically spent on consumption and a proportion of this expenditure is captured in the local economy. The consumption effects under this scenario are estimated at $56.975 million.
Under this scenario, total output, including all direct, industrial and consumption effects is estimated to increase by up to $277.415 million. In REMPLAN impact modelling results are summarised in an automatically generated report and are also expressed as graphs:
In addition to providing REMPLAN economic impact modelling software to clients we can also provide project economic impact statements on a consulting basis.
Please contact the team at REMPLAN to discuss your requirements:

03 5444 4788  or   07 5689 1499


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At REMPLAN we are a team of economists, demographers and software developers. We develop online analytical tools and information resources for economic development and planning practitioners in local, state and federal government agencies, consulting firms, university researchers and students.

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