Regional economic accounting methods

Still in constrution. This is a very first draft

Regional economic accounting methodologies may be of greater interest than cost benefit analysis (CBA) for assessing socioeconomic impact of environmental measures or degradations when their indirect impacts may be of such significance and magnitude that important regional income multiplier effects may be generated.

WHEN TO USE REGIONAL ECONOMIC ACCOUNTING METHODOLOGIES ?

Assessing the economic impact of environmental measures or environmental degradations may be done through Cost benefit analysis (CBA). However, indirect impacts on other sectors (sectors not directly targeted by the measure or impacted by the degradation) often should be excluded from the analysis. These indirect impacts may be of such significance and magnitude that important regional income multiplier effects may be generated. The context for the analysis and estimation is the regional economy, as the direct economic benefits (or costs) result in additional (reduced) economic activities in the region. For instance regional accounting methods might be applied for the estimation of the indirect benefits resulting from the restoration of fish yield by reducing suspended sediment concentration in waters of a given coastal area.

The resulting regional income/employment effects may be quantified through the use of regional input-output matrices (I-O), Supply chain analysis, computable general equilibrium (CGE) or green accounting. Take care to the fact that none of these four regional accounting methodologies mentioned above is perfect since each present advantages and disadvantages as presented further. For instance, supply chain analysis has the disadvantage of taking into account fewer indirect impacts than I-O tables. I-O tables assume linear relations between inputs and outputs from different sectors as well as linear relations between outputs and final demand, which does not always correspond to reality. However, some have validated their input-output model with historical data and obtained simulated results quite close to historical data (look for Idenburg and Wilting, 2000). The results from CGE models are highly dependents on key economic parameters on which remain uncertainties. In addition, those models are time consuming (it takes about years to build a CGE model) and expensive.