Orestimba Creek Feasibility Study - Stanislaus County

Economics Appendix – Draft Report - Orestimba Creek Feasibility Study, Stanislaus County, California – September 2012
Attachment C: Regional Economic Development (RED)
Regional Economic Impact of Funding Flood Risk Management Construction
Orestimba Creek Project
The US Army Corps of Engineers (USACE) planning guidance notebook (ER 1105-2-100) states
that while National Economic Development (NED) and Environmental Quality (EQ) accounts
are required, display of Regional Economic Development (RED) is discretionary. The Corps
1991 NED Procedures Manual states there should be no doubt that RED benefits are real and
legitimate benefits. The concern, from a federal perspective, is that they are often offset by RED
activity in other regions. But for the local community, these benefits are important and can help
them in making their preferred planning decisions.
Existing guidance from USACE offers limited detail in describing either the definition or the
procedures to determine RED 11 . Principles and Guidelines (P&G 1983) states that the RED
account registers changes in the distribution of regional economic activity that result from each
alternative plan. Evaluations of regional effects are to be carried out using nationally consistent
projections of income, employment, output and population.
Input-output models are characterized by their ability to evaluate the effects of industries on each other,
through both the assumptions that any industry uses the outputs of others as its inputs, and that the outputs
of any industry are partly used by other industries. Most typical measures of economic activity examine
only the total output or employment of an industry, or the amount of final consumption demand provided
by a given industry. The input-output model provides a much more comprehensive view of the interrelated
economic impacts.
Specifically, levee and floodwall construction projects as well as procurement activities directly create
employment and purchases of goods and services throughout the County of Stanislaus and the State of
California; however, economic activities associated with flood related construction funds do not end with
construction and procurement. These activities also create jobs and output in other industries in the State
and County.
The econometric analysis allows for the evaluations of the full range of economic impacts related to
specific economic activities (construction and procurement) by calculating the direct, indirect, and
induced benefits of the activities in the specific geographical designation (Stanislaus County and State of
California).
* Direct Benefits consist of economic activity contained exclusively within the designated
sector(s). This includes all expenditures made by the companies or organizations in the industry
and all employees who work directly for them.
* Indirect Benefits define the creation of additional economic activity that results from linked
businesses, suppliers of goods and services, and provision of operating inputs.
* Induced Benefits measure the consumption expenditures of direct and indirect sector
11 The Institute of Water Resources released a draft White Paper titled Review or Guidance and Procedures of
Regional Economic Development and Other Social Effects, August 2006. The analysis of RED for this study is
consistent with this draft document.
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