Calculating the Economic Impacts of Cooperative Firms at a State or Regional
As enterprises owned and controlled by their patron members, cooperatives can provide an effective tool for improving the economic well-being of its members and their communities. However, understanding and communicating the positive impacts that cooperatives have within a
region can be a challenge.
A description of cooperative economic impacts, which helps place cooperatives in
the context of a broader economy, can be a useful starting point. This
description includes both the direct economic activity of cooperatives, and
the additional economic effects as that activity ripples through that economy.
Like all businesses, cooperatives purchase inputs from other businesses (indirect activity), and pay salaries and wages that support household purchases (induced activity).
Input-output analysis models these interactions across the industry sectors
of a particular economy. These additional effects can be
described by numerical multipliers of the direct economic activity. The Center used IMPLAN modeling software to estimate these
multiplers and the
total impacts of
cooperative economic activity at a national level in the 2009
Economic Impact of Cooperatives (REIC) project.
While the scope of the REIC project did not include an impact analysis by
state, there continued to be interest in this type of analysis at a state
Responding to this interest in Wisconsin, the Center conducted a
simplified study in 2012-13 using IMPLAN analysis and recently published the
Economic Impacts of Cooperatives in Wisconsin report.
For a description of project methodology and data collection, see:
REIC: IMPLAN methodology
REIC: Data Collection
Economic Impact of Cooperative Firms in Wisconsin: Data Collection
Developing a Cooperative Impacts Calculator
A cooperative economic impact report for a state or region requires data
collection resources, and access to IMPLAN or similar modeling software.
In an effort to support impact reporting efforts by other groups, the
state-level multipliers from the Economic Impact of Cooperative Firms in
Wisconsin project are being made available in an "cooperatative impacts
calculator" format that could be used as a first step to estimate
cooperative economic impacts in other states or regions.
National or State Multipliers?
Mulitipliers describe the indirect and induced activities in a
geographically defined economy by modeling the particular structural
linkages that exist between the business sectors in that area. Indirect and induced impacts will also be affected by the size of the economy being analyzed;
the smaller a defined region is, the larger the proportion of the multiplier
effects occurring outside of a region’s boundaries. For example, the
linkages between Wisconsin agriculture and other sectors in the
Wisconsin economy may be different than those at a national level, and a greater
portion of those multiplier effects may occur outside of the boundaries of
Wisconsin. The multipliers for agricultural cooperatives in Wisconsin and in
the U.S. will be different as a result.
For comparison, this calculator application allows the user to apply either national
multipliers derived from the REIC project or state-level multipliers derived
from Wisconsin data. The national multipliers are availble for more business sector categories,
but the Wisconsin multiplier option may be more reflective of a state or
Using the Cooperative Impacts Calculator
The cooperative impacts calculator was developed to broadly gauge
potential cooperative impacts based on cooperative data that has been
gathered by sector in a given region. It is for general estimates only,
and is not meant to be a substitute for an economic impact analysis of
cooperatives by sector in a state or region.
It should be noted that there is no “cooperative multiplier” within a
sector: financial management practices differ significantly across sector,
and the impact of patronage redemption practices is difficult to assess.
To use the calculator, cooperative firm
data on annual sales revenue, wages, and the
number of jobs (in full-time equivalents) by business sector
UWCC Cooperative Impacts Calculator
When referencing the data, calculator or analysis,
please cite "Cooperative Impacts Calculator. University of Wisconsin Center