Quantifying Economic Benefits & Impacts of Extension Programs

1. Quantifying Economic Benefits & Impacts of Extension Programs Dean McCorkle Extension Program Specialist Mark Waller Assoc. Dept. Head and Ext. Program Leader Texas A&M AgriLife Extension Service Agricultural Economics Joint Meeting of PLN, AEA, and ASREd Nashville, TN, August 19-23, 2013

2. OverviewDevelopment, Reporting, Accountability • Identifying issues at the local level • County level leadership advisory board • Issues forum every 4th year • Update issues every year • Programs priorities(Regional Program Directors)

3. Overview (Cont’d) State Strategic Plan(5-yr rolling plan) • Imperatives, Goals, and Strategies • Sustain food/fiber/green industry • Protect/serve natural resources • Support CED • Improve health, nutrition, safety, and economic security • Prepare Texas youth

4. Overview of Program … • Evaluating programs • Agents and specialists • Supported by program evaluation faculty • Moving toward 4-5 statewide program evaluations each year • Federal Report • Report select areas from strategic plan • Economic Impact Briefs

5. Introduction • Economic accountability: measuring and interpreting economic benefits and impacts of Extension programs to demonstrate accountability for our use of public funds

6. Target Audience • Elected officials and legislative staff • State, Federal, Local/County • Texas House and Senate Committees • Grantors, TAMUS Chancellor, others • Available on Texas A&M AgriLife Extension web site

7. Process of Developing Economic Impact Briefs Texas A&M AgriLife Extension Service Process for Developing Extension Economic Impact Briefs

8. Intangible Benefits Tangible Benefits Private (Direct) Benefits Contingent Valuation Willingness To Pay Public Benefits Types of Economic Benefits

9. Economic Benefits that most often can accrue from various types of programs

10. Agricultural programs:What do we need to measure? Economic indicators • Determine most appropriate economic indicator: • Improved net farm income (profitability)….due to: • Adoption of best management practice (BMP), leading to… • Cost reduction (variable, fixed) • Increased production (and gross income) • Improved efficiency • Improved alternative crop • Technology adoption • Debt reduction, improved equity position • Jobs • Employee compensation (wages/salaries) • Property value

11. Environmental and Natural Resources:Common economic indicators…. • Determine most appropriate economic indicator: • Water quantity (conservation) • Amount conserved (valued at a price) • Water quality (environmental benefit) • Water shed protection planning • Removal of watershed from EPA’s list of impaired watersheds • Feral hog abatement • Reduction in feral hog damage

12. Certification and continuing ed. programs:Economic Indicators…. • For certification programs: examples from Texas: • Pesticide safety applicators • On-site wastewater treatment service providers • Child care provider education • Continuing education programs for county government • Landscape irrigators certification • Economic benefit not easy to quantify • Describe participants in economic terms: • No. of jobs • Wage and salary base

13. Certification programs (Cont’d) • Extension certification/licensing programs directly support:

14. What type of data do I need? • It depends on the situation, but in general: • For adoption of practice: • Program evaluation, self-reported • USDA-NASS • USDA-AMS (Ag Marketing Survey) (ex: acres planted by cotton variety) • USDA-ARMS (Ag Resource Management Survey) • SBCEO (Scientific Best Conservative Educated Opinion)

15. What type of data do I need (Cont’d)? • Livestock and other inventories • Census of Agriculture (USDA) • USDA-APHIS (ex: Dairy management practices) • Commodity Prices • USDA/AMS/NASS-State offices • Livestock Marketing Information Center (LMIC) • Fuel/energy prices • U.S. Energy Information Agency • EnergyWise (electricity)

16. Data (Cont’d) • Extension Crop & Livestock Budgets • Great resource to make use of • Relevant research findings • Benefit Transfer

17. Basics of Measuring Changes in Net Income • Partial budgeting • Consider a whole-farm financial picture • Isolate the area we are dealing with • Simple form: measure changes in gross revenue (if any), relative to changes in associated costs (if any) • Must have some estimate of: • No. of participants • No. of acres or no. of head effected • Must have some estimate of Usually from program evaluation

18. Economic Impact Analysis Terminology • Economic Contribution – Gross changes in new economic activity associated with an industry, event, or policy in an existing regional economy. • Economic Impact – Net changes in new economic activity associated with an industry, event, or policy in an existing regional economy. Philip Watson, et al., Determining contributions and impacts: What is the difference, and why do we care? Journal of Regional Analysis and Policy, 2007.

19. Economic Impact Analysis Terminology • Measuring the changes in a region’s economy that result from an event. • The “stone in the pond”: Events have ripple effects • New spending flows may create effects that are larger than the original flows (expenditures) JOBS TAXES INCOMES

20. Illustrations of Extension Economic Impacts

21. Example: Beef Cattle Short Course • More than 1,000 participants annually • Program evaluation • Self-report of adoption of various management practices • No. of head managed by each participant • Use of benefit transfer • $ benefit per head from secondary sources (range: $8 - $25) • Economic benefit of $350,000 (2011) • Cumulative benefit of $4.6 million (since 2006)

22. Ex: Boll Weevil Eradication Program • Grower participation is determined by a vote on an eradication referendum in each eradication zone. • Acreage in the program has grown from 1.4 mill. in 1996 to 7 mill.in 2011. • Extension’s role? • Data: Acreage and BWE cost (Tx BWE Foundation), BWE yield losses (Beltwide Cotton Conference – Pest Loss Database), Yields and prices (NASS). • Accounted for supply increase affect on price (FAPRI flex rates)

23. BWE (Cont’d) • BW yield losses and insecticide costs from before and after eradication plan implementation were used to estimate the change in net returns above variable costs for each zone, which ranged from $7 to $101 per acre in 2011. • Total increase in net returns estimated at $426 million in 2011. • Helped to support an additional 4,978 jobs.

24. Heat Abatement in Dairies • The most common heat-abatement methods include the use of fans, soakers, shade and cooling ponds (cow comfort). • Parties involved: TAMU Research, Extension, Monsanto, Pfizer, local veterinarians, artificial insemination (AI) organizations, cooling equipment manufacturers, and other dairy industry consultants • More than 90% (375,000 cows) of dairies have adopted some form of cooling method • About 10 different cooling systems assessed

25. Heat Abatement in Dairies • Specialists knowledge of the industry critical • Mean benefit of $37/cow annually • Or $13.9 million annually

26. Communications and Interpretations • Economic Impact Briefs http://agrilifeextension.tamu.edu/impacts

29. Concluding Remarks • Importance of integrating: 1) identification of issues, 2) program priorities, 3) statewide strategic plan, 4) program evaluation, and 5) federal integrated report, and economic impact interpretation.

30. Take Aways • We have gotten much better at measuring changes in knowledge, and behavior • To measure economic benefits: • Remember: we are usually NOT trying to publish results in a scientific/peer-reviewed journal • Engage your Extension economists • “I didn’t ask that on the evaluation” • Making assumptions

31. Thank You Dean McCorkle, PhD. Extension Economist Texas A&M AgriLife Extension Service Dept. of Agricultural Economics The Texas A&M University System College Station, TX E-mail: d-mccorkle@tamu.edu Phone: 979.845.1861