Full Title: Economic Powerhouses: The Economic Impacts of America’s Electric Cooperatives
Author(s): Joe Goodenbery, Jennifer Gorman, Shawn Carr, and Jordan Ahern
Publication Date: October 22, 2023
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America’s electric cooperatives (co-ops) are crucial engines of economic development both nationally and at home in their local communities. In addition to providing safe, affordable, and reliable electricity to their consumer-members, co-ops create benefits that extend beyond the electric sector. As locally-engaged member-owned electric utilities, co-ops conduct economic activity through the generation, transmission, and distribution of electricity, including investments in new capital, operating and maintenance expenses, and disbursement of capital credits. These activities not only impact the industries in which they directly occur, but also drive economic activity across multiple sectors, creating value for local, statewide, and national economies.
The full value of these economic benefits can be quantified by tracking how co-op investments flow from one industry to another. To do so, Strategen Consulting employed the IMPLAN model to conduct analysis using economic multipliers, which estimate how expenditures in one sector stimulate new activity across multiple sectors, measured through direct, indirect, and induced effects. Direct effects are the impacts within the industry where the initial economic activity occurs. These direct effects create indirect impacts for industries in the supply chain, while induced effects result from employees in the direct and indirect industries spending income in their communities. Every dollar spent generates direct, indirect, and induced activity, and economic multipliers determine the magnitude of impacts from one industry on other sectors. Total impacts are then determined by adding together the direct, indirect, and induced effects.