The entry of a new 2,880-square-foot greenhouse producing hydroponic lettuce (or something similar) in Alabama causes an increase in economic activity within the state, both in construction and in ongoing annual operations. Consider the following economic activity created during construction and one full year of operations of a greenhouse in Alabama.
Output or Sales (Total Effects)
$ 202 thousand, $130,869 of which is supported each year from ongoing operations.
1.5, 1 of which is supported each year from ongoing operations.
$98 thousand, $70,125 of which is supported each year from ongoing operations.
$70 thousand, $52,531 of which is supported each year from ongoing operations.
A greenhouse in Alabama sources roughly 25% of all inputs locally.
$18 thousand, $12,345 of which is supported each year from ongoing operations.
A new 2,880-square-foot greenhouse in Alabama would generate the following estimated total impact from its construction to the local (state) economy.1
Taxes paid (all levels)
In the first full year of operations, a new 2,880- square-foot greenhouse in Alabama would generate the following estimated total impact on the local (state) economy.2
Taxes paid (all levels)
Top Industries Impacted
From a construction standpoint, the top ten industries within Alabama most impacted by the economic activity include the following:
|Prefabricated metal buildings and components manufacturing||$14,798|
|Iron and steel mills and ferroalloy manufacturing||$562|
|Monetary authorities and depository credit intermediation||$444|
|Offices of physicians||$272|
From an operations standpoint, the top ten industries within Alabama most impacted by the economic activity include the following:
|Greenhouse, nursery, and floriculture production||$40,649|
|Support activities for agriculture and forestry||$1,361|
|Electric power transmission and distribution||$1,023|
|Monetary authorities and depository credit intermediation||$988|
|Offices of physicians||$797|
When a greenhouse enters a local economy, it causes a series of new economic activities (impacts) to take place. For this summary, we break the economic impacts into construction and operations. The magnitude of these new economic activities is largely related to the presence of industries that supply the needed inputs for the greenhouse. Common measures of economic activity are employment (jobs), labor income, output (sales), and value added (output minus the cost of inputs).
The construction of a new 2,880-square-foot greenhouse requires several purchases including lumber, steel, concrete, and specialized equipment. Once construction is completed, the greenhouse operators use water, equipment, electricity, supplies, maintenance, and other professional services. The direct purchases of supplies and equipment are known as direct effects. The suppliers and vendors used by the greenhouse operators and farmers then purchase inputs to supply the greenhouse; these are known as indirect effects. Those who construct the greenhouse, those who work for the greenhouse once complete, and those who work for the operation’s suppliers and vendors then use their additional income to make household purchases. These are known as household or induced effects. Taken together, the sum of direct, indirect, and induced effects are known as total effects and account for the total multiplier effect present from the construction and operations of a new greenhouse in Alabama.
1To arrive at the total effects of a new 2,880-square-foot greenhouse, the following basic assumptions (from Auburn University) were used: (1) construction costs to build a new greenhouse were assumed to be $15.98 per square foot.
2To arrive at the total effects of a new 2,880-square-foot greenhouse, the following basic assumptions (from Auburn University) were used: (1) $73,826 is produced each year in lettuce sales with 1⁄3 sales of direct–individual at $2.50/head, 1/3 sales of direct–case at $2.00/head, and 1/3 sales of wholesale at $1.75/head; (2) increases in labor from the use of a crisper and increases in the size of the cooler depending on the sales method were not included. One hundred percent of the crop was marketed, and the scenario is dependent on location.
3Additional details on methodology can be obtained through communication with the study’s author, Decision Innovation Solutions (email@example.com).