Community Economics: a Simulation Model for Rural Development Planners

Rural areas and small towns are facing new challated to these impacts. With shifting populations, ecolenges as their economies grow and develop. The popnomic changes, and energy development, reliable ulation influx to nonmetropolitan areas has brought new impact models are increasingly useful. Many types of and increasing demands for community services. Premodels and methodologies have been developed. These liminary 1980 census figures indicate that nonmetrorange from economic-base analysis to complicated politan counties increased by about 15 percent, whereas community simulation models. Some are briefly summetropolitan counties increased by about 9 percent from marized below (see Murdock and Leistritz for a more 1970 to 1980 (Beale). Many mining, resort-retirecomplete review). ment, and urban fringe counties increased in populaAn early version of an impact model was developed tion by 40 to 50 percent or more. At the other extreme, by Shaffer and Tweeten. It was designed to measure nearly 500 of the 2,485 nonmetropolitan counties conthe impact of new industry on rural communities in tinued to decline in population during the 1970s (SecOklahoma. The model provides results for the private retary of Agriculture). sector, public sector, and school district. A framework The trend toward fiscal federalism, inflationary for calculating net gain (loss) to the community was also pressures, and high interest rates creates planning and included. This calculation of net gain (loss) allowed development problems for local decision-makers. community leaders to evaluate any inducements they Rapid population growth greatly magnifies these alwere considering offering a prospective industry. The ready serious problems. Since planning community model is notable because of the emphasis placed on services often entails large capital outlays, it is impormaking it useful and understandable to local leaders. tant to base plans on available employment, income, The model utilizes partial budgeting techniques and is and population information. A water or sewer treata single-period tool with no dynamic time considerament plant built too large or too small can be very extions. Shaffer and Tweeten note the difficulty of estipensive and embarrassing to elected officials. mating the indirect and induced effects at the Similarly, decision-makers in declining or stagnating community level because there are no published rural rural areas need to properly plan so that their scarce recommunity input-output tables. Two of the authors' sources are efficiently allocated, conclusions are that industrial impacts vary over difThis paper illustrates how extension professionals ferent economic sectors and that they differ among can utilize community simulation models to aid local communities. decision-makers. More specifically, the objectives are Ford presents a computer model, BOOM 1, that is (1) to review several community impact models, (2) to designed to describe the impacts of locating large power present an overview of methodology used in a complants near small, isolated communities. Small towns munity simulation model, and (3) to present an appliin the western states that experience this type of impact cation of the community simulation model. generally go through an initial "boom" period of rapid expansion. Following the initial construction phase, economic and demographic changes level off. CharREVIEW OF IMPACT MODELS USED TO acteristics of the population immigrating during the ANALYZE COMMUNITY GROWTH construction phase are often quite different from the AND DEVELOPMENT characteristics of the indigenous population. Public service capital and economic activity are often exImpact models describe economic and demographic panded to support the rapid population growth, putting changes affecting both the public and private sectors. a strain on the budget of the public sector. Following Private sectors impacts include changes in employcompletion of the energy project, a "bust" period often ment, income, and output by industry or group. Public follows. Tax revenues decrease, and the local governsector impacts include changes in local government ment is left with excess capacity in the public sector. revenue and changes in the need for public services. The BOOM 1 model provides annual economic, dePopulation changes and demographic trends are remographic, public service, and fiscal projections of the