working paper

The Economic Benefits of the New Climate Economy in Rural America

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Glossary

agroforestry: Agroforestry encompasses practices that combine agriculture and trees to produce benefits such as improved soil health, diversified farm revenue (USFS 2012), improved livestock health (NAC n.d.), improved water quality, and increased carbon sequestration (Montagnini and Nair 2004). Specific agroforestry practices include silvopasture, alley cropping, and windbreaks or riparian buffers.

direct effects: Direct effects represent the initial change in earnings or jobs created by new input activities in the initially changed industries. This is the first round of impacts. An example of a direct effect are the jobs created in the heating, ventilation, and air conditioning (HVAC) industry to make efficiency upgrades targeted by a federal program.

employee compensation: This is the total value of payroll and includes wages or salaries, additional benefits, and payroll taxes. Employee compensation is one of the four components of gross domestic product. The other elements are proprietor income, taxes on production and imports, and other property income.

indirect effects: Indirect effects are those throughout the supply chain resulting from the direct change. This is the second round of impacts. An example of an indirect effect are the jobs created at a high-efficiency boiler manufacturer when an HVAC installation firm purchases its products.

induced effects: Induced effects result from the new earnings created by the direct and indirect effects. These earnings are injected into the economy when workers spend their incomes on any kind of good or service in the region.

private financing: This refers to debt-leveraged funding from financial institutions. The money paid out by financial institutions creates the initial construction impacts.

reforestation: Reforestation describes the process of planting trees or naturally regenerating trees on previously forested land. Reforestation does not include replanting trees after they have been logged for commercial use.

renewable: A source of energy is renewable if it comes from natural sources or processes, like wind and solar, and is constantly replenished.

restocking: Restocking describes the practice of increasing the density of existing forests and/or replanting trees after they have been harvested. Restocking differs from reforestation in that restocking takes place in established forests to restore areas where trees have been lost due to disease, environmental factors, or harvesting.

rural counties: A county is defined as rural according to the U.S. Department of Agriculture 2013 Rural-Urban Continuum Codes. Rural counties fall on the spectrum of scores from 4 to 9.

taxes on production and imports (TOPI): These include the total value of sales, excise, property, and severance taxes; customs duties; motor vehicle licenses; and special assessments. Subsidies are subtracted. They do not include profit taxes. In some instances, TOPI are negative, implying that the value of subsidies is greater than the taxes generated by the industry.

total economic investment: The amount of money infused into the economy after private financing leverage and investments are considered.

tree restoration: Tree restoration describes a set of practices that restores healthy forests and tree cover to historically forested areas. These practices include reforestation and restocking degraded forests and establishing agroforestry systems (see above).

urban communities: A county is defined as urban according to the U.S. Department of Agriculture 2013 Rural-Urban Continuum Codes. Urban counties fall on the spectrum of scores from 1 to 3.

value added: This represents the difference between total output and the cost of intermediate inputs (consumption of goods and services purchased from other industries or imported). Value added is equivalent to an industry’s contribution to gross domestic product.

wildfire risk management: Wildfire risk management involves forest management strategies that mimic the effects of wildfire by thinning overstocked forests and/or using prescribed burns to reduce ground-level fuels. While fuel treatments such as thinning and prescribed burning do diminish carbon stored in forests, they are intended to prevent a far greater release of carbon from high-intensity conflagrations that kill all trees in a stand (Dore et al. 2010).

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