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
Overview
Development, Reporting, Accountability
Identifying
issues at
local-level

Program
Priorities
State
Strategic
Plan
Evaluating
Programs
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)
Federal
Integrated
Report
-----Economic
Impact
Briefs
Overview (Cont’d)
Identifying
issues at
local-level
Program
Priorities
State
Strategic
Plan
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
Evaluating
Programs
Federal
Integrated
Report
------
Economic
Impact
Briefs
Overview of Program …
Identifying
issues at
local-level

Program
Priorities
State
Strategic
Plan
Evaluating
Programs
Federal
Integrated
Report
------
Economic
Impact
Briefs
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
Introduction

Economic accountability: measuring and interpreting
economic benefits and impacts of Extension programs to
demonstrate accountability for our use of public funds
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
Process of Developing Economic Impact Briefs
Program leaders &
specialists suggest
programs
Ext. Admin.
reviews before
publishing
Follow-up with
specialists
Texas A&M AgriLife Extension Service
Process for Developing Extension
Economic Impact Briefs
Develop list of
3-member
target
review team
programs
Conduct
analysis and
develop…
Work with
admin. to
prioritize
Types of Economic Benefits
Tangible
Benefits
Private
(Direct)
Benefits
Public
Benefits
Intangible
Benefits
Contingent
Valuation
Willingness
To Pay
Economic Benefits that most often can
accrue from various types of programs
Tangible
Program Area
Agricultural
Environmental &
Nat. Res.
Community/Econ
Development
Nutrition
Health
4-H & Youth
Private
Benefits
Public
Benefits
Intangible
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
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
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
Certification programs (Cont’d)

Extension certification/licensing programs directly support:
No. of jobs
supported
Child care
On-site wastewater
treatment
Pesticide Safety*
County Gov’t
Landscape irrigation
Total
Salaries/wages
supported
2,865
$233 Mill.
64
$1.9 Mill.
18,624
$729 Mill.
1,964
$91 Mill.
423
$9 Mill.
23,940
$1.06 Bill.
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)
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)
Data (Cont’d)

Extension Crop & Livestock Budgets
◉ Great resource to make use of

Relevant research findings
◉ Benefit Transfer
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
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.
Economic Impact Analysis Terminology



Measuring the changes in a region’s economy that result
from an event.
JOBS
TAXES
INCOMES
The “stone in the pond”: Events
have ripple effects
New spending flows may create
effects that are larger than
the original flows (expenditures)
Illustrations of Extension Economic
Impacts
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)
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)
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.
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
Heat Abatement in Dairies



Specialists knowledge of the industry critical
Mean benefit of $37/cow annually
Or $13.9 million annually
Communications and Interpretations

Economic Impact Briefs
http://agrilifeextension.tamu.edu/impacts
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.
Identifying
issues at locallevel
Program
Priorities
State
Strategic
Plan
Evaluating
Programs
Federal
Integrated
Report
-----Economic
Impact
Briefs
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
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