Economic Impacts of Forestry and Forest Product Industries in Tennessee

Ummey Honey, Tennessee State University


Around 52 percent of Tennessee’s total land area (14 million) is covered by forests, majority of which is occupied by hardwood species. The usage of the forest and forest products have different degrees of impact on local, State, and regional level economies. Moreover, several sectors are interconnected through input and output markets generating spillover effects. While these direct and spillover effects due to forest and forest product related industries contribute to the regional economies, previous studies in Tennessee have failed to appropriately estimate impacts accounting for the direct and indirect impacts solely due to forestry and forest related industries. Specifically, some previous studies present the impacts in combination of agricultural sector. However, since agriculture itself is a big industry, the interpretation of combine impact may over- or under- value the forestry-sector. Additionally, the impact analysis is sensitive to the sector or sub sector industries chosen under forestry and needs careful examination. Taking these into considerations while overcoming limitations from previous studies, this study computes contribution of forestry and forest based industries through direct, indirect and induced impacts in Tennessee. We present contribution and impacts of an overall forestry sector and different subsectors within forestry in the State of Tennessee and across its congressional districts. The interconnection between sectors and their role in regional economies are estimated using recent data and modeling using Impact Analysis for Planning (IMPLAN, 2016 data). The study estimated that forestry and forest product industries contribute a total of $24.36 billion on Tennessee’s economy employing 110,991 individuals, generating labor income of $6.2 billion and $9.62 billion in total value addition (in 2016-dollar value). We also examined the total effect of portions of the forest based industries within the region among all 9 congressional districts through Regional Purchase Coefficients and found that 9th congressional district has the highest level of total contribution. In addition to contribution analysis, our simulated hypothetical scenario about potential adverse impact on the state’s economy due to economic downturn suggests that with a 33% reduction in establishments even in a single subsector sawmill industry in Tennessee (around 47 sawmills shut down), Tennessee economy could lose $563 million of industrial output and 3,187 in employments. Overall, our findings from this study are expected to enhance the understanding of the role of the forestry sector, its interconnection with other industries and sectors and to provide useful information for policy makers, businesses, and researchers aiming to investigate or invest in forestry sector.

Subject Area

Agriculture|Agricultural economics

Recommended Citation

Ummey Honey, "Economic Impacts of Forestry and Forest Product Industries in Tennessee" (2019). ETD Collection for Tennessee State University. Paper AAI22585121.