Economic impact of urban planning

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This is a page providing background in a specific field of expertise

Urban objects host and cause economic activities related to production, distribution, exchange and consumption of goods and services. This is referred to as the economic impact of urban planning.


Urban objects such as sport stadiums, commercial centers or airports are considered to contribute to improve the overall functioning of the city. Hence, development projects generally lead to advantages for the city in terms of leisure opportunities, supply of retail space, travel time/costs, and so on. These positive effects can also be measured in terms of economic/financial terms. This includes effects that are the result of markets and can be measured in terms of e.g jobs, income, gross national product, etc., but also the so-called welfare effects in terms of e.g. quality of life or travel time for recreational use that are not the result of markets.

The same applies to the economic effects of security threats in an urban environment. Crime and terrorism have in general a negative effect on the functioning of urban objects and the urban environment as a whole. These effects can also be measured in terms of economic/financial terms.

Types of urban objects

In Securipedia, the following types of urban objects are discerned. The most important economic impact for each of these objects is

  • Residential: this concerns housing facilities for living purposes;
  • Retail and commercial services: this concerns buildings designed designated for the purpose of housing economic activities that fulfil the role of goods and service provision. Examples include shops, restaurants, credit unions, etc. ;
  • Office: a location which accommodates employment facilitating the provision of services.;
  • Industry: a facility that accommodates employment facilitating the creation of gooods;
  • Public services and facilities: a facility designated to fulfil supportive functions related to the health and well-being of the citizens of a modern society or urban area.
  • Amenity, open and civic Space: a building, space or facility designated to provide recreational requirements of an urban area.
  • Utilities: critical infrastructures, needed for maintaining the essential support for sustaining the standard of living.
  • Transportation: a facility designated to facilitating the movement of people, cattle, animals and goods from one location to another. Examples include: a road network, rail line, station and port.
  • Mixed use: a facility or location, designated for more than one of the above functions.

Examples of economic impact of urban planning

Governments and private parties develop many ambitious ideas and plans for spatial development and new infrastructure. Hence, one regularly reads in the news about claims that the development of a new urban area creates X jobs in an area or that a big sport venue generates Y million Euros in sales or income in a community, et cetera. These effects are also referred to as economic effects or economic impact. For example:

A newly developed tourist area

The impact of the development of a tourist area with hotels, apartments, bars and clubs, and so on, generates primary and secondary effects.The most important primary impact are the temporary effects caused by the construction phase. This phase will not only generate construction jobs, but will also generate business for the suppliers of the construction companies and public investments and income. On a more permanent basis, tourists will generate an impulse in consumption and the owners of real estate will generate economic value for the local economy. The above mentioned primary impact will also generate a secondary impact:

The Westin Warsaw
  • First of all, the direct economic impact will generate jobs, turnover and revenues for other sectors in the economy such as: trade, the financial sector, transport & communication, manufacturing, and so on.
  • Secondly, the tourist sector will generate business for the trade sector, the financial sector, the real estate sector, agriculture, and so on.
  • Finally, the general level of welfare will rise, improving the quality of life of local residents.

Related subjects

Footnotes and references