Primary economic impact

Primary (direct) economic impact is the initial, immediate causes::economic output generated by a program/project or security event. It forms a precondition for the causes::secondary economic impact, since each urban development project will not only generate effects on the targeted markets, but also on other markets.

Description

Primary or "direct economic impact measures what is sometimes called the 'first round' of spending'". Put differently, a new toll road will generate direct transactions between the users of the road and the road owner (money for a shorter travel time). Hence, these effects are in essence limited to the owner(s) and user(s) of the specific urban object and are a specific category of economic impact.

Temporary versus permanent primary impact

In the realisation phase, an urban planning development will lead to temporary and permanent primary economic effects. The construction of a utility plant, for example, will generate a temporarily demand of labour and construction supplies, including services. Once the utility plant is finished, it will lead to permanent primary output in the form of benefits for both the owners of the utility plant (revenues) and the customers of the utility plant (resources).

Examples of primary economic impact

The examples below are closely related to the examples provided in the page on secondary economic impact.

Crime

Considerable costs are incurred in relation to crime. In anticipation of crime people, companies and public organisations invest time and money in precaution measures to avoid crime such as locks, alarm prevention programs and surveillance. As a consequence of crime, there is loss of property, medical and health care costs, the costs of victim support, etc. In response to crime, finally, the public authorities spend public resources on policing, prosecution, court proceeding, sanctions, etc. (these effects are also referred to as fiscal effects).

A new highway

Snelweg A7 tijdens de avondspits

The primary economic impacts generated by a new highway consist of:

• Construction costs (including security measures)
• Maintenance costs (glass construction and the road)
• Reduction of travel time and travel costs
• Traffic flow effects
• Real estate effects (alongside the sustainable highway)
• External effects such as safety effects, environmental effects and local noise and emission effects

The construction costs are the bulk of the investment costs, and the reduction of travel time will generate the bulk of the economic revenues. The impact on safety, the environment and the local emissions are referred to as comprises::external effects, which are in some cases included in economic studies, especially in countries where indicators are available that translate these external effects into monetised variables.

A cultural forum

File:Bastille Opera Building.jpg

Bastille Opera Building

The primary economic impact of a cultural institute in a city could exist of:

• Construction costs
• Maintenance costs
• Temporary housing
• Costs for the development of surrounding public space
• Exploitation costs
• Cultural grants
• Ticket fees

A cultural forum will in most cases lead to exploitation costs due to the fact that ticket fees are not enough to cover the costs. Cultural institutes receive in many European countries grants from central governments to promote cultural events in the region. Culture is an important aspect of the social domain.

Related subjects

• Economic main page
  • Economic impact
    • Primary economic impact
    • Secondary economic impact
    • External effects
  • Economic impact of urban planning
  • Economic impact of security threats
  • Economic impact of security measures
  • Economics of criminal and terrorist behaviour
• Economic output
• Economic tools

Footnotes and references

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