Primary economic impact

Primary economic impact

Primary economic impact is the initial, immediate economic output generated by an urban planning process. Put differently, it is the goal of urban planning in terms of economic functionality. Primary impact forms a precondition for the secondary economic impact, since each urban development project will not only generate effects on the targeted markets, but also on other markets.

Definitions

Primary economic impact

In the context of the urban planning process, primary economic effects are defined as the initial, immediate/direct economic output generated by a specific urban development project. They are in essence limited to the owner(s) and user(s) of the specific urban object.

Temporary versus permanent primary impact

In the realization 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

A sustainable highway

Movares, a Dutch engineering company developed an integrated solution to reduce motorway emission and noise problems in an urban environment. It consists of a motorway canopy made of cold-bendable laminated glass, and its solar cells produce clean energy for the environment. The primary economic impacts generated by this sustainable highway consist of:

• Construction costs (including security measures)
• Maintenance costs (glass construction and the road)
• Avoided investments (e.g. air pollution measures)
• Reduction of travel time and travel costs
• Traffic flow effects
• Sustainable energy effects (due to the solar panels and the warmth generated by cars)
• 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 realization of The Sustainable Highway will also generate positive economic effeccts due to its capability to generate sustainable energy and to reduce the environmental pollution, emission and noise. The impact on safety, the environment and the local emissions are referred to as external effects, which are in some cases included in economic studies, especially in countries where indicators are available that translate these external effects into monetized variables.

A scientific institute

The realization of a scientific knowledge institute will generate the following primary economic impacts:

• Construction costs
• Maintenance costs
• Research grants from outside the city/region
• Knowledge valorisation (patents and licences)
• Efficiency (due to scale benefits)

The efficiency impacts can be realized due to scale benefits or a more efficient use of space. The institute will also generate important social impact, like fundamental research, education, and so on. These effects, however, are not only difficult to quantify, but are also not economic impacts in the sense that they create economic activity, except through knowledge valorisation and research grants.

A cultural forum

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.

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