Economic Impact Study

An Economic Impact Study is one of the more often used [#_Economic_tools_2 economic tools] to facilitate the preparation of a robust urban plan. It traces the flows of spending associated with a spatial development to identify changes in economic activities of the sectors in a local/regional economy. This is done by measuring or estimating the changes in [#_Economic_output economic output] (like an increase in sales, income and jobs). == Economic impact calculation ==The model used to measure the economic impact of an urban project development contains several modules (depending on the project scope). The figure below is an example of an Economic Impact Model for a tourist, and residential area:Figure: Example of an Economic Impact model [[Image:]]===== Source: Decisio =====The example contains three modules: construction, residential, and tourism. The main inputs for the modules are determined by the scope of the project (the amount of residential units, hotel rooms, bars and restaurant, etc.).Based on the input and its interrelationships, the module calculates the direct output impacts of the urban development. The Economic Impact Model calculates the direct (primary), indirect and induced (secondary) effects of the urban development plan:* [#_Primary_economic_impacts Direct effects] are production changes associated with the immediate effects of change in expenditures. An impulse in construction activity, for example, leads to an increase in wages, profits, taxes paid, et cetera.* [#_Secundary_economic_effects Indirect effects]: are the production changes resulting from various rounds of re-spending of the receivers of the direct spending impulse in other backward-linked industries. For example: architects and brick suppliers will receive orders from the construction companies responsible for the construction of the ordered development.* [#_Secundary_economic_effects Induced effects][#_Secundary_economic_effects :] are the effects resulting from the re-expenditures of households. Employees of companies earn wages that are spend on goods and services. This means that not only the construction companies’ purchases are included, but also the expenses of the employees of the construction company, et cetera.=== Model calculations ===Based on the direct input (the amount of invested capital and labour, etc.), economists calculate the impact of the urban development project on the whole economy. This is mostly done with the help of so-called [#_Input/output_analysis_1 Input-output analysis].=== Data collection and analyses ===The data and information model engineers need are mostly available from existing data or previous studies. The following list shows some of the information needed:Supply information:* Demographic statistics (resident population, employment statistics, number and type of businesses, etc.)* The details of the [#_Development_plan Development Plan] (amount of planned hotel rooms, residential houses, etc.)* Qualitative economic information (expected economic growth, the quality of the local economy, etc.)Demand information:* Statistical data on consumption, investments, export (e.g., the regional and local volume of tourist spending)* Demand surveys (e.g, for the real estate market, construction, and tourism)== Related subjects ==[#_Social_cost-benefit_analysis_2 Social Cost-Benefit analysis]