Economic impact of urban planning

Economic impact of urban planning

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.

Description

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.

Examples of economic effects of urban planning

A scientific institute

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

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

And the following secondary economic impact:

• More productive research project development
• More productive applied sciences in business
• Economic spin-off suppliers
• Induced effects employees

A new highway

The primary economic impact generated by a sustainable highway consists of:

• Construction costs
• Maintenance costs
• Reduction of travel time and travel costs
• Traffic flow effects
• External effects such as safety effects, environmental effects and local noise and emission effects.

The realization of a new highway does not only generate effects for the direct owners and users of the highway, but could also generate the following secondary effects:

• An improved functioning of the markets in the local economy as a whole due to a reduction of transport costs.
• An improved functioning of labour markets due to its increased size.
• Scale and agglomeration advances due to an increased size of the market
• Spatial and strategic effects due to an improved reach ability of the area.

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:

• 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.

Related subjects

• Economic impact
• Economic impact of security threats
• Economic impact of security measures
• The economics of criminal and terrorist behaviour

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