Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgements
- 1 Benefit-Cost Analysis: Introduction and Overview
- 2 Investment Appraisal: Principles
- 3 Investment Appraisal: Decision-Rules
- 4 Private Benefit-Cost Analysis: Financial Analysis
- 5 Efficiency Benefit-Cost Analysis
- 6 Calculating the Net Benefits to the Referent Group
- 7 Consumer and Producer Surplus in Benefit-Cost Analysis
- 8 Valuing Traded and Non-traded Commodities in Benefit-Cost Analysis
- 9 Incorporating Risk in Benefit-Cost Analysis
- 10 The Social Discount Rate, Cost of Public Funds, and the Value of Information
- 11 Weighting Net Benefits to Account for Income Distribution
- 12 Valuation of Non-marketed Goods
- 13 Economic Impact Analysis
- 14 Writing the Benefit-Cost Analysis Report
- Appendix 1 Case Study Assignment
- Appendix 2 Discount and Annuity Tables
- Index
13 - Economic Impact Analysis
Published online by Cambridge University Press: 05 September 2012
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgements
- 1 Benefit-Cost Analysis: Introduction and Overview
- 2 Investment Appraisal: Principles
- 3 Investment Appraisal: Decision-Rules
- 4 Private Benefit-Cost Analysis: Financial Analysis
- 5 Efficiency Benefit-Cost Analysis
- 6 Calculating the Net Benefits to the Referent Group
- 7 Consumer and Producer Surplus in Benefit-Cost Analysis
- 8 Valuing Traded and Non-traded Commodities in Benefit-Cost Analysis
- 9 Incorporating Risk in Benefit-Cost Analysis
- 10 The Social Discount Rate, Cost of Public Funds, and the Value of Information
- 11 Weighting Net Benefits to Account for Income Distribution
- 12 Valuation of Non-marketed Goods
- 13 Economic Impact Analysis
- 14 Writing the Benefit-Cost Analysis Report
- Appendix 1 Case Study Assignment
- Appendix 2 Discount and Annuity Tables
- Index
Summary
Introduction
A large project, such as construction of a major highway or development of a large mine, will have a significant impact on the economy. The spending in the construction and operating phases will generate income and employment, and public sector decision-makers often take these effects into account in deciding whether or not to undertake the project. An economic impact analysis is a different procedure from a cost-benefit analysis in that it attempts to predict, but not evaluate, the effects of a project. Since the data assembled in the course of a cost-benefit analysis are often used as inputs to an economic impact analysis the two types of analyses tend to become related in the minds of decision-makers and may be undertaken by the same group of analysts.
In this Chapter we survey briefly three approaches to economic impact analysis: the income multiplier approach; the inter-industry model; and the computable general equilibrium model. Use of the latter two approaches involves a degree of technical expertise and would generally not be undertaken by the non-specialist. In discussing economic impacts we emphasize that these are not the same as the costs or benefits measured by a cost-benefit analysis. However there may be costs and benefits associated with the project's economic impact and the decision-maker may wish to take these into account.
The decision whether or not to take the multiplier or flow-on effects into account in the evaluation should be based on an assessment of the extent to which similar such effects would or would not occur in the absence of the project in question.
- Type
- Chapter
- Information
- Benefit-Cost AnalysisFinancial and Economic Appraisal using Spreadsheets, pp. 288 - 303Publisher: Cambridge University PressPrint publication year: 2003