An economic impact assessment study of an activity (for example an existing development already in place or a proposed new development) goes beyond the financial or accounting impacts by including the wider knock-on economic impacts as well as the direct impacts. The knock-on impacts comprise indirect and induced effects, which can be estimated using economic impact multipliers (Type I and Type II) derived from supply-and-use and input-output tables which generally show the interactions among the various sectors of an economy (the Central Statistics Office (CSO) provides the data enabling estimation of these multipliers for each sector of the Irish economy). Only this official data source is relevant for accurate and reliable estimation of economic impact multipliers for the various sectors of the Irish economy and it is important that the estimation is performed correctly (using large-scale matrix analysis).
Typically, the key economic impact variables used in economic impact assessments are gross value added (GVA), employment and Exchequer contribution; however, environmental impacts such as, for example, the equivalent number of homes powered and/or carbon abatement due to a project can also be estimated. In all cases, it is important that all calculations and estimates are based on sound data sources (ideally publicly available sources in order to ensure reproduction and objectivity).
Economic impact assessment reports may be requested by clients seeking robust analysis of the impacts of their activities on the national economy or as part of environmental impact assessment (EIA) reports in respect of planning applications or proposed developments.
What clients may seek economic impact assessments? Companies and developers embarking on proposed developments seeking planning approval; established businesses and other organisations wanting to establish and communicate their ‘economic footprints’ nationally, regionally or locally; local authorities seeking accurate estimates of the economic impact of a new piece of infrastructure in their areas (such as a new road or other form of transport infrastructure, for example); various users (for instance, planning authorities or local community groups) who may be concerned about the claimed validity of a proposed development or might wish to get independent scrutiny of same, or who might wish to establish environmental credibility of a proposed development.
The results of economic impact assessments may also be employed to inform the related area of economic appraisal.