Economic Impact Analysis (EIA)Economic impacts are the effects a project or policy has on the economy of a designated project area, measured in terms of the change in business sales, jobs, value added, income,or tax revenue. These effects are sometimes referred to as "economic development impacts". Whereas Benefit-Cost Analysis is an exercise to determine an action's social welfare effects (compared to costs), Economic Impact Analysis is an exercise to determine how a project or policy affects the amount and type of economic activity in a region.Economic impacts can result from various sources, including time savings to businesses, household and business vehicle operating cost savings, the strengthening of local and regional market connectivity, induced land development, or increased tourism. In all cases, economic impacts arise because a transportation investment causes a change in prices, a change in household behavior, or a change in business behavior that improves business investment, attraction, expansion, retention, or competitiveness in the study area (when impacts are positive - of course, they can be negative as well). Examples
Relationship to Transportation System Benefit-CostEconomic impacts are not included in benefit-cost analysis (with the exception of productivity impacts, discussed below). Economic development impacts occur as the end result of direct impacts of a transportation project on travelers and non-travelers. A transportation project may improve local business competitiveness (and hence economic growth) by reducing existing transportation costs (for employees and freight), expanding markets for business sales and services (providing more revenue with economies of scale in operations), and expanding labor market access (providing access to a broader job base). A transportation project may also affect economic growth by saving money for area residents (increasing available income to spend elsewhere in the economy) or by improving the attractiveness of the area as a place for people to live and locate their business activities.
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