Economics for the real world

Economic Impact Analysis

An Economic Impact Analysis (EIA) estimates the impact on a regional economy due to the introduction or removal, expansion or contraction of a business, industry or any large organization, including governmental entities. The analysis estimates the direct and indirect impacts of a regional economic change and tracks the change through different industry groups by using a multiplier. Multipliers are predicated upon a domino theory of economic change and track the consequences of change in one industry upon others. Multipliers are ratios that estimate the "ripple" effect of economic activity throughout the economy. Estimated direct and indirect impacts include:

  • Number of Temporary and Permanent Jobs Created or Lost
  • Increase or Decrease in Region's Total Output Levels, including:
    • Purchases of goods and services during the construction phase of the development
    • Impacts of new business' payroll payments to its employees
    • Impact of new business' other operating expenditures
    • Impacts of new residents (if residential) of the development
    • Impacts of visitors, if any, to the development

Why an EIA

The EIA attempts to answer questions such as "What would be the economic impact on the region of a new development?" The analysis can also provide a comparison of various land-uses for the same parcel, "Will a retail development provide a greater economic impact than an office development?" Finally, the EIA can show an impact of policy changes on an area, "What would be the impact on the area of a sales tax increase to construct a new library?"

The analysis is conducted to give policy-makers, decision-makers and the community the economic data needed to make informed decisions. Additionally, proponents or opponents to regional economic changes, such as those generated by a new real estate development, use the data to support and quantify their claims that the change will positively or negatively impact the economy.

An economic impact analysis may be used as a tool for an industry or an association of businesses to show the positive impact of that industry or group of businesses on the regional economy. This may be useful if the industry or group is facing tax increases

Why EEC

EEC has conducted numerous EIA studies for large commercial developments, developments utilizing creative financing methods, local governments, and gaming establishments. EEC has developed close relationships with the University of Nevada, Reno's Center for Regional Studies, utilizing its databases for our analyses.