Now more than ever before, communities are looking for growth in economic activity to “get back to normal’. Opportunities for new investment and jobs often means developing a clear communications strategy to brief local and state government partners on the potential for the project, or even to advocate for public investments or actions to support the project. An economic impact analysis (EIA) is ideal for turning a company’s planned investments and hiring into quantifiable additions to the local and regional economies.
Economic Impact Analysis is a technique that traces spending through an economy and measures the effects of that spending on the other industries there. This is also referred to as Input-Output Analysis and is expressed by taking the ‘direct’ spending by the subject company and calculating the ‘indirect’ effects, which are the expenditures in the supply chain of the company and its direct expenditures. In addition to the indirect effects, it is also possible to look at the ‘induced effects’ which are the spending effects of the employees in the supply chain companies and their purchases. When taken together, these effects can show a wide and cascading pattern of economic activity for a community or a region.
Competing for public resources requires a compelling story about the benefits of the project over time and across the community. An economic impact analysis can show that a modest increase in high-paying jobs will have impacts throughout the retail and service sectors. Uconda Dunn, Vice President of Business Development at the Greenville Eastern North Carolina Alliance used this for a recent business expansion. “The details in the impact analysis helped us communicate the economic benefits of the expansion of this white-collar operation to our public officials,” she said.
While estimating the impacts of a specific new employer is a traditional role for impact analyses, we also see successful projects where the impact analysis is projecting a future set of developments in order to set the stage for changes in land use, zoning, or transportation infrastructure. Josh Hallingse, Executive Director at Transylvania Economic Alliance used impact analysis to paint a picture for his community of a future development which included housing, retail, and childcare. “The IMPLAN analysis and your professional guidance was truly impactful in my understanding of the project and served as an aid to our organization’s ability to have meaningful conversations locally about the proposed development,” he tells us.
As well as communicating within your community, an impact analysis is an effective way to pitch your project to potential funders or grant-makers. Since these entities are looking to make the most impactful investments with their funds, the EIA can help a granting organization see the long-range positive impacts and understand their economic effects. Measuring the future jobs and spending attributable to a project is a great way to form a foundation for funding partnerships and recruit more allies to your team.
There is no limit to the types of projects and developments that can be modeled with an EIA. We recommend using this technique to calculate the impacts of a new or expanding employer, or to communicate to regulatory boards and elected officials the broad impacts of development decisions, and even as part of a pitch to potential grant makers and funders. You can learn more about our impact analysis services on our website HERE or give us a call to discuss the details of your next project!