Economic Impact and Economic Value
What is an economic impact assessment?
All business activities impact the local, state, and national economies. An economic impact assessment is a formal estimate of those impacts, measured in jobs creation and dollars spent. “Direct” economic activity is that which affects the industry where the original orders are placed, such as an order for a new boat. “Indirect” economic activity is that which is inter-industry, such as steel ordered by a boat-building company. “Induced” economic activity is that which “reflect changes in spending from households as income increases or decreases due to the changes in production (IMPLAN User’s Guide, page 102)”. A properly-constructed economic impact assessment will show how the dollars spent in a commercial or recreational fishing sector help support the livelihoods of people in many other industries and areas.
What data goes into an economic impact assessment?
All economic impact assessments are done using the IMPLAN (IMpact analysis for PLANning) economic modeling software. Survey questions provide the per-trip and annual expenditure estimates, and the commercial and recreational statistics programs provide the estimates on the number of trips.
What is the difference between economic impact and economic value?
An economic impact assessment is primarily a production model, showing what goes into producing a good or service. This is not the same as economic value. In economic terms, the value of a good or service is determined by what people are willing to pay, trade, or give up in order to obtain it. Price is a useful unit of measure and relatively easy to track, but the price of a good is not the same as economic value because it does not include the notion of consumer surplus (the difference between what someone pays and the maximum amount they would have been willing to pay). Estimating consumer surplus is a notoriously difficult task both logistically and methodologically.
Which should be used in making policy decisions, economic impacts or economic values?
There is a clear consensus among social scientists who work in fisheries on this subject. An economic impact assessment is best used to estimate the impact of potential changes in policy in terms of job and revenue losses or growth. Economic impact assessments should not be used in making allocation decisions between different fishery sectors. Instead, economic value and social value should be taken into consideration in conjunction with biological concerns.