Economic Impacts, Value Added, and Benefits in Regional Project Analysis

Abstract

This paper addresses five issues encountered when estimating secondary benefits in regional project analysis: (a) the correction for opportunity cost of factors used, (b) the treatment of mobile factors, (c) the effect of economies of size, (d) the role of forward linkages, and (e) the role of spatial structure of economic regions. The first four are reasons that only a small part, if any, of regional impacts can be treated as regional net benefits. The fifth is a reason that, when secondary benefits or damages do exist, their correct estimation can depend on the spatial structure of the affected areas.

A benefit–cost analysis of establishing protected natural areas in New Brunswick, Canada

“…4 A fundamental principle of BCA is that only net social benefits (i.e., social benefits less social costs) in the policy area should be considered(Hamilton et al, 1991). Hence, a transfer of economic activity from one location to another within the region of analysis does not constitute a benefit or cost.5 SeeMitchell and Carson (1989) for a discussion of the advantages of this elicitation format over others.6 Unfortunately, a control sample using the typical bid vector was not included, so it was not possible to comment on whether or not this bid structure actually improved the WTP estimate.…”

A network approach for assembling and linking input–output models

“…Topological transformation thus offer the possibility for the systematic exploration of different model configurations (Fox and Krishna, 1965;Hamilton et al, 1991;Robinson and Duffy-Deno, 1996) to obtain the optimal combination that maximizes resolution while minimizing noise resulting from data estimation.…”

Economic analysis of forest insect pests in Canada

“…Policy-makers are also interested in economic metrics that may not be consistent with welfare economics and CBA. For example, forest sector job losses resulting from forest insect damage may lead to economic welfare changes, though these are complex and can be much less severe than is sometimes assumed (Hamilton et al 1991). Furthermore, high levels of uncertainty over insect behaviour, control efficacy, and biophysical impacts will almost always translate into high levels of uncertainty over economic impacts and the net economic benefits of control.…”