Economic impact analysis for informed decision-making

So let’s say you are in charge of investing tax dollars in ways that will ultimately generate the highest return. How do you know where to allocate those funds? In fact, why invest public dollars in ways that will benefit private investment at all?

To better understand how jobs and public or private investment contribute to community and regional wellbeing we can turn to a tool known as economic impact analysis. Such analyses help us understand the economic impact of jobs (existing, new, and/or lost) and other business activities. In fact, such analysis was done on Extension by Battelle Institute in 2004 to learn that investment in OSU Extension yielded a return of nearly 2.5 times the annual Extension operating budget. Knowing such information can better inform policy decisions, including how to allocate limited resources and/or which industries or businesses to target for future growth and development (which employ people, create goods and services and ultimately generate increased wealth).

Data Analysis 2014-07-31Economic impact analysis, or EIA, benefits communities, chambers, economic development organizations, associations and others who are seeking to understand and quantify economic changes. EIA programs are offered through Extension Community Development (CD) using IMPLAN, an input-output (I-O) modeling software. The model captures indirect and induced impacts that occur from an initial direct investment or series of investments using the most recent data available.

Extension CD offers four basic types of EIA reports which can be customized to meet specific needs:

  • Industry Profile Report – A profile of the top industries in your community by sector. The profile will describe employment, tax contribution and wages for the top five sectors and potential implications for the community.
  • Project Effect Report – An analysis that shows the impact of a past or recent project, highly effective for displaying the value of projects to local community leaders and stakeholders; as well as the value that a local economic development organization offers its service area.
  •  Industry Contribution Report – A detailed report of the contribution of an industry sector to the community and region. How extensive is the impact of the agriculture, tourism or manufacturing sectors to the local, regional and state economy?
  • Economic Impact Analysis – This report provides an in-depth analysis of the economic impact an event has on the local economy when taking place in a variety of selected industry sectors. The EIA can assist in identifying what type of industry is best to target for the local economy.

For more information on the program, including recently completed EIA reports, click here.

(Submitted by Nancy Bowen-Ellzey, Associate Professor and Extension Field Specialist, Community Economics. Additional contacts: David Civittolo, Associate Professor and Extension Field Specialist, Community Economics, and Greg Moon, Extension Educator, Wyandot County & Erie Basin EERA.)

Leave a Reply

Your email address will not be published. Required fields are marked *