How can economic impact be measured most effectively? Perhaps economic impact analyses could use an alternatives approach rather than a cost-benefit approach to determine the actual scale and longevity of the benefits of development projects.
Most current economic impact analyses focus on the amount of investment or subsidy vs. the amount of economic activity created as a result. Of course, a new football stadium will provide jobs for construction and operation, sales tax revenue, and indirect economic activity related to merchandising, tailgating and other fan-driven fun. The question is about the scale of these benefits.
Just as private investors do not limit themselves to considering one investment option, so too cities should compare different investment options. Instead of spending $400 million on a single stadium, how many business parks serving biotech or advanced manufacturing, street and sidewalk improvements to encourage newer and more successful retail development, or enhancements to public schools and libraries could be funded by that same amount. What would be the short- and long-term benefit? In some cases, the stadium investment could be the best option.
In the long-term, those other investments could pay greater dividends for the local economy and thereby create the market in which a football team would want to locate anyway, possibly leading to a win-win situation where the city gets both of its goals. All of the alternatives need to be considered.
RSG’s economic impact models are adaptable to allow us to customize our analysis for the client’s needs and situation. We also provide economic development strategies that take into account the qualitative goals and benefits of different investments and real estate advising to assist with strategy implementation.
Written by Dima Galkin who is an Analyst at RSG