Add direct, indirect and induced impacts, or estimate project and visitor gross output using a supplied regional multiplier. Optional jobs, income, value-added and tax estimates require your own compatible assumptions.

Add three measured or modeled components on the same basis.

Use estimates for the same region, year and impact measure. No industry factors are assumed; gross output is not GDP or net benefit.

Economic Impact Formula

The following formula sums a project’s direct, indirect and induced impacts measured on the same basis, for the same region and period.

EI = DI + INDI + INDU
  • Where EI is the economic impact ($)
  • DI are direct impacts ($)
  • INDI are indirect impacts ($)
  • INDU are induced impacts ($)

To calculate the economic impact of a project, simply sum the direct impacts, indirect impacts, and induced impacts together.

Direct impacts arise from the project’s eligible local spending. For a stadium project, for example, construction output is a direct impact. Employment, labor income, value added and gross output are different measures; use the same measure for all three components, and do not add income to output.

The indirect impact is activity generated through the supply chain, measured consistently with the direct component. For example, if the supplier that was used for the material to build the construction then purchased sub-components from one of their suppliers, then the secondary supplier income would be considered indirect impact.

Induced Impacts would be considered things that occur as a result of the direct and indirect impacts. For example, if the labor hired to build the stadium had more income now than before because of this new job, and spent more on food, entertainment, etc., then that would be an induced impact.

Economic Impact Definition

An economic impact is defined as the total analysis of a project, event, or program as it pertains to its effect on the surrounding economy.

Example Problem

How to calculate an economic impact?

First, determine the direct impact. For this example, $100,000.00 was spent on direct impact. For more information on each impact factor, read the sections above.

Next, determine the indirect impact. For this example, the indirect impact is found to be $50,000.00.

Next, determine the induced impact. This is found to be $25,000.00.

Finally, calculate the total economic impact using the formula above.

EI = $100,000.00 + $50,000.00 + $25,000.00

= $175,000.00.

Economic Impact Calculator screenshot