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.