Economic Impact Analysis, The Right Tool for the Job

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New Technology Infrastructure; What is the Economic Impact?
By David A. Nelson
December 1, 2010

So it's been seventy years since the first electrical infrastructure installation in your County. Sixty years since the first telephone install. Thirty years since the cable tv was brought to the doorstep. Have you ever wondered what it would be like to try and install a similar, ubiquitous infrastructure in today's economy? Take a look at the economic impact of installing fiber-optic service to every home, farm, and business entity in Progresstown.
This Economic Impact Analysis focuses on the installation and operation of a technology utility. The utility delivers the "big three" to the front door including telephone, television, and internet. The labor requirement for excavation and construction of the lines are captured. The expenditures for lines, buildings, computers, and vehicle are captured. The daily operations of the IT services over its forty year life expectancy are captured.
On-the-other-hand Economic Impact Analysis is not the appropriate analytical tool for measuring the net impact or change in operations for the business, household, or farm. These collateral benefits are definite and significant yet incalculable in the IMPLAN model. The local business will expand the customer base online. The local farmer will make direct market contacts with the grain exchange on an hourly or minute-to-minute. Good stuff, just not part of the economic impact formula.
When a community is seeking information to make an informed economic development decision; the economic impact of the venture is second only to the feasibility study in terms of managing expectations and prudently caring for public resources.

In a 2010 study conducted by University of Minnesota Extension examining the economic impact of a proposed new Fiber-To-The-Home (FTTH) infrastructure to business and residence in Progresstown County, Minnesota it was found that:

• Output in the local economy is predicted to increase by $4,501,629 annually due to the daily operation of the facility/infrastructure.

• Employment in the study area is predicted to increase by 13 full and part time jobs annually due to the daily operation of the facility.

• Labor income in the local economy is predicted to increase by $600,099 annually due to the daily operation of the facility.

• The Telecommunications industry, the Service & Repair of non-residential industry, and the Food Service and Drinking industry will be the industries most significantly impacted due to the operation of the facility.

• Output in the local economy is expected to increase by $25,760,910 for two consecutive years due to construction of the facility/infrastructure.

• Employment in the study area is expected to increase by 288 full and part time jobs for one-two years due to construction of the facility.

• Labor income in the local economy is expected to increase by $10,633,119 for two years due to construction of the facility.


1 Comment

Wow! This is the first I've seen that looks at the impact of a Fiber to Home network.

What about the impact that having fiber will have on local businesses? Is it possible to know the impact additional bandwidth will provide?

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This page contains a single entry by nelso417 published on December 1, 2010 2:08 PM.

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