Authors: James A Giesecke and John R Madden
Economic impact statements are part and parcel of project proponents seeking government assistance, infrastructure, or environmental clearance. Such impact assessments are increasingly being conducted with computable general equilibrium (CGE) models. Frequently, however, CGE modellers do not report results in economic welfare terms nor give sufficient attention to the proper simulation requirements for determining net social benefits correctly. In this paper we take the example of a major mining project in the Western Australian region and model it under a variety of stylized scenarios in order to demonstrate the key determinants of an economic welfare measure, gross national disposable income (GNDI). We show that GNDI is sensitive to such factors as: terms of trade effects; profitability; public concessions and infrastructure; cost of foreign financing; and taxation of foreign-owned returns.
JEL classification: D61, D58, Q33, Q38.
Keywords: major projects, economic impact, regional CGE.
Working Paper Number G-185 can be downloaded in PDF format. To print this you will need the Adobe Acrobat Reader.
Go to working papers page