How to Communicate Your Economic Impact Effectively

Demonstrating the economic impact of an industry or a project is critical when you are trying to build support. Organizations routinely try to appeal to the public and/or policymakers using economic numbers like investments and jobs. But when everyone is making the same kind of arguments, they can become ineffective. 

Cutting through the noise is the biggest challenge associated with communicating the results of an economic impact analysis (EIA). Simply presenting impact data to a public office holder who is bombarded with numbers every day never achieves the intended outcome. A deliberate approach is required to impactfully articulate impact numbers. Five principles should be followed: 

1) Know What You Are Communicating 

An EIA can be leveraged to analyze impacts on gross domestic product (GDP), employment, labour income, and tax revenues. Properly defining and calculating these indicators is foundational. Misinterpreting and misrepresenting impact numbers can undermine the credibility of an organization.  

A common mistake is portraying the cost of a new project as the actual impact on the economy and GDP. This is inaccurate as most investments involve spending on intermediate goods and imports that do not contribute to GDP growth.  

As an example, we recently used IMPLAN to determine the impacts of building a $3-billion water treatment plant in Ontario. The direct GDP impact is evaluated at $1,180,699,092, which shows that a large portion of the construction cost does not directly count towards Ontario’s GDP. This stems in part from some inputs being sourced from outside the province. However, the impacts and benefits of this type of investment go beyond the construction phase due to the recurring operations of the infrastructure once open. 

2) Go Beyond your Industry 

The impacts of a new project are never limited to just one industry. An EIA assesses how an investment generates impacts across the economy due to inter-industry linkages and spending patterns. Every event has direct, indirect, and induced impacts. 

• Direct impacts stem from the change in output  
• Indirect impacts are generated by business-to-business transactions in the supply chain  
• Induced impacts come from households spending the labour income generated by the direct and indirect impacts 

Accounting for total impacts (i.e., direct, indirect, and induced combined) amplifies the magnitude of the benefits generated by a project. From a communication and advocacy standpoint, it also enables organizations to go beyond their own industry to demonstrate how other sectors (e.g., suppliers) and workers will benefit from a project.  

3) Use Scenarios 

Economic impact analysis looks to the future, which inherently involves a certain degree of uncertainty. The scope of a planned project may evolve and/or fluctuate over time. In these circumstances, using scenarios is a flexible approach to assess a range of outcomes while acknowledging unknowns.   

By enabling comparisons, scenarios can show opportunity costs. An EIA can be particularly helpful for organizations seeking a government decision that would allow a project to go forward. The results of the EIA can demonstrate the lost economic benefits if the investment does not proceed. 

In some cases, organizations may be looking for government funding to scale up a planned project. A scenario analysis can help calculate and demonstrate the additional impacts government can unlock by funding a project.  

As an example, we consider a plastic product manufacturing company seeking financial support from the government to build and operate a new facility in Ontario. Without this funding, the project would still go forward and have an annual output of $10 million starting in 2027. Government support would boost the production capacity of the company to $15 million in annual output.  

Total Annual Operations Impacts in Ontario (Based on 2027 Dollars) 

4) Put Numbers into Perspective 

Economic impact numbers can be hard to comprehend on their own. Providing context for the data can help an audience appreciate the scale of variation in indicators.  

Presenting economic impacts as a relative change in percentage can be effective. For instance, stating that a manufacturing project will generate 500 new direct jobs can be augmented by highlighting that it would increase total local manufacturing employment by 20%. 

Another way to contextualize economic impacts is through comparisons. For instance, one can compare the total impacts of a project to other previous investments in the region or the province. For major projects with very large impacts, comparing total GDP contribution to the GDP of a city or a small province can also help put things into perspective.    

5) Give Real Life Examples 

Even with the proper context, numbers might not always resonate with the public and/or public office holders. Giving real life examples of the impacts of a new investment can enhance its relatability.  

For instance, an organization can spotlight a project’s positive impacts on the community using both quantitative (e.g., contracts with local suppliers) and qualitative (e.g., partnerships with postsecondary institutions) examples. Case studies can be an effective way to showcase these benefits.   

Demonstrating the impacts on people makes projects more concrete. EIAs can be used to present the number of jobs and the labour income generated by projects. For direct impacts, the average employee compensation per job created can also be calculated.  

Pairing Reliable Impact Numbers With the Right Message 

Using the right data, tools, and expertise to calculate economic impacts is crucial. However, numbers on their own do not suffice. Organizations must effectively articulate the impacts of projects to a target audience in order to achieve their communications and advocacy goals.  

Source  

All economic impact calculations in this article were calculated using the IMPLAN platform. See IMPLAN® model, 2021 Data, using inputs provided by the user and IMPLAN Group LLC, IMPLAN System (data and software), 16905 Northcross Dr., Suite 120, Huntersville, NC 28078 www.IMPLAN.com