There are two elements to the Economy Criterion - improving the economic efficiency of transport and improving the efficiency of economic activities.
In general terms, economics is the analysis of scarce resources which have alternative uses. If an economic system is Pareto efficient, then it is the case that no one person or group can be made better off without another being made worse off. In the STAG Appraisal the Economy Criterion is concerned primarily with maximising the net benefits, in resource terms, of the provision of transport. This requires maximising consumer surplus by maximising the difference between the willingness to pay of transport users and the resource costs of the provision, operation and maintenance of transport facilities - consumer surplus being measured by the difference between the maximum which an individual transport user is willing to pay to travel and the actual cost of that journey. Therefore, consumer surplus is increased when travel time, operating costs and transfer payments, such as fares, are reduced and when more transport users are able to travel due to the reduction in costs.
The impact of a transport infrastructure project on the economy is assessed via a Transport Economic Efficiency Analysis (TEE) and an Economic Activity and Location Impact (EALI) study. The Wider Economic Benefits (WEB) of a transport option, measured in terms of the additional benefits to economic development, are considered as a separate sensitivity test.
