The Economic Activity and Location Impact (EALI) analysis provides an assessment of the impact of transport investment or policy measures on the economy, measured in terms of income (GDP or GVA) and/or employment. The EALI analysis assesses the distribution of the national impacts captured through the TEE and WEB, identifying the impacts on different areas. The EALI does not generally identify additional economic impacts that could be added to the TEE or WEB results. However, where market failures exist, the EALI analysis may capture the economic impacts that the TEE analysis may not have fully assessed.
The Scottish Government has Scotland-wide interests and responsibilities and is therefore interested in economic impacts at both the national and local level. The impacts of transport projects are generally highly pervasive and not limited to particular areas. Accordingly, in looking at impacts on the economy it is necessary to assess these at both the Scotland and the regional or sub-regional level.
It will be noted that there has been a change in emphasis from the previous system of EALI with the introduction of the Wider Economic Benefits (WEB) analysis. With the introduction of WEB, the approximation of the total economic impact of an option is more fully captured than with TEE alone. Additionally, the employment effects of an option are captured by the WB4 analysis. As such, there is potentially slightly less focus on the EALI section than may have been the case before the inclusion of WEB.
This issue is currently under review; however, the view of Transport Scotland is that EALI analysis remains important as a tool for analysing the distributional impacts of transport, but that the resources committed to it may be reduced with the incorporation of WEBs.
Net impacts at the Scotland level are likely to be important mainly in larger options that may have some impacts on the level, location or distribution of economic activity, or where there are "threshold" changes in accessibility (generalised cost) that will give rise to changes such as access to labour or to markets. However, the overall net impact is derived from a number of different gross impacts, some of which may be positive and others negative. As a result, even quite small options will have EALIs which are positive for specific areas or for particular groups, and negative for others.
Economic Activity and Location Impact analysis will only be necessary if it has been identified as important or significant within the Part 1 Appraisal. If so, practitioners should seek to identify and qualify impacts at the national and local level. As a practical approach to identifying and quantifying EALIs (at least in orders of magnitude), it is necessary to consider the nature and scale of these on a case by case basis. This is particularly relevant to small projects. The level of depth required in the analysis should be proportional to the size of the option or policy being appraised. However, any decision to omit an EALI analysis must be clearly justified.
