Practices for Evaluating the Economic Impacts and Benefits of Transit (2017)

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63 Glossary of Terms and abbreviaTions (This glossary draws from NCHRP Report 786, with some additional terms added) Agglomeration economies: business productivity benefits gained from the ability of firms to tap a larger labor market, customer market, or supplier market, or increase interaction with other firms—all enabled by transportation network improvements. The benefits may be associated with “enhanced matching” or “economies of scale” (owing to broader market access), “knowledge spill- overs” (resulting from interaction among firms and workers in clusters), or “technology adoption” (owing to integration of supply chain functions). BCA: Benefit–cost analysis Benefit–cost analysis (term used in North America): a process for analyzing the efficiency of invest- ment by expressing benefits and costs in money terms, calculating the net present value of those benefit and cost streams, and comparing them. Benefits are calculated as the net of their opportu- nity costs. Outside of North America, this is more commonly referred to as “cost–benefit analysis.” CBA: Cost–benefit analysis Cost–benefit analysis (term used outside of North America): benefit–cost analysis. DOT: Department of transportation (government agency) Economic benefit: social welfare value of market ($) and non-market (non-$) benefits associated with a project, event, policy, or industry change. The non-market benefits are assigned a value based on revealed or stated preference methods. Total economic benefit may include user benefits as well as externality benefits. Economic contribution: the gross flow of dollars associated with an industry or service, including spending that it generates and its multiplier effects. Economic impact: the change in economic activity (jobs, income, investment, or value added) resulting from a project, event, policy, or industry change. Economic Impact Analysis (EIA): a process for analyzing the effects of a project (or policy) on the growth of jobs, income, investment, or value added in a given area. Economies of scale: advantages of reduced unit cost that occur when a business increases the scale of its operation, and can spread fixed costs over more units of output. Externality benefit: indirect effects that benefit third parties (i.e., other than the provider and user of the transportation infrastructure or service). This can include wider economic benefits, as well as environmental and community social benefits. GDP: Gross Domestic Product Gross Domestic Product: the amount of business value that is generated in a given nation, state, or region; this is almost the same as Gross Value Added, but it adds further adjustments for taxes paid (+) and subsidies received (-) by business units. Gross Regional Product: GDP value for a state or region within a nation. GRP: Gross Regional Product

64 Input-output model: an economic accounting framework that tracks the flow of spending between industries, households, and institutions and generates measures of the multiplier effect for specific sectors of the economy in specified areas. I-O model: input-output model MPO: metropolitan planning organization Multiplier effect: the effect by which spending for a product or service generates leads to addi- tional rounds of spending for suppliers (indirect effects) and re-spending of worker income (induced effects). Output: the value of business production; it also represents gross business sales revenues. Productivity: a ratio that reflects the level of output generated from a given amount of input. It is a measure of business efficiency. Social benefit: value of net welfare gains for society; identical to the previously defined “economic benefit.” Societal benefit: social benefit Traveler benefit: benefit to travelers, including driver, passenger and vehicle time, cost, and safety benefits. User benefit: a measure of the benefits to users of a facility or system, often equated with traveler benefits, although it also includes benefits for freight shippers who are seen as additional users of the transportation system. Value added: a measure of business output (revenue from product sales) minus the cost of non-labor inputs used to produce that product. It is similar to GDP. Wider economic benefit: additional economic benefits related to agglomeration economies; it may also encompass scale economies and business reorganization benefits that also increase productivity.