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Regional Economics Module

The purpose of the Regional Economics Module is to quantify the economic effect of an airport on its surrounding region, both in terms of positive impacts (e.g. employment) and negative ones (e.g. noise and local air quality). Rather than running a full economic simulation of each local area (which has the potential to be data intensive and computationally costly), the Regional Economics Module is to use the results of an extensive literature survey to provide a rigorous but relatively concise description of the local impact of airports in different regions of the world.

In particular, it requires the Demand Module’s estimates for travel from the airport in question. The amount of travel affects the levels of direct, indirect and induced benefits arising from the presence of the airport. This module also takes as input noise and local air quality contours from the Local Air Quality & Noise Module, which provide a measure of negative impacts on the local economy. For example, excessive aircraft noise may lower house prices near the airport.

The Regional Economics Module was only recently included in the AIM model, once extra funding from the UK OMEGA consortium became available. Jointly with the U.S. PARTNER consortium lead by the MIT Department of Aeronautics and Astronautics, we will carefully analyze the existing literature on the environmental costs of air travel.  Using sound literature-based values of the various environmental costs, the Regional Economics Module will translate the levels of noise and local air pollution into economic costs. A separate study will examine the existing literature with regard to the direct, indirect, and induced economic benefits of air travel. Adding up all positive and negative economic impacts lead to an aggregate estimate of the aviation sector’s economic impact.  Feasible approaches are being investigated for integrating the economic benefits in the GDP projections (which already include a measure of aviation’s total economic effect) used as input to the Demand Module.

The Regional Economics Module allows imposing several policy measures. These include:

  • Local measures which directly affect airport-related employment (e.g. tax incentives for companies to move to an area)
  • Local measures which directly affect air transport demand and infrastructure, (e.g. those that encourage new services (such as from a low cost carrier) or airport construction)