Breath of Clarity

Economic Impact Analysis

Original Post by Alex McAuliffe:

Great choice of article for this section. The examples given provide a perfect case of an environmental impact analysis in a real-world situation. The available information of energy consumption provides further detail on what is required to operate these plants and the effect each option has on the environment. By analyzing the wind farm locations by woodland, desert, and grasslands, it allows for a targeted approach when selecting locations for new wind farms by prioritizing, in terms of environmental impact, desert regions (Gao et al. 2019, 314).

However, when incorporating the other two branches of the triple bottom line, economic and social, other factors need to be accounted for in this example. As you mention in your assessment, off-shore wind energy holds high potential due to typically higher prevailing winds. Location, however, plays a major role in the benefit-cost analysis (Field and Field 2015, 123). By utilizing the Life Cycle Assessment approach, Nian et al (2019) analyzes the benefits to cost ratio to determine if off-shore wind farm development is feasibly beneficial in Southeast Asia. This area typically has sub-optimal prevailing winds for wind energy production, leading to a low benefit – high cost situation. The study does however acknowledge the benefits of avoided carbon emissions from energy consumption taken away from fossil fuels in their analysis (Nian et al 2019).

To address question 1.

A regulatory impact analysis (RIA) of a proposed new regulation to control mobile-source emissions by requiring a certain percentage of electric car sales in the region would have many economic impacts from both a benefit and cost perspective.

(a) The economic impact analysis of limiting gasoline powered cars to a certain percentage in the area could have a range of impacts on the local or regional economy. Car dealerships whose primary product is gasoline powered vehicles would likely lose sales in the area and vice versa for electric powered vehicle sales. There would also most likely be a reduced demand for gasoline in the region, causing the price of gas to go down. If more consumers are purchasing electric vehicles, their home electricity bills will likely go up to pay for charging of these vehicles, putting more demand on the electric grid.

(b) A cost-effectiveness analysis of this scenario would involve determining what the most appropriate percentage of electric cars required be set at. This could be measured by reviewing regional GDP per percentage of electric cars required (or even Green GDP in this case if we include Environmental Impact Analysis) (Field and Field, 2015, 123). This would obviously be an extensive calculation to determine the total economic benefit with each marginal percentage increase or decrease.

(c) The benefit-cost analysis of this scenario would incorporate each component of the triple bottom line in the equation, usually aspects that are considered unmarked outputs (Field and Field 2015, 123). This perspective would have to review aspects such as carbon emissions avoided from reduced gasoline vehicle usage. This could also include unexpected results of these policies as well, for example, an increase in renewable energy production to power the electric vehicles.


Field, Barry C. and Martha K. Field. 2015. Environmental Economics: An Introduction. 7th ed. New York: McGraw Hill/Irwin.

Gao, Cheng-kang, Hong-ming Naa, Kai-hui Song, Noel Dyer, Fan Tiana, Qing-jiang Xua, and Yu-hong Xing. 2019. “Environmental Impact Analysis of Power Generation From Biomass and Wind Farms in Different Locations.” Renewable and Sustainable Energy Reviews 102 (2019): 307–317.

Nian, Victor, Yang Liu, and Sheng Zhong. 2019. “Life Cycle Cost-Benefit Analysis of Offshore Wind Energy under the Climatic Conditions in Southeast Asia – Setting the Bottom-Line for Deployment.” Applied Energy 233–234 (January): 1003–14. to an external site..

My Post:

Hey Alex,

I am interested in understanding the policy proposal via economic impact analysis.

While increasing the amount of sold electric vehicles has its own economic impacts including skyrocketing home electricity bills, the policy also involves mitigating the economic impact of oil price shocks. In the case of no electric vehicles, the impact of oil price shocks is significant because a sharp increase in price does not necessarily lead to a decrease in demand. Regardless of price, people still need transportation to places with essential goods and services. Without electric vehicles, household money is allocated towards fuel instead of being poured into any alternative goods and services. However, a requirement that a certain percentage of all new cars in the region be electric mitigates the economic impact of oil price spikes which reduces the public’s dependency on oil.

Evaluating the impact of clean energy vehicle popularization on employment falls under the umbrella of economic impact analysis. A study in Japan concluded, since the automotive industry employs roughly 9% of all manufacturing workers in the entire country, changes in the types of vehicles will have a significant effect on employment (Osawa and Nakano 2016). The researchers then analyzed the impact of battery industry competitiveness on Japan’s auto industry employment. Overall, economic impact analysis reveals a new technological breakthrough impacts various parts of a country’s economy.


Osawa, Jun and Masaru Nakano. 2016. “The Impact of the Popularization of Clean Energy Vehicles on Employment”. Procedia CIRP 47 (2016) 478 – 482.