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V IMPACT ANALYSIS:METHODOLOGY,APPLICATIONAND FINDINGS <br />Impact analysis is commonly used in regional policy making to predict the economic <br />changes that result from a project.These changes,or impacts,are experienced as <br />increases or decreases in the magnitude of selected economic variables. <br />Employment,output,income,value added,and taxablesales are the most often used <br />impact variables.Project impacts may be estimatedfor a local,regional,state,or <br />national economy. <br />One purpose of this study is to estimate the impacts of the horse park operations upon <br />the state,and more importantly,upon the immediate regional economy.This chapter <br />explainsthe methodsthat we used to estimatetotal regional impacts that result from <br />the initial direct effects of the project.First we describe the general types of economic <br />impacts.Then we briefly explain the specific modeling techniques. <br />Types of Economic Impact <br />There are three types of economic impacts,direct,indirect,and induced--each of which <br />captures one facet of change in regional economic activities. <br />Direct impacts <br />Direct impacts refer to the initial purchases within an economy that result from project <br />activ¡ties.Direct impacts of the horse park include expendituresstemming from <br />construction,operationsand maintenance,and from spending by event participants and <br />spectators.Examplesinclude purchases of concrete for construction,purchases of <br />bedding by the horse park,and expenditures for lodging by out-of-area participants. <br />Indirect (mpacts <br />33