Households will, in turn, increase spending at local businesses.
The Direct Economic Impact is a measure of the total amount of additional expenditure within a defined geographical area, which can be directly attributed to staging an event. Read More In some countries, smaller scale commercial activities can suffer severe impacts following oil spills. Pindyck argues that these estimates of the economic impact of climate change have no foundation in economic theory.
However, more long term and damaging economic impacts can occur when public perception of prolonged and wide-scale pollution remains long after the oil has gone. Impact of Uncertainty The uncertainty about the estimates of the impact of climate change on total economic welfare is rather large.
An economic impact analysis only covers specific types of economic activity. Some social impacts that affect a region's quality of lifesuch as safety and pollution, may be analyzed as part of a social impact assessmentbut not an economic impact analysis, even if the economic value of those factors could be quantified.