Economic Impact Assessments

How and When to Use This Tool:

This tool is first used during Phase 1, to ensure necessary aspects are incorporated in needs assessment. It can be considered alongside Designing for Impact. It can continue to be consulted in Phase 2 to ensure approaches for EIA are included in the Solution Implementation Impact and Monitoring Plan (SIIMP), as appropriate. This tool is most useful when consulted early in the solution co-development process, in order to gather baseline information and set expectations with stakeholders regarding future information collection needs. Experience and a difficult lesson already learned by EO scientists and practitioners is that it is nearly impossible to measure economic impacts and value of information if you only think to do so halfway through a project or near a project's end. While the tool can be reviewed, revisited and aspects incorporated into the solution design and delivery during Phase 3 and Phase 4 as appropriate, it can only be truly accurate and effective when integrated at the start of a project or solution.

EIA Implementation in Co-Development Phases:

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How to Consider the Value of EIA for EO Solutions:

EIAs serve a few primary purposes related to EO solution co-design, adoption, and use.

1. 1 Proving Value of Information (VOI): The value of a tool lies not only in the data product itself, but in the change in decision-making it enables, and even the longer term outcomes like health, wellbeing, tradeoffs, and prosperity. An EIA can quantify this change. It is essential to determine whether the tool can help prevent financial losses. This is what makes the EO industry a multi-billion dollar valuation.
2. 2 Attributing Downstream Success: When EO data or services are provided to partner organizations, these partners are recognized for successful implementation, such as saving lives or reducing costs. It is important to attribute these outcomes to the original service. Anecdotal evidence is compelling, but sometimes hard metrics tell an even bigger story.
3. 3 Optimizing Product Development: An EIA assists in identifying the most economically impactful investments. It supports the strategic prioritization of technical updates for the services or tools supported by the program. It is important to prioritize technical updates for tools that inform high-stakes decisions to ensure resources are allocated where they can be of most benefit.
4. 4 Demonstrating Operational Cost-Savings: An EIA can justify the costs to upgrade from inefficient workflows that rely on substandard information, to more timely and accurate services. By quantifying the costs and benefits of co-designing and adopting better tools, EIAs can more clearly communicate direct benefits for taxpayers.

Approaches to EIA: High Level EIA vs. In-Depth EIA

High Level Valuation:

This is a broader look at the value chain. The steps are aligned with Designing for Impact. It defines where the benefits are happening and who the beneficiaries are but will use estimates and anecdotal evidence rather than a deep statistical model. The goal of a higher level EIA is to establish a value proposition to justify if it's worth a deeper look. High level valuation aligns with proving VOI and attributing downstream success but at a very macro level.

Information Required:

• User Profiles: General sectors using the data and how [baseline information in phase 2]
• Testimonials: Qualitative feedback from partners [phase 3 or 4]
• Market Multipliers: Applying standard growth rates to user counts
• Reach: Downloads, API hits, number of users or number of partners/stakeholders involved [During the ongoing activity]

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General Methods and Data:

Example:

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In-Depth Analysis:

This is a detailed bottom-up approach that uses economic methods like value of information (VOI), randomized control trials (RCTs), or other micro- and macro-economic models tailored to the study. The goal for an in-depth EIA is attribution. This is the best way to prove that the use of the specific EO data/service or tool has led to real world impacts. An in-depth analysis provides micro level information on all the values of EO for solutions listed above.

Baseline Information Required:

There must be documentation of existing conditions or traditional methods before the tool or service is implemented:

• Counterfactual baseline: frequency of data collection, lead time, error rates, etc.
• Socio-economic baseline: inventory infrastructure, economic activity data, historical damage costs, resources
• Behavioral baseline: resource allocation, insurance benchmarks, standard operation procedures

Attribution Information Required:

• Direct performance metrics: number of direct accesses, data requests, trainings, session durations, the time difference in action from baseline to tool implementation
• Operational decision data: specific interventions, efficiency gains, preparation costs
• Economic outcome: avoided damage claims, resources conservation, improved production or services

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General Methods and Data:

For detailed information on methods:

1. Basu, R., Anderson, E., Cherrington, E., Deval, C., Guragai, S., Herndon, K., ... & Sirichaovanichkarn, E. (2025). Using economic methods to assess impacts of earth observation-based services: Why and how?. Environmental Impact Assessment Review, 115, 107975.
2. Basu, R., Anderson, E., Deval, C., Herndon, K., Markert, A., Pransky, L., ... & Sayeed, A. (2024). Serving economic prosperity: economic impact assessments (EIA) on Earth observation-based services and tools by SERVIR. arXiv preprint arXiv:2405.15672.

Example:

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