Regional catalytic economic impacts and noise-damage costs of aviation growth

Abstract

There is growing recognition that transportation or infrastructure improvements can have longer-term catalytic impacts economic productivity, which are in addition to the direct, indirect, or induced household spending impacts. These economic catalytic effects are fundamentally different from traditional measures of the impacts from spending in the air transport sector. In contrast to the generally positive regional economic benefits of aviation, however, aircraft noise has emerged as a major negative externality of the air transportation system and continues to be a controversial issue in communities around airports. In this analysis, I develop a methodology to highlight interrelationships between airport flight operations and noise impacts on surrounding communities, and between air transport industry and regional economic growth. I calculate the noise-damage costs under different airport growth scenarios at London Heathrow and the East Midlands airport, and then apply an econometric input-output model to estimate the regional catalytic economic impacts associated with the growth of the air transport industry under these same scenarios. I find that the local airport noise damages are very small compared to the regional economic impacts from aviation. Furthermore, I find that the wider catalytic economic impacts due to increased productivity and accessibility are greater than the economic impacts from aviation sector itself at the regional level.