Appendix B: Input-output methodology Input-output modelling: overview The fundamental philosophy behind economic impact analysis is that spending on goods and services has attendant impacts throughout the economy. For instance, construction expenditures will generate demand for the inputs to this process (such as tools and labour) that in turn generates additional demand that extends beyond the initial spending. This analysis permits the estimation of this cascading effect by using an input-output model of the Canadian economy. Inputs used for the economic footprint assessment are provided by the Westinghouse Electric Company’s estimates of capital expenditures, operating expenditures and revenues associated with the manufacturing, engineering and installation and operations of the AP1000 Project in Ontario. The input-output model used for the purpose of this report estimates the relationship between economic activity for a given good or service and the resulting impacts throughout the economy (including demand for other goods and services and tax revenues). For the purpose of this report, economic impacts were estimated for the following measures of economic activity: • GDP – the value added to the economy, or the output valued at basic prices less intermediate consumption valued at purchasers’ prices. • Employment – the number of FTE jobs created or supported. • Labour income – the amount earned by the employment expected to be generated. • Government revenue – the amount of revenue collected by the provincial, local and federal government. It includes personal and corporate income taxes collected on a provincial and territorial level, as well as other direct and indirect taxes. The economic footprint was estimated at the direct, indirect and induced levels: • Direct impacts are those that result directly from the company’s expenditures on labour and capital as well as gross operating profits. • Indirect impacts arise from the activities of the firms providing inputs to the company’s suppliers (in other words, the suppliers of its suppliers). • Induced impacts are the result of consumer spending by employees of the businesses stimulated by direct and indirect expenditures. 29