Social and economic statement of impacts: guidance for applicants

6. Core themes and metrics

This section sets out the core economic and social impact themes that should be considered as part of the SESI. These themes represent the minimum that Scottish Ministers are likely to require in order to assess whether a proposed project delivers economic and social benefits in line with Scotland’s National Marine Plan.

As part of these core themes, a consideration should be made to the wider impacts on commercial fisheries, including the downstream functions and the fishing related communities located in the study area(s). While the direct impact of proposed projects on commercial fisheries is captured in EIA, the SESI should include an assessment of impacts on fishing related activities, businesses or communities. Indicators may include employment, economic activity, business viability and community reliance on fishing activity. Annex A contains suggested data sources.

The core themes that should be covered in the SESI are:

• economic
  • wider economic impacts
  • labour market impacts
  • access to public services
  • community resilience and deprivation (including housing)
  • tourism and recreation
• social
  • demographics
  • access to public services
  • community resilience and deprivation (including housing)
  • tourism and recreation
• additional themes

For each core theme, as set out in detail in section 4, applicants should follow this process:

• establish a clear baseline using the best available evidence
• describe a counterfactual covering a similar time scale as the proposed project, representing how conditions would be expected to evolve in the absence of the project
• assess the direction, scale and timing of impacts over the life cycle of the project, relative to the counterfactual
• identify which groups, communities and areas are affected and
• explain the level of confidence in the assessment, including key uncertainties biases, and assumptions

Where economic and social impacts are linked (for example, employment effects leading to demographic effects), applicants should clearly explain these pathways and attribute impacts to all the affected themes.

The core themes are not intended to be exhaustive. Depending on the nature of the project and the sensitivity of affected communities or sectors, applicants may include additional themes (see section 6.3), for instance, in areas in which the Gaelic language is identified as a key feature of community identity, it would be appropriate for an applicant to consider the potential impact of the project on the use and retention of the Gaelic language. Appropriate stakeholder mapping and engagement should assist in the identification of such additional considerations.

Illustrative data sources are provided in Annexes A and B, with further guidance listed in Annex C and a template for completing the SESI in Annex D.

For some sectors, impacts may be assessed across multiple assessment documents. In particular, direct economic and social impacts on commercial fishing from offshore wind farms, such as changes in revenues or costs and the associated social impacts, should be addressed within a Commercial Fisheries chapter of an Environmental Impact Assessment (EIA). While the SESI should include the wider economic and social impacts, the downstream functions, associated with changes to fishing activity, including impacts on seafood processing, supply chains, ports and fishing-dependent communities.

6.1 Economic core themes

In line with the National Marine Plan (GEN 2), Scottish Ministers encourage sustainable development and use which provides economic benefit to Scottish communities. Applicants should therefore assess the net economic impacts of the project, considering both positive and negative impacts, and how these compare to the counterfactual.

The economic themes focus on how the project affects economic activity, employment and income, both locally and across Scotland. Economic impacts should be assessed at an appropriate geographic scale, reflecting both local impacts (for example on coastal communities, ports, or specific sectors) and wider impacts for Scotland as a whole.

In estimating economic impacts, applicants should consider the established appraisal concepts set out in HM Treasury’s Green Book, including additionality, displacement, leakage and deadweight. These concepts are essential for understanding whether estimated impacts represent net benefits or the redistribution of activity between areas or sectors.

6.1.1 Wider economic impacts

Wider economic impacts capture the effects of a project beyond its immediate activities, including impacts on supply chains and the wider economy. These impacts are often described in terms of direct, indirect and induced effects.

The direct effects refer to the economic impact of a project, such as through those employed to work on the project directly. The indirect effects show the value of additional economic activity associated with a project, from businesses that supply goods and services throughout the project supply chain. The induced effects accrue when workers in the direct and indirect industries spend their resultant earnings on further goods and services.

Applicants should assess wider economic impacts by first describing the relevant economic baseline for the study area(s), then generating a counterfactual representing how conditions would be expected to evolve in the absence of the project and finally estimating how project activity is expected to change economic outcomes relative to the counterfactual.

Measures of interest may include Gross Value Added (GVA), output and/or income. Applicants should clearly explain the scope of impacts included, the time period of impacts being assessed, and the geographic level at which results are presented.

A range of methods may be used to estimate wider economic impacts. Common approaches include top-down methods, such as applying multipliers from Scottish Government input-output tables^[7], and bottom-up methods, such as the “local content method”^[8] using project-level expenditure data.

Applicants should explain why their chosen approach is appropriate and should interpret results with care, particularly where national or regional multipliers are used to infer local impacts. Potential leakage and displacement should be considered and assumptions clearly stated. The results should focus on the net contribution of the project to economic activity.

6.1.2 Labour market impacts

Labour market impacts relate to changes in employment opportunities arising from the project, including both direct employment and wider supply-chain effects. Employment impacts may occur within the local study area or Scotland as a whole and may impact local residents, in-commuters or the wider Scottish workforce.

Applicants should assess labour market impacts by describing baseline labour market conditions in the relevant study area(s), generating a counterfactual representing how conditions would be expected to evolve in the absence of the project, and then estimating how employment outcomes are expected to change relative to the counterfactual.

Relevant considerations may include the scale and duration of employment, the sectors and occupations affected and the extent to which local labour supply is likely to meet project demand. Applicants should also assess local education and skills levels, as these influence the ability of communities to access project related employment. Where skills mismatches exist, applicants should demonstrate adequate consideration of the potential for leakage (where jobs are filled by workers from outside the area) or displacement (where jobs are filled by workers who would have moved from similar jobs elsewhere). Conversely, where the project includes training, apprenticeships or upskilling initiatives, applicants should describe how these may increase local participation and enhance net employment benefits.

Employment impacts can be estimated using similar approaches to the wider economic impacts, including the use of multipliers and project level data. Where such methods are used, applicants should clearly explain their assumptions and ensure that results are interpreted carefully at different geographic scales.

Relevant indicators may include number of jobs created and supported (by phase), full-time equivalent (FTE), labour input/aggregate hours worked, job duration, occupational profiles, skills requirements, local employment rates, commuting patterns and earnings profiles.

6.2 Social impact core themes

In line with the National Marine Plan (GEN 3), Scottish Ministers encourage sustainable development and use which provides social benefits to Scottish communities. Applicants should therefore assess the net social impacts of the project, considering both positive and negative impacts and how these compare to the counterfactual.

The social themes focus on how the project may affect the population, livelihood, resilience and access to public services of communities in or near the study area(s). The social impacts may arise through economic pathways or independently of these.

As with economic themes, social impacts must be assessed relative to the baseline and counterfactual. Applicants should clearly explain causal pathways, identify who is affected and describe the scale and duration of impacts.

Where quantitative data are limited or unavailable, applicants may rely on qualitative analysis or expert judgement, provided these are clearly explained and supported by appropriate evidence. In some cases, especially where impacts are very high or highly localised, primary evidence and/or stakeholder engagement may be necessary. The methods toolkit in Annex C provides additional guidance on how to undertake primary research and community engagement.

6.2.1 Demographics

This theme considers whether the project will influence population size, structure, or composition in the study area(s).

Applicants should assess demographics by first establishing a demographic baseline using existing publicly available data, generate a counterfactual representing how conditions would be expected to evolve in the absence of the project and then assess whether project related changes are likely to alter the demographic characteristics compared with the counterfactual.

In constructing the demographic baseline, it is expected that the metrics of interest will include age structure, gender, migration patterns, household composition and income profiles. Annex B contains regularly used national and indicative local data sets.

Applicants should clearly explain any assumption underpinning the projected changes and their associated uncertainties.

6.2.2 Access to public services

This theme assesses whether the project will affect communities’ access to essential public services.

Applicants should assess access to public services by first establishing a baseline of service provision, capacity and accessibility within the study area(s), generate a counterfactual representing how conditions would be expected to evolve in the absence of the project and then assess whether project related population change or workforce inflows are likely to alter demand for services such as education, health care or public transport.

Indicators may include service capacity and utilisation (e.g. GP lists, school rolls), waiting times and locally specific indicators of service pressure.

Publicly available data, such as those listed in Annex B, should be used to form the baseline. Where quantitative data are unavailable, a qualitative assessment should be provided, drawing on local evidence and stakeholder engagement where appropriate.

6.2.3 Community resilience and deprivation (including housing)

This theme considers how the project may affect community resilience, particularly in areas of high socio-economic deprivation.

Applicants should assess this theme by first presenting a baseline using relevant indicators such as the Scottish Index of Multiple Deprivation (SIMD)^[9], generating a counterfactual representing how conditions would be expected to evolve in the absence of the project, and then assessing how the project may interact with existing vulnerabilities or assets within communities, relative to the counterfactual.

The assessment should include a consideration of how impacts are likely to reinforce or reduce inequalities and for which groups. Given the multi-faceted nature of deprivation, it may be necessary to rely on a well-evidenced, qualitative discussion of estimated impacts, if quantitative data do not exist.

Housing should also be assessed within this theme, reflecting its role in shaping community resilience. Applicants should assess whether a project may affect housing availability, affordability, or demand for temporary accommodation, particularly during construction phases, and explain how these effects differ from the counterfactual.

Indicators may include SIMD, housing tenure mix, affordability ratios, house prices and rent costs, housing supply and indicators of housing demand or temporary accommodation use.

6.2.4 Tourism and recreation

This theme captures the impact that a project may have on recreational or community use of marine and coastal spaces.

Applicants should assess this theme by first identifying the relevant user groups, such as sailing and yachting clubs, diving clubs and communities and other water-based sports clubs, through a stakeholder mapping exercise and describe the baseline use of the marine and coastal space. Applicants should then generate a counterfactual representing how conditions would be expected to evolve in the absence of the project. An assessment should then be undertaken on how the project activities may affect access, safety, or enjoyment relative to the counterfactual.

Given the commercial nature of the groups and users involved in tourism and recreation, there is a possibility of economic impacts that will arise as a result of a project. In this case, applicants should identify the mechanism through which the impacts are likely to occur (both positive and negative) and include anticipated economic impacts in the economic theme section of the SESI.

Secondary indicators such as participation rates or visitor numbers may be used where available. Given the locally specific and qualitative nature of recreational use, stakeholder engagement and community evidence are often necessary.

6.3 Additional themes

In addition to the core economic and social themes discussed above, applicants should consider whether additional themes should be assessed for the application being made for a proposed project. This may be where sector-specific activities are likely to experience change with a high-level of economic and social consequence or where stakeholder engagement identifies significant additional economic or social concerns.

Applicants should clearly describe the inclusion of any additional themes and follow the same process outlined within Section 6 - core themes and metrics.