In line with economic assessment guidelines issued by the State and Commonwealth Treasury departments, the unique value created by the markets, individually and collectively, would be the $ value of foregone benefits across the three categories above if these assets ceased operating. This identifies the extra value the markets create beyond the utility users, host community members, and the wider Victorian community would otherwise enjoy without the markets. This is known as the additionality test.

One point to note in this categorisation of benefits is the distinction between economic ‘benefits’ and economic ‘impacts’. The income and employment multipliers supported by the markets through their supply chains and household consumption linkages represent an impact, but only part may be credited as an economic benefit under the additionality test. For example, if the markets ceased operations, local or state communities would not lose all the spending and supply chains that currently occur through them. In part, this spending would shift to other retailers, such as supermarkets, so that at the aggregate (State) level, jobs directly and indirectly supported by this trade would be substantially retained. The substantive economic impacts in this scenario would be the loss of additional spending from induced tourism, which would translate into net losses in economic contribution and jobs in Victoria. Redirecting spending to other outlets would also affect supply chains and the geography of employment, with substantive effects such as foregone skills development and reduced local economic resilience.

Unpacking market benefits

The more commonly mentioned benefits generated by municipal markets cover:

• Utility/value for market shoppers
• Food security
• Culture & place quality
• Precinct vitality
• Business formation
• Social capital and cohesion
• Skills formation
• Local jobs
• Tourism.

SGS’s economic analyses of municipal markets have identified additional, less regularly cited, benefits. These include:

• Existence value for non-users: some municipal markets are acknowledged cultural institutions, not dissimilar to museums and art galleries. As with cultural institutions, some people value, and would be willing to pay for, the markets' continuation even if they do not use them. This is a substantive economic effect, often recognised in Treasury-sanctioned business cases for cultural infrastructure.
• Heritage: some municipal markets feature heritage buildings and infrastructure which have a value separate from their function as retailers of fresh food and other merchandise.
• Avoided leakages of domestic spending: in the absence of markets, at least some of the spending currently flowing through them would be lost to ‘imports’ in the sense that shopping requirements would be partially fulfilled through online outlets. While this matters less for fresh food, it could be significant for general merchandise sales.
• Health impacts: SGS’s work has shown that, compared with other retail providers, users of municipal markets are more likely to use active transport, walking and cycling, to fulfil their shopping needs. To the extent that markets support more active transport than a default base case, they would generate quantifiable, monetizable health benefits. The same may also be true if municipal markets support healthier diets within catchment populations compared to the default scenario, where food is distributed through more corporate outlets.

Assessing the economic contribution of retail markets

Measuring and explaining the social, economic and community impact of public retail markets requires a multi-faceted approach.

While economic multiplier effects are not necessarily substantive economic benefits, as explained above, policymakers are always interested in markets' impacts on generating sales and employment, both directly and indirectly. Policymakers can assess these impacts by simulating the supply chains of businesses operating within markets.

Assessing the substantive economic benefits of markets, or their total contribution to welfare or wellbeing, requires different analytical framing and methods.

Modelling multiplier effects

Sales generated by retail markets support on-site businesses and jobs, as well as employment and profits in the supply chain. They also have a downstream effect: traders and their employees spend a portion of their incomes on various goods and services, generating more jobs (and profits) in the economy.

Input Output analysis (I/O) can model the direct, indirect, and induced economic contributions of markets. I/O tracks sales between sectors in the economy and between sectors and households. The Australian Bureau of Statistics produces national tables which record these inter-sectoral transactions. Input-output (I/O) tables for identified regions, such as the host municipalities of markets, the metropolitan area as a whole, or the State as a whole, can be built using a statistical method called RAS. This technique factors the national I/O accounts down into smaller geographies.

Generally, these synthesised I/O tables are fit for purpose when headline/end-state estimates of economic impacts are required. They can be applied to estimate the output (sales), income (profits + wages and salaries) and employment (annual FTE equivalents) directly generated by markets, plus indirect increases in output, income and jobs generated through suppliers, plus induced increases generated through household spending associated with incomes earned by traders and their suppliers.

The same analysis could be undertaken using more sophisticated Computable General Equilibrium (CGE) modelling. CGE models are based on input-output relationships but use comprehensive, empirically derived regression equations to account for supply lags and capacity constraints.

It is questionable whether the additional investment required to apply CGE modelling is warranted when modelling the impacts on individual markets. Indeed, this form of modelling may not be practical because turnover amounts are relatively small compared with the size of the State economy.

Monetisation of substantive benefits for users, the host community and the wider State community

A range of methods can quantify and monetise the substantive benefits markets generate. A nominal list of potential approaches is provided in the following table.

Potential monetisation methods