Skip the NI Direct Bar
Skip navigation

Adjusting for Displacement

2.5.45Consideration should be given to displacement. This is the degree to which a promoted activity will be offset by reductions in activity elsewhere. It is important to assess this because appraisal is about identifying a proposal's net impact on NI. Displacement occurs when a grant-assisted business expansion takes business away from competitors in the same market. It also occurs where a service development in one region (e.g. of health, education, or transport services) will draw customers away from similar service provision in an adjacent region. As with other elements of appraisal, the primary focus should be upon displacement within NI. However, where there are likely to be significant displacement effects elsewhere in the UK, these should also be identified and appraised.
2.5.46Where displacement can be quantified in money terms, the cost/benefit streams should be adjusted to reflect the proposal's net impact. This is more likely to be the case for a business expansion than a service development. In any case, the nature and extent of anticipated displacement should be identified and reported fully in appraisal reports. Where significant potential displacement is foreseen, it may be appropriate to reconsider the nature or scale of the proposed service development or to refuse financial assistance. Fuller guidance on assessing displacement is given at 4.2.6 below

Read on to Multiplier Effects

Back to Topic Index