The modelling of DEC is based on calculations for each part of the infrastructure sector at the national and regional levels. These calculations consider:
■ the quantity of infrastructure services consumed (Q);
■ the price paid by users for those services (P); and
■ the input costs associated with the provision of the services (I).
The DEC of the infrastructure in question is then calculated using the formula DEC = Q x P - I, where:
■ Q = the quantity of infrastructure services consumed (essentially demand for the service);
■ P = the price paid for the service; and
■ I = the input cost of providing service, i.e. what is it costing to provide the infrastructure itself.
This approach is akin to calculations of the 'value-add' commonly used in economic analysis for other industries.
In sectors where the cost of providing the infrastructure service is not priced at all, or not fully priced, e.g. in much of the transport sector, and parts of the water sector, the calculations estimate government outlays associated with providing the infrastructure. This is treated as a proxy for the prices that might otherwise be paid if the services were being charged for in a more conventional manner.