DCS advisors provide economic and market reports to our public and private sector clients across the cores sectors that we focus on, including infrastructure, energy & utilities, oil & gas and real estate. Economic and market reports are often required for underlying due diligence elements of our transaction advisory, capital fundraising, tender management, M&A and privatization and valuation services mandates. We also provide independent third-party economic and market reports, in projects or transactions where we have no other role.

Our economic and market reports provide macroeconomic and microeconomic forecasts and projections within local, national, regional or global economies or markets that may be relevant within our client's sector and market focus. Our underlying economic models develop forecasts of macroeconomic variables such as interest rates, inflation, currency exchange rates and commodity prices; and microeconomic variables such as consumer demand and price elasticities of demand, substitution, opportunity costs and related forecasts. Our underlying market models, draw on these to forecast overall consumer numbers in a client’s market of interest by identifying the market and its segments, forecasting the key demand drivers in each segment (including demographic, macroeconomic and other drivers), and – critically in an uncertain world – conducting sensitivity analyses around a baseline forecast.

Within each of our core sectors, the following are provides a more detailed description of some of the specific types of economic and market models that we develop within our sectoral focus areas.

Infrastructure. Within the infrastructure sector, we develop economic and market models related to infrastructure demand in the following segments:
- Surface Transportation. The “four-step” framework ((1) Trip Generation; (2) Distribution; (3) Modal Choice; (4) Route Assignment) is the most widely used approach for transportation demand forecasting. The TBM approach can be employed to forecast traffic volumes on or through (proposed) infrastructure including roadways, railways (including tramway, subways, and light rail), bridges, tunnels or ferries, or to forecast the demand for proposed routes using existing physical infrastructure. Depending on client needs and data availability DCS can develop forecasts for passenger, freight or mixed traffic volumes on new infrastructure, with or without already existing or potential competing modes of transportation, and over long or short distances. To address these needs the modelling is customized to incorporate the different generators or ‘drivers’ of passenger versus freight trips (e.g. demographics, economic activity, land-use), different sets of alternative modal choices on particular routes (e.g. road versus rail), etc. While the “four-step” approach has been the most common framework for transportation volume planning since its inception in the 1950s, there has been growing interest more recently in Activity Based Modelling (ABM) and in the application of GIS to transportation demand modelling. Survey approaches have also been employed – particularly perhaps in the context of determining alternative configurations for urban transit systems. Regardless of the forecasting approach chosen in consultation with clients, DCS will typically use traffic demand forecasts as inputs into our revenue models and our clients' capital plans for roadways, railways, parking, ferry terminals, multimodal facilities and port developments (trans-oceanic marine transport is an example of a mode for which a focus on the ‘Trip Generation’ and ‘Distribution’ steps of modeling may be more important than the discrete modeling of modal choice – since there are typically few economically viable alternatives to such transportation over many routes). We typically produce traffic demand forecasts as inputs into our revenue models for clients considering the development of new or the acquisition of existing transportation infrastructure in transactions involving toll/fee revenue and other demand-based revenue regimes.
- Airports. The airport demand modeling focus and approach taken by DCS will depend upon client requirements and data availability, but will typically involve the identification and quantification of the role played by drivers such as passenger enplanement volumes (if these are not themselves the focus of the modeling exercise) broken down by classification (origination & destination - "O&D" or connecting) and type (business and leisure); airport O&D service area passenger and air cargo O&D trip generation drivers; propensity to fly and to arrive at the airport by automobile, taxi, or other means; competing airports (distance, capacities, type, landing and gate fees and connectivity); competing modes; airline operations (connecting passengers and cargo volumes); fare, landing and gate fees and fuel prices; taxes; and price and tax elasticities of demand. We typically use airport demand forecasts as inputs into our revenue models for clients pursuing airport projects and transactions. We also use airport demand forecasts – and their associated ‘sensitivity analyses - as inputs into our clients' infrastructure capital plans for airports and associated facilities.
- Pipelines. Gas, oil and water pipelines generally operate at full capacity and therefore, demand models relate to the markets served by access points to the pipelines. In this context, demand forecasting relates to the amalgamation of all of these served markets for gas, oil or water. We cover gas and water demand forecasting within our energy & utilities focus below. We cover oil demand forecasting within the oil & gas focus below. We typically use pipeline commodity demand forecasts as inputs into our revenue models for clients pursuing pipeline projects or transactions. We also use pipeline commodity demand forecasts as inputs into our clients' infrastructure capital plans for pipelines and associated facilities. Sensitivity analyses form a key component of all DCS forecasts.
- Transmission and Distribution Networks. Electricity, gas, water and wastewater transmission, distribution and collection network demand models relate to markets served by grid connections. Therefore demand forecasting relates to the amalgamation of all of these served markets for electricity, gas, water and wastewater. We cover electricity, gas, water & wastewater demand forecasting within our energy & utilities focus below. We typically use transmission and distribution network commodity demand forecasts as inputs into our revenue models for clients pursuing transmission and distribution projects and transactions. We also use transmission and distribution network commodity demand forecasts as inputs into our clients' infrastructure capital plans for transmission and distribution network and associated facilities.
- Solid Waste. Models of the demand for solid waste management services typically rely on forecasts of the volumes and types of solid waste generated for disposal, or of the demand for recycled, reused and repurposed products and materials, compost and other solid waste byproducts (such as biogas and power generated from waste products). The development of forecasts of the demand for solid waste management services involves the identification and projection of key drivers including: demographic and economic growth; per capita consumption; per capita waste products; propensities for waste reduction; raw materials pricing for manufactured products competing with recycled/re-used/repurposed products; prices for biogas and electricity; refuse collection, electricity and fuel prices; and price elasticities of demand. We typically use solid waste demand forecasts as inputs into our revenue models for clients pursuing solid waste projects or transactions. We also use solid waste demand forecasts as inputs into our clients' infrastructure capital plans for solid waste facilities and associated facilities.

Energy & Utilities. Within the energy & utilities sector we develop economic and market models related to power, gas and water/wastewater demand in the following segments:
- Energy Markets. In the energy sector, we develop two types of models for our clients: energy demand models and energy market models:
  - Energy Demand Models. Energy demand models are used to forecast the demand for energy carriers such as electricity, heat and cooling energies and natural gas, within specific countries, regions or other service areas. Energy demand models are typically driven by factors including demographic and economic development projections; per capita and household energy consumption rates (which are correlated with GDP); industrial energy consumption intensities. If demand for a single energy type is the focus (e.g. the demand for electricity) then the availability, applicability and cost of substitute energies and fuels (electricity, gas, fuel oil, coal, biomass, etc.); energy substitution factors assume particular importance. Energy demand forecasts are used as inputs into our clients' energy market models and energy sector infrastructure capital plans. Furthermore, energy demand models are used to support feasibility studies of expansionary capital projects in the energy sector.
  - Energy Market Models. Energy market models are used to forecast key metrics such as energy prices, GHG and other pollutant emissions etc. in national or regional energy systems. They may address the markets for particular energy types – such as electricity or gas – or may consider all energy types in use within a jurisdiction. Forecasting exercises may focus on the short-term (where key elements of energy infrastructure are fixed) or on the medium- to long-term where investments in technologies (as well as advances in technology) may be anticipated. Insofar as energy types are constrained by – for example - long-term offtake agreements (such as power/gas/heat/cooling purchase agreements, contracts for differences "CfDs", or similar structures) or subsidy arrangements (such as emission and tax credits, "green" certificates, carbon pricing and other similar structures) this must be taken into account. Energy market modelling modelling is typically of interest as the underpinning of policy evaluation exercises (forecasts are produced under alternative policy/regulatory scenarios, and the consequences compared and evaluated), or to determine the feasibility of capital projects (including return of and return on invested capital) in projected future market scenarios (i.e. to provide forecasted inputs into our revenue models for clients pursuing energy sector projects or transactions). In the case of a regulated market environment, where revenue models from proposed energy sector capital projects serve as inputs into the market model, the "end user" tariff price projections are used to determine project feasibility (and affordability).
  - Support to Rate-Setting and Strike-Price Determination. Under a regulated market environment, energy demand models are developed from the "bottom-up" in accordance with the applicable regulatory regime (such as a Regulated Asset Base or "RAB" based regime). The processes of developing an appropriate, defensible tariff which will be subject to regulatory scrutiny is comparable to that of determining an appropriate ‘strike price’ to form the basis of a Contract for Difference or Power Purchase Agreement (PPA) – involving financial modeling, careful accounting for all costs (including CAPEX and OPEX) and a realistic and prudent allocation of risk between ratepayers and shareholders. The extensive experience of DCS in financial modeling leaves us well placed to assist in all aspects of rate-setting and strike-price determination including determination of appropriate (i.e. ‘risk-adjusted’) rates of return on equity, the development of spreadsheets to underpin the “rolling forward” of the asset base under RAB, etc. We offer this support to project developers seeking to reach agreement on PPA terms with counterparties and to asset owners or regulators seeking support during the ratemaking process.
Water & Wastewater Markets. In the water & wastewater sector, we develop water & wastewater demand models. Water & wastewater demand models are used to forecast water and wastewater demand within a specific market area. Water and wastewater demand models include the development of drivers including demographic and economic development; land use; long-term weather and climate change; water supply availability and cost (aquifer, pipeline/aqueduct, desalination, etc.); water consumption per capita and per household; industrial and agricultural development; industrial and agricultural water & wastewater demand; energy input prices; water & wastewater tariffs, fees & taxes; energy prices; water tariff, fee and tax elasticity of demand. We typically use water and wastewater demand forecasts as inputs into our revenue models for clients pursuing water and wastewater capital projects and transactions. We also use water & wastewater demand forecasts as inputs into our clients' infrastructure capital plans for water & wastewater capacity development and phasing planning.

Oil & Gas. Within the oil & gas sector we develop economic and market models related to oil & gas demand in the following segments:
- Oil Markets. Oil is a inherently global commodity and is therefore oil is subject to global supply and demand characteristics. We produce oil demand models for our clients based on global supply and demand of oil. Global oil demand is influenced by many factors. Historically, oil demand has been linked to economic growth (GDP growth), which suggests that highly industrialized countries consume high levels of oil per capita and industrializing/"developing" countries and regions will tend to show increasing per capita oil demand, in correlation to GDP growth. However, in global oil demand in the future is likely to depart from its historical correlation to economic growth. There are a variety of reasons for this. Firstly, global oil supplies are finite and many of the world's proven oil resources (which can be profitably extracted) are in production decline and it unlikely that sufficient new discoveries of economically recoverable oil resources will replace depleted resources. This is likely to result increasing global oil price volatility (which further complicates investment in new production). Secondly, as oil prices become increasingly volatile, in many consumer market segments in industrialized economies, there will likely be a sustained reduction in oil demand per capita. Reduced oil demand per capita is due mainly to energy efficiency, modification of consumer behavior and substitution of other energies for oil, such as electricity derived from non-oil fuels will increasingly be substituted for oil-based liquid fuels. Our global oil demand models integrate both the regional oil demand characteristics (consumption of oil by consumers and by oil-dependent industries) and the impact of global oil prices on regional oil demand elasticities. We use oil demand models for our revenue models related to oil & gas sector client in the upstream, midstream and downstream projects and transactions. Oil price forecasts are also utilized in many of our other sectors, such as transportation.
- Gas Markets. Natural gas is predominantly subject an interregional market, where gas production regions are interconnected with gas consumer markets via pipeline. However, there are two major nuances with respect to the gas market: 1) gas production is linked to oil production (natural gas is often derived from oil production areas) and therefore the supply of gas is linked to the price of oil; and, 2) there is an increasing global trade element of gas associated with the international transport of gas via liquified and compressed natural gas (LNG/CNG) facilities. Therefore, while gas markets are based upon the supply and demand within an interregional market area, gas prices are influenced by global demand and supply elements. In our gas demand models, we take into account local, regional and interregional demand factors as well as the price elasticity of gas demand influenced by global gas price elements. Our global gas demand models, which take into consideration the global gas supply and demand and related price projections serves as an input to regional gas demand models (used by regional gas utilities and stakeholders) as set forth above. The aggregation of the gas demand profiles of the regional gas markets served by a gas pipeline's access points serves as an input into a pipeline gas demand model or as an input into a gas producer's or LNG/CNG terminal's gas demand (in both cases, where a gas production field or a LNG/CNG terminal are connected to consumer markets via a gas pipeline and grid.

DCS advisors are able to provide economic and market reports on a stand-alone basis or as an element of the services we offer to a public and private sector clients who also have mandated us to provide transaction advisory services, capital fundraising services, M&A or privatization advisory services or strategic planning services. In most cases, as economic and market modeling and reporting will be only one element of a larger project delivery program, DCS will also be providing other complementary analytical services in relation to other transaction elements. Our preference is always to provide such comprehensive advisory services and coordinate all elements of the transaction, including economic and market modeling and reporting services on behalf of our clients.

Under any economic and market reporting mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand. This will always include leadership of DCS affiliate experts who possess decades of global transactional experience related to the specific sector and project type. In any economic and market reporting mandate, our preferred role is always to serve as the lead project/program manager. Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international technical, economics and other specialized advisors or other specialized advisors, as the specific transaction may require. To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors. First, DCS expert affiliates themselves possess many of required technical, economics and managerial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles. Second, economic and market reporting is a very complex undertaking, requiring the management and coordination of many simultaneous workstreams. DCS advisors are experts inproject and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.

Complementing our economic and market reporting services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific needs of our client.

DCS experts provide comprehensive economic and market reporting services in the following sectors that we specialize in. Please click on the below links to learn more about the sectors that we cover: