What is a Downstream?
Downstream refers to the benefits (or costs) that will ultimately result from decisions made today.
How Does a Downstream Work?
In finance, a series of investments might be made with the anticipation that at a point in time in the future these efforts will yield a series of returns. These returns occur after the initial investments. As a result, they are referred to as downstream benefits. Similarly, investments can have downstream 'costs' as well. The expectation is that the downstream benefits will outweigh the downstream costs.
At the same time, because the future is hard to predict, downstream effects are often unanticipated, setting off unintended costs and consequences.
Why Does a Downstream Matter?
It is important to consider the 'downstream' effects of an investment decision since it will impact ones future economic performance.