A spatial weights matrix quantifies the spatial relationships that exist among the features in your dataset. Many tools in the Spatial Statistics toolbox evaluate each feature within the context of its neighboring features. The spatial weights matrix file defines those neighbor spatial relationships. (For more information about spatial weights and spatial weights matrix files, see Spatial weights.)
Typically, spatial relationships among a set of features are defined using Euclidean distance measurements and contiguity, fixed, or inverse distance weighting schemes (see Modeling spatial relationships). However, for many applications, including retail analysis, accessibility to services, emergency response, evacuation planning, and traffic incident analyses, defining spatial relationships in terms of real-world travel networks (roads, railways, footpaths, for example) is more appropriate. The Generate Network Spatial Weights tool allows you to model and store spatial relationships based on time or distance between point features in the case where travel is restricted to a network dataset. This tool requires a license for the ArcGIS Network Analyst extension.
You provide a point feature class representing both feature origins and feature destinations. You also provide an existing network dataset (see Designing a network dataset or use one of the ready-to-use network datasets that come with Street Map Premium for ArcGIS). The Generate Network Spatial Weights tool locates each point on the network and quantifies, in distance or time, the proximity between each and every other feature. The resultant proximity solution for any two features may optionally consider barriers and/or restrictions (road closures, for example). These proximity values are utilized in the mathematics of several spatial statistics tools including Spatial Autocorrelation (Global Moran's I), Hot Spot Analysis (Getis-Ord Gi*), and Cluster and Outlier Analysis (Anselin Local Moran's I).
The proximity values within the spatial weights matrix file are stored in little endian binary format using sparse matrix techniques to minimize use of disk space, computer memory, and the number of required calculations.
Many organizations maintain their own street network datasets that you may already have access to. As an alternative, Street Map Premium for ArcGIS includes prebuilt network datasets in SDC format that cover North America, Latin America, Europe, the Middle East Africa, Japan, Australia and New Zealand. These network datasets can be used directly by this tool.
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Getis, A., and Aldstadt, J. (2004). "Constructing the Spatial Weights Matrix Using a Local Statistic." Geographical Analysis 36(2):90–104.
Haining, R. (2003). Spatial Data Analysis: Theory and Practice. Cambridge, UK: Cambridge University Press.
Price, Mike. (Fall 2009). "It's all about streets". ArcUser Online. ESRI.