Transcript Slide 1

Basics of Economic Impact Analysis
Prepared For:
Siena College Economics of Travel and Tourism Course
Prepared By:
1
Agenda
• About Camoin Associates
• Why do an economic impact analysis?
• Key terms
• How to do an economic impact study: step-by-step
• Other examples
• Discussion
2
2
Introduction to Camoin Associates
• Founded in 1999 by Robert Camoin
• Completed Work in 22 States and Counting
• Employ 10 Full-Time Staff
3
3
Start-to-Finish
Economic Development Solutions
• Economic Development Strategic Planning
• Market Analysis & Financial Feasibility
• Economic & Fiscal Impact Analysis
• Evaluation & Benchmarking Indicators
• ED Communication & Marketing Recommendations
• Workforce Development
• Stakeholder Engagement
4
4
What is Economic Impact Analysis?
• Examine effect of event on the economy of a
specified geography
• Measures change in jobs, sales, and earnings –
can be positive or negative
5
What’s the point?
Why do an economic impact study
anyway?
6
Why do an economic impact study?
• Compare proposed incentive packages and public outlays.
• Help sell a project to a community.
• Understand long-term impact on a community and help plan for a major
change (e.g. loss of a major employer).
• Fulfill statutory requirements to award incentives.
• Use as “mitigation” during an environmental review process.
• A version of economic impact studies can be used to identify economic
development opportunities by evaluating the economic base (i.e. which
industries drive your economy) and “missing” industries in your region.
7
Key terms
Direct Effect
Indirect Effect
Induced Effect
Total Impact: Jobs, Earnings, & Sales
Multipliers: Ratio between direct and total effects
8
KeyKey
terms
understand.
termsto
to understand.
Direct Effects
Jobs created as a result of a particular project or change in
circumstances.
Example: The gain of a major employer.
Tourism is a special case and could have two “direct”
effects.
Example: A new casino being built that brings in many
visitors.
1. The economic activity at the casino
2. All of the visitor spending on lodging, food,
transport, entertainment (other than casino), etc.
9
KeyKey
terms
understand.
termsto
to understand.
Indirect Effects
Business-to-business purchases that occur within the
geography causing additional impacts and rounds of
spending.
Example: New office occupant purchases
maintenance services to clean offices.
10
KeyKey
terms
understand.
termsto
to understand.
Induced Effects
Employees spending wages in the geography (e.g. some
employees live locally and purchase groceries), causing
additional impacts and rounds of spending.
Example: Some employees live locally and
purchases groceries from local businesses.
11
Key terms to understand.
Economic Impact
Total of direct, indirect and induced impacts.
Multipliers
This is the ratio between “direct” jobs and “total” jobs. A
ratio of 2.5 means one new direct job creates one and a
half additional jobs for a total of 2.5.
12
So what are we really measuring?
13
KeyKey
terms
understand.
termsto
to understand.
Change in Final Demand
“Exogenous Change” - Money is coming in from
somewhere outside of your community.
Usually occurs when:
• Community exports a good or service elsewhere
• Tourism or Retail: People bringing outside dollars into
your community - “visitor spending”
14
But…what if I’m going to visit the
community regardless of the project?
Can you count my spending?
15
KeyIt’s
terms
to
about
the
Key all
terms
tounderstand.
understand.
Net New!
Single biggest pitfall to impact studies is failing to
correctly calculate “net new” when thinking about
change in final demand.
“Net new” is the change in final demand once you
have eliminated and accounted for all other changes.
16
Net New: Importance of Geography
Walkway Over the Hudson
17
How to do an impact study
Case Study: Adirondack Rail Corridor
Rail vs. Trail
18
Step 1
Select Geography
• Typically a single or
multi-county
geography is used.
• Can also use MSAs
and even ZIP Codes
(not all models allow
this).
• Think about the
project’s logical
economic reach.
Franklin County and Essex County, NY
• Adirondacks – major tourism area
• Home to Lake Placid, Saranac Lake,
Tupper Lake
19
Step 2
Select & Build Your
Impact Model
• Choose what
software you will use.
Modeling Software
• RIMS II
• IMPLAN
• REMI
• EMSI
• Purchase data
specific to your
geography.
20
Step 3
Data Gathering &
Qualitative Analysis
• Discuss project with
stakeholders and project
sponsor to gather
information for basic
inputs to model –
customize the model
based on results.
Data needed
• Projected increase in train riders
• Estimated number of trail users
(hikers, cyclists, snowmobilers)
• Average visitor spending on food,
shopping, recreation, lodging,
transportation
Sources
• Ridership estimates from
comparable railroads
• Trail usage estimates for
comparable trails
• Travel spending studies
21
Step 4
How much new visitor spending would
occur as a result of the rail upgrade or trail
construction?
Estimate Direct Impacts
• Figure out how initial
economic output
levels will change in
the industry affected
in your economy.
• “Net New”
Key Assumptions
• Only non-local visitors are net new
• Half-day additional spending per new
visitor, on average
22
Step 5
Apply to Model
• Enter change in
economic output into
model to appropriate
industry sector or
sectors
• Run model
23
Step 6
Report Results or
Refine
• Report direct,
indirect/induced, and
total jobs, earnings,
and spending
24
Recent Tourism-Based Impact Studies
•
•
•
•
•
•
•
•
•
Nevele Casino & Resort
North Hampton (MGM Springfield Casino)
Erie County Fairgrounds & Raceway
Walkway Over the Hudson
Friends of Old 7 (7-Mile Bridge)
Nassau Coliseum: Islanders
Bangor Arena & Conference Center
Tug Hill ATV
Omega Institute
25
Questions?
?
Christa Franzi: [email protected]
Tom Dworetsky: [email protected]
26