Economic Impact Concepts

An economic impact analysis estimates the

changes in economic activity

within a region

resulting from some action

Several measures of the changes in economic activity can be generated. The most widely used are changes in sales (or spending), changes in regional income, and changes in employment. The spending of visitors within the local area becomes sales or receipts for local businesses or other organizations selling products and services to visitors. Income is the sum of wage and salaries accruing to workers in these businesses and proprietor's income and profits. Employment is the number of jobs supported by the given level of sales.  Jobs are generally not reported as full time equivalents, as they include part time and seasonal jobs. Income or value added (includes income and indirect business taxes) are the preferred measures of the contribution of recreation and tourism to a region's economy.

A region must be defined to identify what spending and economic activity to include. The region of interest may be a local area, a multi-county region, one or more states, or the entire country.  When assessing local economic impacts, we generally define the local region around recreation/tourism sites to be all counties within a given radius of the destination, usually a 30-60 mile radius. Only spending that takes place within this local area is included as stimulating the changes in economic activity. Measures of impacts are then for businesses and households within this local region. The size of the region influences both the amount of spending captured and the multiplier effects.