NRPA Measuring Impact of Park & Rec

Measuring the Economic Impact of Park and Recreation Services www.NRPA.org National Recreation and Park Association © 2010 All Rights Reserved 44 community if most of the attractions associated with it come from outside the community. Consider the following scenarios: • A park and recreation department organizes an event for which the central attraction is a carnival and most visitors are locals. The carnival owners and workers may spend some of their revenues on local supplies and labor, but the leakage of money out of the local economy will likely be sig- nificant as the carnival moves on. Thus, the carnival draws money from community residents that would otherwise have been spent locally and spends it elsewhere. (Tyrrell and Johnston, 2001) • Assume a major local event is held on a particular Sunday and as a result the individual chooses to purchase brunch from event vendors—money that subsequently leaves the region. The expen- diture would have occurred regardless of the event. However, as a direct result of the event, an expenditure that would typically be directed to local firms is now directed to firms located out of the region. Accordingly, this represents sales revenues lost to the local region as a direct result of the event. (Power, 1988) Exhibit 4-5 reports the income multiplier coefficients used to estimate the economic impact of special events held in three cities: College Station, Texas (population 90,000); Des Moines, Iowa (200,000); and San Antonio, Texas (936,000). This exhibit illustrates two points. First, as the size of the cities increase, the multipliers become larger. Larger communities are more likely to have greater interdependencies among businesses so there is less leakage out of their economies. Second, the coefficients are different for each category of expenditure that is listed. For example, in College Station, a $1 expenditure by visitors in retail shopping yielded 63 cents in personal income to resi- dents, while $1 spent on commercial transportation yielded 38 cents in personal income. This is because most expenditures on commercial transportation (primarily airfares and to a lesser extent rental cars) are paid directly to companies based outside the community whose operating personnel and suppliers also are primarily from outside the community. In contrast, most personnel and service suppliers to retail stores come from inside the city, so they are more extensively linked to other elements of the local economy 1 . Exhibit 4-5 Personal Income Multiplier Coefficients in Three Cities of Different Sizes College Station (90,000) Des Moines (200,000) San Antonio (936,000) Restaurants, Bars, Nightclubs .55 .78 1.26 Admission Fees .62 .81 1.07 Groceries .52 .71 1.08 Retail Shopping .63 .94 1.12 Lodging Expenses .51 .71 1.05 Automobile Gas and Oil .44 .62 .69 Airfares, Rental Cars, Taxis .38 .49 .81 1 N.B. it should not be assumed that the industry sectors with the highest multiplier coefficients contribute most to the local economy, because high volume of expenditures in a sector may compensate for a relatively low multiplier. Sectors with high multiplier values in which there are low levels of spending may not be as valuable as sectors with low multiplier values that have high levels of spending.