NRPA Measuring Impact of Park & Rec

47 Measuring the Economic Impact of Park and Recreation Services www.NRPA.org National Recreation and Park Association © 2010 All Rights Reserved “guesstimates” had no empirical basis and often were unreasonably high because they were promulgated by advocates of the facility or event. In the past decade, this situation has changed. There are now several models available that can pro- duce local input-output relationships. The most widely used of these are RIMS II, REMI, and IMPLAN. Of these, IMPLAN is probably the most widely used at the community level. There are two components to the IMPLAN system, the software and the databases. The software performs the calculations and the databases, updated annually, provide all the information needed to cre- ate the IMPLAN input-output models. They provide information from 440 different industrial sectors, closely following the North American Industry Classification System and accounting conventions used by the U.S. Bureau of Economic Analysis. The databases incorporate comprehensive data for the entire United States. They are available in stan- dard form at the county, state, and national level and can also be customized and made available at the ZIP-code level. An input-output model can be defined for a section of a city, a single city, a single county, several counties, a state, a group of states, or the entire United States. However, the use of ZIP codes to define a study area smaller than a county is likely to lead to some overstatement of the induced effects because it is derived by a proportional reduction of a larger county database. This assumes that employ- ees live within the ZIP code area in the same proportions as in the larger database. The smaller the area, the less likely this is true, which causes the induced effects to be overstated leading most economists to advise against defining local areas below the county level. To run a local economic analysis, both the statewide and local county input-output models and data- bases are needed. The current cost of purchasing these (they are typically under $1,000) can be found at www.IMPLAN.com. An individual trained in the use of IMPLAN can produce the economic impact mea- sures in a few hours once the expenditure data have been entered into the model. An Illustration of the Implications of Abusing the Fundamental Principles of Economic Impact Analysis and Multipliers The magnitude of distortion that occurs when the principles of economic impact analysis and mul- tipliers are abused was vividly illustrated to the author when he reported to a city’s park and recreation board the results of an economic impact study of a festival incorporating more than 60 events during a three-week period in a large city. This study estimated the economic impact on residents’ incomes to be approximately $16 million. The data that were reported are shown in Exhibit 4-6 , p. 48, (Crompton and McKay, 1994). At the conclusion of the presentation, some board members quickly challenged the results arguing that they were much too low. They observed that two weeks previously, the city council had heard a similar presentation from the convention and visitors bureau relating to a professional rodeo event the city hosted annually. The council members were informed that the economic impact of the three-day professional rodeo event was almost $30 million. The conundrum confronting the park and recreation board was posed in the following terms: How can we possibly accept that this festival lasting for 3 weeks and embracing more than 60 events had a smaller economic impact than a 3-day rodeo? The city council provides a substantially larger budget to the park and recreation department to stage the festival than they allocate to the convention and visitors bureau to host the profes- sional rodeo event. When they compare the festival data, which have been presented to us, with those from the rodeo, there is a real possibility that the festival budget will be cut, because the festival costs much more to stage and its economic impact on the city is barely half that of the rodeo. (Crompton and McKay, 1994)