Ray Spurr

Evaluating tourism's economic effects: new and old approaches

Abstract Techniques such as multiplier analysis and Input–Output analysis are still very commonly used to make estimates of the economic impact of changes in tourism expenditure. These techniques have serious limitations, and as a result, alternative techniques have been developed to address the problems. Computable General Equilibrium (CGE) models are now extensively used, especially in Australia, the UK, the US and Canada, to estimate economic impacts of a wide variety of changes and policies, across most sectors. CGE techniques have been used in the tourism context, but so far, not extensively. Economic evaluation in tourism thus fails to achieve best practice. The paper presents arguments in support of CGE modelling as the preferred technique in analysing the economic impacts of tourism, and discusses its potential to drive future research in this area that is more relevant to real world tourism destinations.

Estimating the Impacts of Special Events on an Economy

Special events are typically regarded as major generators of economic activity and jobs. Despite its continued use in event assessment, Input-Output (I-O) analysis has been rejected in other areas of economic impact evaluation in favor of more rigorous evaluation techniques that recognize resource constraints in the economy and interindustry effects of demand shocks. This article discusses traditional and alternative perspectives on event assessment and the assumptions on which each approach are based. Illustrative results are then provided from a study that contrasted the economic impacts from a selected event analyzed by use of a traditional I-O approach, with estimates provided through the use of a more comprehensive computable general equilibrium (CGE) model. Issues involved in the wider use of CGE models for event assessment are discussed together with the need for further development in event evaluation techniques.

Assessing the Economic Impacts of Events: A Computable General Equilibrium Approach

This article explores the use of computable general equilibrium (CGE) analysis in evaluating the economic impacts of special events. It is argued that CGE analysis is preferred to input-output (I-O) approaches for assessing other than local economic impacts. The article illustrates several differences between the alternative forms of analysis in event assessment. These include assessing the differential effects of events on the host region, other regions, and nationally and the ability to estimate interindustry effects. The article then shows how CGE models can be adapted to estimate the displacement effects of events, their fiscal impacts, intraregional effects, event subsidies, and multistate effects. The article also discusses how event impacts will vary depending on the extent of integration between regional and national resource markets and regional and national product and services markets and how labor markets are modeled.

Estimating the carbon footprint of Australian tourism

This paper explores the issues in estimating the greenhouse gas (GHG) emissions from the tourism industry and related activity in Australia. The scope of tourism consists of the economic activities defined as “tourism characteristic” and “tourism connected” as defined in the Australian Tourism Satellite Account (TSA). Two approaches are employed and contrasted – a “production approach” and an “expenditure approach”. Depending on the approach, tourism contributes between 3.9% and 5.3% of total industry GHG in Australia. The rationale for each approach is explained. The GHG emissions have been estimated for 2003–2004, the latest year for which detailed industry GHG emissions data are available in a form suitable for this type of analysis. Tourisms GHG emissions are compared with other industries in the Australian economy. The policy implications of the results are discussed. It should be possible to adopt a broadly similar method for any destination with TSA – enabling tourism stakeholders to play an informed role in assessing appropriate and effective climate change mitigation strategies for their destination.

Inter-Industry Effects of Tourism Growth: Implications for Destination Managers

The study of the economic contribution of tourism has recently undergone a ‘paradigm shift’ as a result of the use of Computable General Equilibrium (CGE) models in place of input–output models. In a CGE model which incorporates a realistic set of economy-wide constraints, the effects of tourism growth on destination income and employment cannot be anticipated a priori. The development and application of this superior technique have major implications for the way that tourism economists must now think about the economic impacts of tourism and for the policy advice they give to decision makers in both the public and private sectors. This paper explores three areas in which CGE modelling has relevance for the destination management organization: tourism planning, cooperative destination marketing, and assessment of destination competitiveness.

Tourism's Contribution to a State Economy: A Multi-Regional General Equilibrium Analysis

A multi-regional general equilibrium model is used to estimate the effects of increased tourism on the economy of New South Wales, Australias largest state. Simulations were undertaken of the effects of an increase in world, interstate and intrastate tourism on the economy of New South Wales focusing on the assumptions that generate maximum impacts. The paper concludes with a discussion of the implications for policy making from the perspective of New South Wales as a tourism destination.

Advancing Ecological Systems Theory in Lifestyle, Leisure, and Travel Research

Ecological systems theory and research focus on describingand explaining the thoughts and actions of individuals and groups within specific contexts of their lives. This article applies ecological systems theory to examine the contextual facilitating and constraining factors in the thoughts and actions of individuals regarding work, leisure, and travel alternatives. The article presents the results of a case research study of five Australian households with thought protocol data on these households’ lived experiences in work, leisure, and travel, and learning how they compare “ noncomparable” leisure expenditure options; the discussion leads to advancing macroecological and microecological systems theory in leisure travel behavior. The article includes suggestions for future research and implications for tourism marketing strategy.

Contrasting the Uses of TSAs and CGE Models: Measuring Tourism Yield and Productivity

Tourism satellite accounts (TSAs) and computable general equilibrium (CGE) models are used increasingly in tourism analysis, though they have distinctly different functions. These are illustrated by means of two examples. The first of these involves developing measures of profitability and productivity of the Australian tourism industry – the national TSA was used to provide the database for this exercise. The second involves measuring the yield of different types of tourists to the tourism industry and the economy as a whole. TSAs provide an appropriate technique to estimate economic yield at the industry level, while the CGE approach is used to estimate the yield to the economy as a whole.

Economic evaluation of special events.

Introduction Special events are now highly sought after in many countries, regions and cities, internationally. Special events may be defined as, ‘major one-time or recurring events of limited duration, developed primarily to enhance awareness, appeal and profitability of a tourism destination’ (Ritchie 1984: 2). Events are generally seen as increasing economic activity and creating new jobs resulting from the net increase in demand for goods and services they generate. Governments are often prepared to offer generous funding incentives to attract events, and to allocate large expenditure to upgrading the facilities needed for the events. Several states in Australia, for example, have now set up events corporations, to win events, to facilitate their operations and sometimes to subsidise them. In some cases, they are prepared to enter expensive bidding wars to secure footloose events. Thus, Victoria bid the Formula 1 Grand Prix away from South Australia, and also bid the Motor Cycle Grand Prix away from New South Wales, which had previously bid it away from Victoria. What can be an economic gain for one state can be an economic loss for another, and Australia as a whole need not gain because the event is held within its borders. Clearly, this competitive federalism, whereby states spend real resources in shifting events from one state to another, with little or no gain to the nation, can be very wasteful. Probably the main reason for this growing enthusiasm for events is their perceived economic benefits. It is recognised that there may be other perceived benefits from events, such as ‘putting a city on the map’, facilitating business networking and civic pride. These aspects are very difficult to test or evaluate. Granted this, however, much of the public justification of events funding centres around the perceived positive economic impacts of events. The theme of this chapter is that the economic impacts and net benefits of events, if rigorously assessed, are very much lower than those invariably claimed. The techniques of analysis widely used have inherent biases, which lead to overstatement of impacts on output and jobs. As a result there is likely to be misallocation of events funding, and excessive overall spending in promoting events. We begin by summarising the current state of event evaluation and promotion, and then examine what is wrong with it. Next, highlighting a recent study undertaken by the authors, we outline

Economic Impacts of a Carbon Tax on the Australian Tourism Industry

The article assesses the potential economic effects on the Australian tourism industry from the introduction of a carbon tax introduced July 1, 2012. The tax is projected to lead to changes in key macroeconomic variables, reducing growth in real GDP, real consumption, and employment. Most tourism industries in Australia will experience a small but significant contraction in output relative to projected baseline values over the period to 2020 in line with a reduction in growth for the economy as a whole. A slightly larger reduction in tourism employment, relative to that of other Australian industries, is projected for the period. The largest falls occur in the Accommodation; Air and water transport; and the Cafes, restaurants and food outlets industries. Since direction of impacts on the tourism industry can be expected to be similar for any pricing scheme to reduce carbon emissions, the analysis has implications for tourism policy globally.