Economic Impacts Economic Impact: the economy-wide effect on employment and incomes produced by a policy, event, or decision Fiscal Impact: the effect on tax revenues produced by a policy, event, or decision Source: BusinessDictionary.com
Economic Impacts We know (and will continue to track) some of what happened in the economy with the oil spill The research is estimating what would have happened without the oil spill The difference between what did happen and what would have happened is the economic impact
Economic Impacts Challenges How are the effects of the oil spill isolated from everything else going on in the economy? Katrina recovery Recession/recovery
Hospitality and Tourism Mississippi Visitors Casino Gamers are the largest market (about 40 %). ‘Soft adventurers’—bird watch, camp, fish, interest in nature/ wildlife. Comprise about 7 % of the visitors. Source: Mississippi Development Authority Tourism Division/TNS
Decoding the Trends: Anecdotal Evidence Ship Island ferry down 60% over a May weekend (“Oil Spill Hurting Miss. Gulf Coast Tourism” WAPT.com, May 10) A Biloxi charter boat captain said customers booked 26 trips with him in May 2008 and 26 in May 2009, but only 11 this May. He said his numbers for June were similar. (“Geography protects Mississippi from worst of the oil spill, but tourism still hobbled”, AP June 15 th )
BP has spent $350 million on cleanup, which has barely begun, and hired 13,800 people across the Gulf states to enlist in the effort. (“Shrimpers, fishermen, hotels feel oil spill's trickledown effect.”, USA Today, May 13) Of the 5,700 people contracted to work on the Mississippi response effort, about 4,700 are natives of the state. (“Employing Mississippians makes the difference”, Mississippi Gulf Response (BP), June 21 st ) Decoding the Trends: Anecdotal Evidence
Decoding the Trends Current/future survey work Sector specific Chain hotels vs. locally owned hotels Tourism attractions Seafood harvesters Seafood processors
Decoding the Trends Future survey work – looking forward National attitude surveys Seafood safety/desirability Tourism Soft adventurers (fishing, bird watching, etc.) may be less inclined to come to the Gulf Coast Did Gulf Coast tourism customers find other regions to visit?
Decoding the Trends Fisheries – looking forward Oysters/shrimp Mature oysters and shrimp are fairly resistant to toxic effects But, they can accumulate toxins making them a potential health hazard Eggs and larvae are more susceptible This leaves the possibility that the current years harvest will show little effect but there will be lower populations over the next 2-3 years
Decoding the Trends Fisheries – looking forward Finfish Mature finfish can swim away from the hazard This may cause a geographic shift in the harvest Evidence from previous oil spills suggests that the finfish abundance will return relatively quickly
Decoding the Trends Quasi-experimental matching Finding ‘control’ locations without oil and comparing trends Biloxi vs. Tunica gaming MS Gulf Coast vs. Myrtle Beach tourism MS Gulf Coast vs. Charleston fisheries
Modeling the Impacts Static (input-output) models Estimate the change in economic activity resulting from the change in final demand for a product/service (or group of products/services) Inter-industry transactions Household-industry transactions Multiplier effect Estimates the statewide impacts of a regional event IMPLAN, EMSI, RIMS II
Modeling the Impacts Dynamic models Builds upon input-output model allowing for changes in price levels, labor mobility, etc. Estimates the statewide impacts of a regional event In addition to changes in final demand, inputs to the model might include changes in prices, wage rates, imports, exports, etc. Projects impacts into the future REMI
Economic Effects of the Deepwater Horizon Oil Spill Discussion/Questions
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