Basics of Economic Impact Analysis Prepared By: 1 Prepared For: Siena College Economics of Travel and Tourism Course

2 Agenda About Camoin Associates Why do an economic impact analysis? Key terms How to do an economic impact study: step-by-step Other examples Discussion 2

3 Introduction to Camoin Associates Founded in 1999 by Robert Camoin Completed Work in 22 States and Counting Employ 10 Full-Time Staff 3

4 Start-to-Finish Economic Development Solutions Economic Development Strategic Planning Market Analysis & Financial Feasibility Economic & Fiscal Impact Analysis Evaluation & Benchmarking Indicators ED Communication & Marketing Recommendations Workforce Development Stakeholder Engagement 4

5 What is Economic Impact Analysis? Examine effect of event on the economy of a specified geography Measures change in jobs, sales, and earnings – can be positive or negative

6 What’s the point? Why do an economic impact study anyway?

Compare proposed incentive packages and public outlays. Help sell a project to a community. Understand long-term impact on a community and help plan for a major change (e.g. loss of a major employer). Fulfill statutory requirements to award incentives. Use as “mitigation” during an environmental review process. A version of economic impact studies can be used to identify economic development opportunities by evaluating the economic base (i.e. which industries drive your economy) and “missing” industries in your region. Why do an economic impact study? 7

8 Key terms Direct Effect Indirect EffectInduced Effect Total Impact: Jobs, Earnings, & Sales Multipliers: Ratio between direct and total effects

9 Key terms to understand. Jobs created as a result of a particular project or change in circumstances. Example: The gain of a major employer. Tourism is a special case and could have two “direct” effects. Example: A new casino being built that brings in many visitors. 1. The economic activity at the casino 2. All of the visitor spending on lodging, food, transport, entertainment (other than casino), etc. Direct Effects Key terms to understand.

Business-to-business purchases that occur within the geography causing additional impacts and rounds of spending. Example: New office occupant purchases maintenance services to clean offices. Indirect Effects Key terms to understand. 10 Key terms to understand.

Employees spending wages in the geography (e.g. some employees live locally and purchase groceries), causing additional impacts and rounds of spending. Example: Some employees live locally and purchases groceries from local businesses. Induced Effects Key terms to understand. 11 Key terms to understand.

Total of direct, indirect and induced impacts. Economic Impact 12 This is the ratio between “direct” jobs and “total” jobs. A ratio of 2.5 means one new direct job creates one and a half additional jobs for a total of 2.5. Multipliers Key terms to understand.

13 So what are we really measuring?

“Exogenous Change” - Money is coming in from somewhere outside of your community. Usually occurs when: Community exports a good or service elsewhere Tourism or Retail: People bringing outside dollars into your community - “visitor spending ” Change in Final Demand Key terms to understand. 14 Key terms to understand.

15 But…what if I’m going to visit the community regardless of the project? Can you count my spending?

Single biggest pitfall to impact studies is failing to correctly calculate “net new” when thinking about change in final demand. “Net new” is the change in final demand once you have eliminated and accounted for all other changes. Key terms to understand. 16 Key terms to understand. It’s all about the Net New!

17 Net New: Importance of Geography Walkway Over the Hudson

How to do an impact study 18 Rail vs. Trail Case Study: Adirondack Rail Corridor

Step 1 Select Geography Typically a single or multi-county geography is used. Can also use MSAs and even ZIP Codes (not all models allow this). Think about the project’s logical economic reach. 19 Franklin County and Essex County, NY Adirondacks – major tourism area Home to Lake Placid, Saranac Lake, Tupper Lake

Step 2 Select & Build Your Impact Model Choose what software you will use. Purchase data specific to your geography. 20 Modeling Software RIMS II IMPLAN REMI EMSI

Step 3 Data Gathering & Qualitative Analysis Discuss project with stakeholders and project sponsor to gather information for basic inputs to model – customize the model based on results. 21 Data needed Projected increase in train riders Estimated number of trail users (hikers, cyclists, snowmobilers) Average visitor spending on food, shopping, recreation, lodging, transportation Sources Ridership estimates from comparable railroads Trail usage estimates for comparable trails Travel spending studies

Step 4 Estimate Direct Impacts Figure out how initial economic output levels will change in the industry affected in your economy. “Net New” 22 How much new visitor spending would occur as a result of the rail upgrade or trail construction? Key Assumptions Only non-local visitors are net new Half-day additional spending per new visitor, on average

Step 5 Apply to Model Enter change in economic output into model to appropriate industry sector or sectors Run model 23

Step 6 Report Results or Refine Report direct, indirect/induced, and total jobs, earnings, and spending 24

Recent Tourism-Based Impact Studies 25 Nevele Casino & Resort North Hampton (MGM Springfield Casino) Erie County Fairgrounds & Raceway Walkway Over the Hudson Friends of Old 7 (7-Mile Bridge) Nassau Coliseum: Islanders Bangor Arena & Conference Center Tug Hill ATV Omega Institute

? Christa Franzi: Tom Dworetsky: Questions? 26