Economic impact analysis
Filming above Franz Josef Glacier
The case studies for Fiordland National Park, the West Coast, Abel Tasman National Park, Queen Charlotte Track, DOC-concessioned activities in three national parks, the Mt Ruapehu skifields and the Southern Lakes Ski Areas were carried out using economic impact analysis, a standard tool that economists use. This method measures the total dollars spent in a region that would not have been spent if the national park/conservation area did not exist.
One advantage of measuring economic impacts is that the results can be expressed in ways that are familiar to non-economists:
- Jobs: number of employees and self-employed persons expressed as full-time equivalents (FTEs).
- Household income: what households earn before tax.
- Value added: household income plus returns to business capital, i.e. wages, taxes, interest, depreciation, self-employed income and profits.
- Output: total turnover, that is, the sum of value added, and purchases from suppliers.
Calculating economic impacts entails chasing the money-go-round in a regional economy, that is, counting what tourists spend on tourism businesses, and what they buy from their suppliers, and so on. The flow-on effects are derived from the direct spending using formulas known as multipliers.
Multipliers are based on economic models of regional economies. For instance, on the West Coast, the average multiplier for all types of employment in respect of public conservation land is 1.26. That means that if there are 1442 jobs directly related to conservation, the total number of jobs generated in the region is 1814. The additional 372 jobs include the extra retail staff, hairdressers, bankers, builders, petrol station workers and so forth needed to service the 1442 workers.
Using economic impact analysis, it is possible to estimate how much extra money is pumped into a local economy, the number of new jobs created, and the contribution to a region’s household income and to business profits as a result of a national park or conservation area.
The studies on following pages prove that public land is not a “lock up” of resources, rather, they provide a “lift off” for their sustainable management.