Economic Impact Assessment

Abstract

Concepts for understanding economic impacts, and valid methods of assessment are well developed. In fact, there is so much information available that this is the largest chapter in the book – not the most important. A thorough and accessible reference on the subject is the book Tourism Economics and Policy by Dwyer, Forsyth and Dwyer (2010) as it contains a full chapter on events. Event Tourism (Getz, 2013) also covers economic impact assessment in detail. There have been well-documented problems with economic impact assessments for tourism and events (Matheson, 2002; Matheson and Baade, 2003; Crompton and McKay, 2004; Tyrell & Ismail, 2005; Crompton, 2006; Davies et al., 2013), pertaining to both how they are done and the purposes they serve. Dwyer and Jago (2014, p.130) identified three main types of criticisms associated with the assessment of the economic impacts of events, commencing with the exaggeration of benefits owing to either deliberate manipulation or faulty methods. Attention has often focused on the use of Input-Output tables to formulate ‘multipliers’, a practice which leads to exaggerated benefits, with a number of scholars preferring Computable General Equilibrium (CGE) modelling. Most fundamental is the frequent failure to consider all costs and benefits, leading to calls for more comprehensive cost-benefit analysis (CBA). Most economic IAs have utilized only a narrow range of metrics, but even more unfortunate is the continued reliance on multipliers and econometric models, as these ‘black-box’ approaches tend to exaggerate imputed benefits while ignoring costs and equity issues. This is certainly not in keeping with principles of social responsibility and sustainability.