Local trades, your opinion please
I am working on an economic impact report where instead of paying for some services, this particular festival is providing free tickets for services. How would one model this in an economic impact report? Would you including this as part of local festival expenditures, despite the fact they are not paid in money? Or should services for tickets be left out of the model? Anyone dealt with this before?
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Hi Nathan! Thank you for your post. As for modeling the impact of the Festival, you can only include the total ticket cost of those that have paid. You can still include the ticket count as it is money collected. However, even those whom are performing services may get into the festival w/o paying, they are spending money on other items. You can look at a "tourism impact" on what they are spending their money on: food, souvenirs, hotel (?), crafts, etc. As a note, when modeling this type of "tourism impact", you will need to be sure you are capturing the monies spent are from those outside of the study region. As those spending their money that live in the region are substituting spending monies at the festival vs at the movies or at another entertainment type venue. In terms of the Operation cost, can you describe for us more about how this exchange is occurring? Thanks! -
There are two parts to the model: The first is the spending from people who live outside of the county, their spending outside of the festival. I did not count spending inside of the festival because I count it through the direct spending of local vendors that the festival brings in. The second part of the model is the direct local spending by the festival to produce the festival. Part of this direct spending on local vendors to produce the festival is a ticket trades, i.e. the festival trades $50,000 worth of tickets for advertising, production, other services. I'm trying to decide if it is smart to count these ticket trades as though it were $50,000 of spending from the festival. On one hand it is in exchange for goods and services, which would have an effect on regional GDP. On the other hand it's not money that is being traded, so I have been questioning whether the multiplier effect would be different. If there is an argument for a reduced multiplier I can just change the multiplier in IMPLAN, but I am looking for opinions on how to handle this both theoretically, and in the program. -
Hi Nathan! Thank you for the additional information. IMPLAN, like all Input-Output Models, is a production Model so what we are trying to capture is changes in production. Thus what we are trying to see is the impact to production associated to the spending. The recommendation to treat the value of the tickets bartered as the same as those sold is the idea that even though money didn't change hands between the Direct actors (the festival and the add agencies) the advertising, production, other services companies still had expenditures they had to sustain in order to provide those services, and that the festival likely incurs some cost of operations as a result of those tickets being used by the recipients. Thus those tickets would represent a change in intermediate production for both the ticker provider and the recipient. If you feel this is the case but are concerned about misrepresenting the actual dollar figure in your results/report you could use the value of the bartered tickets as a mean of generating the Indirect and Induced impacts associated to the total ticket value and then back the bartered ticket value out of the Direct Effect for Output and Value Added. Unless you feel that the extra attendance won't effect the required Employment for the Event, we would recommend not adjusting the Employment or Labor Income values, but these assumptions would depend on what you know about the festival. If it has fixed operating costs (e.g. Employment, Labor Income and Intermediate Expenditures don't change substantially regardless of 14 guest or 2,014 guests) then that has it's own set of caveats. One option if you feel that the latter is the case, although it doesn't cover all the caveats of the above, is to split out the value of the work done for barter and impact those Sectors doing the work with their value of services. This does require you to be able to identify the value of each vendor's services and the vendor type to be able to discern the IMPLAN Sector to impact. Thank you!
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