PRR 840: Recreation and Tourism Economics

Course is scheduled T-Th 12:40-2:00
Room is 130 Natural Resources
Instructor:  Fall 2001 will be Daniel Stynes.

Text: Loomis and Walsh. 1997. Recreation Economic Decisions. 2nd edition. Venture Publ.

COURSE DESCRIPTION: Applications of economic analysis to recreation and tourism including estimation and prediction of demand and supply, valuation, determination of regional economic impacts,  and use of economic analysis in management, marketing and policy decisions.


Schedule subject to adjustment based on class interests and progress.

Syllabus
Week 1 : Introd to Use of Economics in Recreation/Tourism
Week 2 : Economic Characteristics of Recreation & Tourism
Week 3  : Introd to Demand Analysis
Week 4  : Economic Data on WWW - NIPA, REIS, CBP, etc.
Week 5 : Tourism Satellite Accounts
Week 6  : Economic Impact assessment methods
Week 7-8  : Use of MITEIM, MGM2 models
Week 9  : Travel Cost Method
Week 10:   CVM, hedonic and other valuation methods
Week 11: Forecasting recreation and tourism
Week 12: Benefit Cost Analysis, Discounting
Week 13 : Elasticity, Pricing Decisions
Week 14 : Supply Side, Costs
Week 15-16 : present term projects
 Links
 

Basic Information for Prospective Students

Preliminary Course Syllabus, Fall 2001 (Word document)

Course is scheduled T-Th 12:40-2:00
Room is 130 Natural Resources
Instructor:  Fall 2001 will be Daniel Stynes.

Text: Loomis and Walsh. 1997. Recreation Economic Decisions. 2nd edition. Venture Publ.

COURSE DESCRIPTION: Applications of economic analysis to recreation and tourism including estimation and prediction of demand and supply, valuation, determination of regional economic impacts,  and use of economic analysis in management, marketing and policy decisions.

New topics/thrusts this year will include:


The course is divided into five modules of roughly three weeks each:

1. Nature & Scope of Recreation & Tourism (R&T):  definitions and economic measures of recreation and tourism products and services, economic measures of the magnitude and nature of R&T as activities, industries, and markets. Coverage of recreation and tourism in NIPA accounts, 1997 Economic Census, County Business Patterns and other data. NAICS industry classification.  Tourism Satellite Accounting Methods (TSA). We will focus particularly on the special characteristics of recreation and tourism supply and demand of relevance to economic analysis, e.g.  services vs products, household production, mix of products and choices, spatial and temporal markets, public and private roles, consumed at the point of production, variety of market structures, externalities & non-market characteristics.

2. Estimating and Forecasting Recreation & Tourism Use/Demand : Methods for estimating visits, demand and value of recreation & tourism. Demand shifters and elasticities. Qualitative, structural and time series methods for forecasting R&T demand/consumption. Price indices, leading indicators and seasonal adjustment.  Economic and other notions of value. Travel cost, CVM, and hedonic approaches to valuation.

3. Economic Impacts of Recreation and Tourism. Contributions of R&T to national, regional and local economies as measured by production, income, value added and jobs. Estimating R&T spending and economic impacts. Interpretation and use of multipliers and I-O models. The MITEIM, MGM2 and  IMPLAN systems. R&T contributions to balance of payments, and government revenues and costs. Fiscal impacts of R&T.

4. Recreation and Tourism Supply and Markets. Competitive and monopolistic market structures. Government intervention (direct provision, taxes, incentives and regulations). Production functions, long and short run costs. Supply decisions of individual firms and government agencies. Factors of production (land, labor and capital), infrastructure. Economics of recreation & tourism investment, production, and marketing decisions (pricing, location, promotion, product). Feasibility studies.

5. Using Economic Analysis to Support Decisionmaking. Integrating economic analysis with social, environmental and political factors. The course will conclude with presentation of a set of applied case studies in which economic analyses are applied to management, planning, policy and marketing decisions. Students will work on these cases during the semester.
 

PRE-REQUISITES: A basic knowledge of microeconomics and introductory natural resource or tourism economics is desirable.  The course will be tailored to the abilities and interests of the class and remedial sessions/materials will be offered as needed for economics background or computer skills. Emphasis will be on application of economic methods and concepts to recreation and tourism management, marketing, planning and policy analysis. Students should be proficient in use of spreadsheets (Excel) and Web browsers. We will be making fairly extensive use of Excel for analysis of economic data and will be downloading economic data and related information from the web.



Assignments for Week 1 : Introduction to Course, Branches and Functions of Economics

1. Read Chs 1-3 of Loomis and Walsh text
2. Find a micro-economic text you can use as companion reader to brush up on economic basics.
3. Course will assume basic proficiency with Excel.
4. Browse web sites below for preview

Excel : If you need refresher, try one or more of following:
Buy an "Excel for Dummies" type book and go thru it.
MSU Computer training Modules (CBT) - on-line training modules
excel5.doc - my short Excel tutorial as a Word document.
 Exercises - see excel materials in PRR475 Exercises for practice. Weeks 2,4,6,7,9 all involve Excel.
 

Week 2 : Characteristics of Rec/Tsm of Importance to Economic Analysis
Readings:

Leisure, The new Center of the Economy, Academy of Leisure Sciences White Paper. A popular piece discussing economic significance of leisure. May want to skim Benefits and Tourism papers here also.

Mahoney. Recreation Marketing: The Need for a New Approach. (copies distributed). note links between marketing and economics here. Many of the same characteristics of recreation discussed here in terms of marketing have parallel implications for economic analysis.

Exercise: Choose a more popular "classic" book or monograph covering economic perspectives on leisure, recreation or tourism and prepare a short book review. Some suggested classics are listed below.

Week 3 : Introd to Demand Analysis

1. Skim the exec summary  - Importance of Wildlife to Canadians (1985) for an overview of three primary economic applications to recreation - (1) valuation or benefits, (2) spending and economic impact, and (3) discounting and B/C. The complete version of 1996 Canadian study is available on WWW(PDF).  The US National Surveys on Hunting & Fishing (a similar report for 1991 and 1996)  can be found at  http://www.census.gov/prod/www/abs/fishing.html .

2. Walsh, Chs 4, 5, and 7 covering demand curves and demand shifters.
 

Week 4: Measuring size and importance of R/T in the economy: NAICS, NIPA Accounts, REIS, CBP, other data.

A. There is great deal of economic information to provide a picture of the size and extent of recreation and tourism in the U.S. A good place to begin is the U.S. Census Bureau's Statistical Abstract of the United States. You may download individual sections ( 32 of them plus Appendices in 2000 version) at the web site. You can likely find something relevant to recreation & tourism in most of these sections, but begin with following:
     Section 7: Parks, Recreation & Travel 415 - 451
     Section 14. Income, Expenditures and Wealth 715 - 766
     Section 32 : 1997 Economic Census 1438 - 1458

What to look for?

1. What kind of data exist related to recreation and tourism here?
2. What are souces of these data? (Follow up to original sources for details).
3.  What does data represent/mean? For this you must undestand definitions of concepts, how data were gathered, etc.
4. How might I use the data?

B. Further Details : Check following for more detail.

 Learn about NAICS : Master web site for the new North American Industrial Classification System, which is replacing the Standard Industrial Classification System (SIC). Start with 6 page brochure here, then 16 pager and browse from there as desired. Look for sectors that cover recreation and tourism industries and the levels of detail/aggregation available at 2, 3 or 4 digit level.  There are also many documents discussing the classification system, for example, here's an early document covering performing arts, spectator sports, and amusements - PDF.

The most useful data sources/websites are summarized in Socioeconomic Data for Understanding Your Regional Economy: A User's Guide .  This is an excellent guide to economic data on the WWW and its application to regional economic analysis.

US Census Bureau: Popln and Housing data, 1997 Economic Censuses, County Business Patterns, ACS, Fact Finder
Bureau of Economic Analysis (BEA): REIS, NIPA, I-O. National and Regional economic data.
Bureau of Labor Statistics (BLS): Employment statistics and consumer price indices (CPI).

C. Comprehensive Sites. You should also become familiar with comprehensive sites that provide access to many of the above sources and more. These are also summarized in Data Guide above. My favorites are listed here (Top 5 are below).

 Government Information Sharing Project : Nice interface, REIS, Econ Census
 Statistical Resources on the Web : U Michigan links
 http://fisher.lib.virginia.edu/ : REIS, CBP
 Michigan Information Center - state information clearinghouse
Minnesota's Guide to On-Line data - step by step guide with links.

Week 5. Tourism Satellite Accounts (TSA). TSA's are the latest development in estimating the size and economic importance of tourism to national economies. The methods are being extended to state and local levels. To understand TSA's you must have a basic familiarity with NIPA accounts (see Section 14 of Statistical Abstract above, any macro-economics text or BEA's Guide to NIPA Accounts) .

Tourism Satellite Accounts : I have a brief introduction to TSA's and some links at my economic impact website. Read Frechtling's paper and study the official US TSA's, then read my own applications to local CVB's in Michigan. Want more? Check out TSA documents, WTO document and WTTC website.

Frechtling. D.C. 1999. The tourism satellite account: foundations, progress and issues. Tourism Management 20: 163-170.

 U.S. Travel and Tourism Satellite Accounts for 1992,  U.S. Travel and Tourism Satellite Accounts for 1996 and 1997 - two official US Tourism Satellite Accounts developed by BEA. Read 1992 first as it covers methods in greater detail.

Marquette County  Lansing CVB (Draft) - my experiments in applying TSA to Michigan counties

 TSA documents. - many documents here about satellite accounting methods - from conference last year in Vancouver.

Draft Manual on Statistics of International Trade in Services - WTO Guidelines on International Tourism Statistics & TSA
 

Week 6: Estimating Economic Impacts of Recreation and Tourism

Exercise for next couple weeks is to choose a region (county, CVB, state) and estimate economic impacts of tourism in the region using both Satellite approach and MITEIM model. Will be easiest if you pick a region I have IMPLAN files for.

Here's direction to resources/readings to help.

1. Loomis and Walsh  - Ch 14
2. Stynes- Economic impact webpage and links

Weeks 7-8: Use of MITEIM, MGM2 and TSA models

Exercise for next couple weeks is to choose a region (county, CVB, state) and estimate economic impacts of tourism in the region using both Satellite approach and MITEIM model. Will be easiest if you pick a region I have IMPLAN files for. Copy of exercise

My Economic impact website - MITEIM and MGM2 sections have models that can be downloaded and descriptions of model
Michigan county TSA's and TI-ratio estimator.  Here's spreadsheet with some preliminary TSA's for Michigan counties and a simple model for adjusting national TI-ratios. Don't just copy TSA's here.
  Develop your own. Use these as check if you wish to see if your estimates are in ballpark. You should be refining what I've quickly assembled here.
  If you've asked for multipliers or TSA data for a given region, find the files here.

Week 9: Travel Cost Model

Read Chapters 6 and  9 of Loomis and Walsh.
Download and read RMRS-GTR-72 : Benefit transfer of Outdoor Recreation use values by Rosenberger and Loomis's
Ecosystem Valuation website - browse travel cost section
Exercise: Travel Cost Model Computational Exercise (handout).

Week 10: Contingent Valuation Methods

Read Chapter 10 of Loomis and Walsh
Ecosystem Valuation website - browse CVM sections
Carson and Mitchell - selected pages
Bishop and Heberlein experiments.
Exercise : Find and review an article using CVM techniques.

Week 11; Forecasting recreation and tourism
    Read:  Chapters 12 and 13 of Loomis and Walsh
              Stynes - chapters on forecasting (handouts)
              Cicchetti, Chapter 4, Forecastingrecreation in the United States.
    Exercise: Download monthly recreation or tourism data series from WWW and use seasonal decomposition methods to estimate trend and seasonal factors; forecast one year ahead. NPS website has visit data for all Natinal Parks

Week 12: Benefit Cost Analysis
    Read Chapters 19-20 of Loomis & Walsh
    Exercise: B/C spreadsheet exercise

 Week 13: Pricing Decisions
    Read Chapters 17 and 18 of Loomis and Walsh, Re-read Chapter 8 (elasticity)
    Break -even analysis exercise
 

 Week 14 : Cost, supply analysis
        Read Chapters 15-16 of Loomis and Walsh
        Cost effectiveness analayis

Presentation of term projects
 
 
 
 



 

Links to some course materials

My Economic impact website - bulletins, software, reports, training materials

 Lots of other Great Economic Sites on WWW, e.g.
Guide to Economic data on WWW
ECONOMICS Working Paper Archive
Resources for Economists on the Internet
Resources for the Future
SocialScience Gateways
EconData.Net
Working papers in Econmics(WOPEC) - from UK
Web Book of Regional Science: includes Hoovers text, Shaeffer's regional impact models, others on sustainable development
Hotel On-line - links to consulting firms with various reports and papers
Socioeconomic Data for Understanding Your Regional Economy: A User's Guide - great guide to economic data on WWW
Ecosystem Valuation website - excellent non-technical explanation of valuation in general and key concepts and methods for ecosystem valuation. "Dollar-based" section covers market price, travel cost, CVM, hedonic and other methods. Also useful glossary and links.
EPA Environmental Values
World bank, Environmental Valuation  -
  • Economics of Cultural heritage
  • Tourism and the Env in the Carribean.
  • B/C Madagascar National Park
  • Value of Coral reefs in Indonesia.
  • Others

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    Some "Popular" Economic Classics to Review

    Becker. The economic approach to human behavior
    Becker. A theory of the allocation of time.
    Clawson and Knetsch. The Economics of Outdoor Recreation
    Krutilla. Conservation reconsidered.
    Lancaster. A new approach to consumer theory.
    Linder. The Harried Leisure Class
    Schor. The overworked American
    Scitovsky, Tibor. The Joyless Economy.
    Veblen. The theory of the leisure class. Veblen, Thorstein - on-line from McMaster Univ. Archive for History of Economic Thought.
     

     RMRS-GTR-56 Wilderness recreation use estmation: a handbook of methods and systems. Watson, Cole, Turner and Reynods (2000).
     Other RMRS Electronic Publications
     
     



    Old Stuff from last time I taught tis course in 1986