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HomeMy WebLinkAboutEconomic Impacts of Protecting Rivers, Trails & Greenway Corridors-A Resource Book 1992 ECONOMIC IMPACTS OF PROTECTING RIVERS, TRAILS AND GREENWAY CORRIDORS A RESOURCE BOOK PREPARED BY RIVERS, TRAILS AND CONSERVATION ASSISTANCE NATIONAL PARK SERVICE I I I I I I I I I I I I I I I I I I I ECONOMIC IMPACTS OF PROTECTING RIVERS, TRAILS, AND GREENWAY CORRIDORS A RESOURCE BOOK RIVERS, TRAILS AND CONSERVATION ASSISTANCE NATIONAL PARK SERVICE 1992 Third Edition DEC ! 4 U. S. DEPARTMENT OF THE INTERIOR NATIONAL PARK SERVICE RIVERS~ TRAILS AND CONSERVATION ASSISTANCE PROGRAM Rivers, Trails and Conservation Assistance is a program of the National Park Service which cooperates with states, local governments, and citizen groups to protect and restore river corridors and to establish trail systems. The goal of this outreach program is to share the expertise of the National Park Service with groups working to protect their river, trail and greenway resources. Contents Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Preface Economics Clearinghouse Purpose of Resource Book Intrinsic Values Resource Book Format How to Use the Resource Book Assistance from Local Economists Acknowledgements 1 Real Property Values Increased Property Values- Quantified Increased Property Values Surveyed Increased Property Tax Revenues Construction/Development Perspectives How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References 2 Expenditures By Residents Leisure, A Spending Priority Resident Expenditures Trends and Expenditures by Activity How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References 3 Commercial Uses Concessions, Permittees, and Partnerships Special Events Filming and Advertising How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References 4 Agency Expenditures Level of Expenditures Local Business Support How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References IV IV V V VII VIII VIII 1-3 1-7 1-7 1-8 1-9 1-13 1-15 1-16 2-3 2-5 2-5 2-9 2-14 2-15 2-17 3-3 3-4 3-6 3-6 3-8 3-9 3-10 4-3 4-4 4-5 4-7 4-7 4-8 I I I I I I I 5 Tourism The Travel Industry Natural/Cultural Areas Attract Travellers Attributing Expenditures to Greenways Direct, Indirect, and Induced Effects Multipliers Economic Impact Models Marketing Potential How To Use These Rationales in Your Community Sources of Information Considerations In Using These Rationales References 6 Corporate Relocation and Retention 5-3 5-4 5-5 5-7 5-10 5-12 5-13 5-14 5-19 5-20 5-22 6-3 I I Quality of Life Attracts Businesses Greenways Contribute to Quality ol Life Greenways Promote Employee Fitness How to Use These Rationales in Your Community Considerations in Using These Rationales References 6-4 6-5 6-6 6-8 6-9 I I I 7 Public Cost Reduction Public Service Requirements Hazard Mitigation Pollution Control Health Care Costs How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References 7-3 7-5 7-6 7-8 7-9 7-11 7-12 7-13 I I I I 8 Benefit Estimation Introduction to Benefit Estimation Assessment Methods Preservation Values Benefit-Cost Analysis Public Expression of Value How to Use These Rationales in Your Community Sources of Information Considerations in Using These Rationales References Appendices 8-3 8-5 8-10 8-11 8-12 8-12 8-13 8-14 8-15 I I A Correcting for Inflation in Housing Prices 8 Updating Consumer Good Values C Survey Questions D Rivers, Trails and Conservation Assistance Regional Offices A-2 A-6 A-12 A-19 Economic Impacts of Protecting Rivers, Trails, and Greenwa¥ Corridors What You Need to Know About this Resource Book Contents Page EconOmics Clearinghouse IV Purpose of Resource Book IV Intrinsic Values V Resource Book Format V How to Use the Resource Book VII Assistance from Local Economists VIII Acknowledgements VIll Il I I I I I I I I I I I I I I I I Preface Rivers, trails, and greenway corridors (linear open spaces connecting recrea- tional, cultural and natural areas) are traditionally recognized for their environ- mental protection, recreation values, and aesthetic appearance. These corridors also have the potential to create jobs, enhance property values, expand local businesses, attract new or relocating businesses, increase local tax revenues, decrease local government expenditures, and promote a local community. An example which illustrates the range of possible economic benefits is the Delaware and Raritan Multi-Use Trail, built along an abandoned railroad and canal in Central New Jersey. · "Property values adjacent to the park and trail have increased, according to James Amon, Executive Director of the D&R Canal Commission. Private businesses have been created in response to user demand. It is now common to see concessionaires and rental establishments catering to the many users of the trail and canal. An historic train station in Lambertville was recently restored into a restaurant and a hotel was built nearby which profits greatly from its trail neighbor. New proposals for trail-oriented development are currently in the works, including a combination canoe and bicycle rental outfitter" (Railroads Recycled, Rails to Trails Conservancy, Washington, D.C., 1990). The Rivers, Trails and Conservation Assistance (RTCA) program of the National Park Service has produced this Resource Book to help IocaHevel planners, park and recreation administrators, citizen activists, and non-profit groups understand and communicate the potential economic impacts of their proposed or existing,corridor project. Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Economics Clearinghouse An Economics Clearinghouse has also been initiated by RTCA to encourage the exchange of up-to-date information on the economic impacts of rivers, trails and greenways. This Clearinghouse will be a listing of case studies, economic impact analyses, and other reference material. Most of these references, as of 1990, are cited at the end of each section of this Resource Book. For further information regarding the Clearinghouse, contact the Rivers, Trails and Conservation Assistance Program at the address listed at the end of this section. Purpose of this Resource Book The aims of this Resource Book are specific and are as follows: Encourage local professionals and citizens to use economic concepts as part of their effort to protect and promote greenways Provide examples of how greenways and parks have benefited local and regional economies Demonstrate how to determine the potential economic impacts of of river, trail, and greenway projects ~Suggest other sources of information Economic Impacts of Protecting Rivers, Trails and Greenway Corridors is intended to be acom pilation of the most recent information on this subject area. Many of the examples, and case studies, and information available focus on more traditional parks, rather than linear parks, trails, and river corridors. However, greenways and traditional parks often provide many of the same amenities. The growing interest in applying economic rationales to support greenway protection efforts will likely result in more economic analyses and studies. IV I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Intrinsic Values This Resource Book is not intended to diminish the importance of the intrinsic environmental and recreational benefits of rivers, trails, and greenway corri- dors. The non-monetary value of open space should continue to be the primary emphasis in conservation efforts. In some cases, it may be more appropriate to stress intrinsic environmental benefits rather than spend considerable time and effort conducting economic analyses. In other cases, especially in developing areas, clear communication of intrinsic values and potential eco- nomic impacts will help decisionmakers recognize rivers, trails, and greenway corridors as vital to the well-being of a community. Resource Book Format We endeavored to make this Resource Book "user friendly". It is not intended to be a definitive textbook on economics. Rather, it is intended to be used as a framework for understanding potential economic impacts of greenways. We used a loose-leaf format to make it easier for you to add economic information about your local project and community. The Resource Book contains eight sections, each focusing on a different set of economic rationales, and appendices. The sections included in the Re- source Bqok are: Real Property Values Expenditures by Residents Commercial Uses Tourism Agency Expenditures Corporate Relocation and Retention Public Cost Reduction Benefit Estimation These sections are summarized in Table 1. V Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Table 1 Section Real Property Values Expenditures by Residents Commercial Uses Tourism Agency Expenditures Corporate Relocation and Retention Public Cost Reduction Benefit Estimation Summary of Resource Book Sections Descriptions Presents evidence that greenways and flails may increase nearby property values. Demonstrates how an increase in property values can increase local tax revenues and help offset greenway acquisition costs. Explains how spending by Iooal residents on greenway-related activities can help support recreation-oriented businesses and employment, as well as other businesses which are patronized by greenway, dver and trail users. Describes the potential for concessions and special events within the greenway, which can boost local business as well as raise funds for the greenway itself. Describes how greanways, rivers and trails which attract visitors to a community support local businesses such as lodging, food establishments, and recreation-oriented services. Greenways may also help improve the overall appeal of a community to visitors and increase tourism. Explains how the agency responsible for managing a river, trail or greenway can support local businesses by purchasing supplies and services. Jobs created by the managing agency may also help increase local employment opportunities and benefit the local economy. Presents evidence that the quality ol life of a community is an increasingly important factor for retaining and attracting corporations and businesses, and that greenweys, rivers and trails can be important contributors to the quality of life. Corporations bring jobs to a corn munity and help support businesses which provide services and products to corpora- tions and their employees. Explains how conservation of rivers, trails and greenways m ay help local governments and other public agencies to reduce long term costs for services such as roads and sewers; reduce costs resulting from injury to persons and property from hazards such as flooding; and avoid potential costly damages to natural resources such as water and fisheries. Describes how the recreational benefits of rivers, trails and greenways can be estimated in monetary values. Users can be surveyed to estimate the value of a visit to a greenway. VI I I I I I I I I I I I I I I I I I Preface How to Use the Resource Book A good initial step is to skim the entire resource book to understand the range and scope of the economic concepts and strategies included. Before working through a specific section, you should prepare a detailed description of your greenway project, as well as the geographic area within which economic impacts will be determined. Beth the project and geographic area should be mapped and described in a narrative. This will ensure you are working from a consistent information base. It is also important to address the proposed scale and estimated use of the project because impacts vary for different greenways. Potential economic impacts will largely depend upon the amenities offered, the scale and magni- tude of your project, accessibility, level of projected use, and intended users. The greater the size or amenities provided by the project and the heavier the potential use, the greater the potential economic impacts are likely to be. If your goal is to maximize economic impacts, it is important that you keep these factors in mind throughout the planning stages of your project. Once the project and geographic area are clearly identified and you have reviewed the sections, you should select one or more methods of analysis and work through each applicable section. We recommend you select sections which address primary concerns to your community and decisionmakers. After you select the appropriate section(s), you should read them carefully. You are encouraged to use references, handbooks, texlbooks, or training which may help in understanding the concepts and the strategies. Once again, we remind you that detailed economic studies requiring the services of a b'ained economist may also be warranted. If an economic issue is likely to be the key factor in the decisionmaker's evaluation of a project, we recommend a trained economist be involved as either a volunteer or paid consultant to evaluate or perform the appropriate analyses. 'Vil Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Assistance from Local Economists This Resource Book is not intended as a substitute for more detailed economic studies, which may be necessary for larger-scale or controversial projects. Our purpose is to inform individuals and groups working toward corridor conserva- tion about the usefulness of economics in.conservation planning, introduce basic economic concepts, and methods of analysis. You are encouraged to seek help from local professionals who have economic credentials to enhance the credibility of your findings. Possible sources of expertise that may help you include: Economists (banks, marketing firms, large corporations) Economic consulting firms University business or economics classes, masters or doctoral candidates, and their professors Staff with an economics background Acknowledgements The idea for the Resource Book was conceived by Ray Murray, Chief of Planning, Grants and Environmental Quality for the Western Region of the National Park Service (NPS). Principal investigative writers and editors for the Resource Bookwere Western Region River and Trail Conservation Assistance staff member Kathleen Williams, staff member Susan Harris, and Ray Murray. We thank all those who have provided valuable input to this project and who served as our official, hard working reviewers, including Joan Chaplick, John Crompton, John Loomis, Stuart McDonald, William Penn Mott, Richard Trudeau, Keith Hay, Alan French, Bill Carle, John Haines, Gary Guthrie, George Goldman, and Rivers, Trails and Conservation Assistance national and re- gional staffs. Also, thanks to Eugene Fleming for providing graphics/desktop publishing and Halstead, who illustrated the cover. We also thank The Conservation Fund for contributing to the printing of the Resource Book. The Conservation Fund isa national, non-profit, scientific and educational organization dedicated to the conservation and wise stewardship of America's natural heritage. VII1 I I I I I I I I I I I I I I I I The American Greenways Program of the Conservation Fund was established in 1987 to m eetthe informational and service needs of greenway projects at the local, state, and national levels. The program includes, among otherthings: the publication and distribution of the book Greenways forAmerica;in cooperation with the National Park Service, a monograph entitled The Ecology of Green- ways; a national greenways data base and referral service that will enable individuals, organizations, and public agencies to ne~ork with one another; grants for demonstration projects that are models of innovative approaches to financing, economic analysis, or other areas related to greenway planning; and other projects to advance and promote the greenway concept. National Park Service staff are available to assist in using this Resource Book to protect and promote rivers, trails, and greenways in your community. Your comments, suggestions, and additional case studies for this Resource Book would be greatly appreciated. Please contact the Rivers, Trails and Conser- vation Assistance Program (RTCA): Rivers, Trails and Conservation Assistance National Park Service, Western Region 600 Harrison Street, Suite 600 San Francisco, CA 94107-1372 (415) 744-3975 A list of all RTCA regional offices is included as Appendix D. Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Real Property Values Contents Page Increased Property Values - Quantified 1-3 Increased Property Values - Surveyed 1-7 Increased Property Tax Revenues 1-7 Construction/Development Perspectives 1-8 How to Use These Rationales in Your Community 1-9 Sources of Information 1-13 Considerations in Using These Rationales 1-15 References 1.-2 1-16 I I I I I I I I I I I I I I I I I I I I I Real Property Values I I I I I I I I I I I I I I I I Greenway corridors provide a variety of amenities, such as attractive views, open space preservation, and convenient recreation opportunities. People value these amenities. This can be reflected in increased real property values and increased marketability for property located near open space. Developers also recognize these values and incorporate open space into planning, design, and marketing new and redeveloped properties. Increased Property Values - Quantified The effect on property values of a location near a park or open space has been the subject of several studies. Statistical analyses have been a common method of attempting to measure this effect. These analyses attempt to isolate the effect of open space from other variables which can affect property values, such as age, square footage, and condition of homes. Isolating the effect of open space can be difficult and results have been varied. Nevertheless, many studies have revealed increases in property values in instances where the property is located near or adjacent to open spaces. Most studies have addressed traditional parks or greenbelts (large open space areas), though a few studies are available for greenways. · A study of property values near greenbelts in Boulder, Colorado, noted that housing prices declined an average of $4.20 for each foot of distance from a greenbelt up to 3,200 feet. In one neighborhood, this figure was $10.20 for each foot of distance. The same study determined that, other variables being equal, the average value of property adjacent to the greenbelt would be 32 percent higher than those 3,200 feet away (Correll, Lillydahl, and Singell, 1978). · The amenity influence of greenbelt land on property values also applies to privately held greenbelt land, according to a study of the Salem metropolitan area in Oregon. In this case, the greenbelt was comprised of rural farmland. Greenbelt zoning had been applied to this prime farmland beginning in 1974 in an effort to contain urban sprawl and preserve farmland. The study found that urban land adjacent to the greenbelt was worth approximately $1,200 more per acre than urban land 1,000 feet away from the greenbelt boundary, all other things being equal. However, rural land values within the 1-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I 1-4 restrictive zoning actually decreased in value by $1,700 per acre (Nelson, 1986). · A recent study of market appreciation for clustered housing with permanently-protected open space in Amherst and Concord, Massachusetts, found that clustered housing with open space appreciated at a higher rate than conventionally-designed subdivisions. Appreciation was measured as the percent increase in open-market sales price. The study compared one clustered development and one conventional subdivision in each community. The clustered homes studied in Amherst appreciated at an average annual rate of 22%, as compared to an increase of 19.5% for the more conventional subdivision. This translated into a difference in average selling price of $17,100 in 1989 between the two developments. In both Amherst and Concord, the homes in the clustered developments yielded owners a higher rate of return, even though the conventional subdivisions had considerably larger lot sizes (Lacy, 1990). · An analysis of property surrounding four parks in Worcester, Massachusetts, showed a house located 20 feet from a park sold for $2,675 (1982 dollars) more than a similar house located 2,000 feet away (More, Stevens, and Allen, 1982). · In the neighborhood of Cox Arboretum, in Dayton, Ohio, the proximity of the park and arboretum accounted for an estimated 5 percent of the average residential selling price. In the Whetstone Park area of Columbus, Ohio, the nearby park and river were estimated to account for 7.35 percent of selling prices (Kimmel, 1985). · In the vicinity of Philadelphia's 1,300 acre Pennypack Park, property values correlate significantly with proximity to the park. In 1974, the park accounted for 33 percent of the value of a plot of land (when the land was located 40 feet away from the park), nine percent when located 1,000 feet away, and 4.2 percent at a distance of 2,500 feet. (Hammer, Coughlin and Horn, 1974). I I I I I I I I I I I I I I I I I I Real Property Values I I I I I I I I I I I I I I I I The effects of proximity to open space may not be as simply quantified as in the above studies. Many studies (Brown and Connelly; Colwell, 1986) have found the potential for an increase in property value depends upon the characteristics ofthe open space and the orientation ofsurrounding properties. Propertyvalue increases are likely to be highest near those greenways which: highlight open space rather than highly developed facilities have limited vehicular access, but some recreational access have effective maintenance and security · Similar residential properties near a park in Columbus, Ohio, were compared to determine if proximity to the park affected property values. Conclusions showed properties where the homes that faced the park sold for be~een seven to 23 percent more than homes one block from the park. Those homes that backed up onto the park sold at values similar to properties one block away (Weicher and Zerbst, 1973). Some high use areas can actually have a negative influence on adjacent property, but still contribute to increased value of nearby properties. Lyon (1972) showed this relationship, as it pertained to traditional parks, graphically in Figure 1-1 on page 1-6. One implication of these studies might be that increases in nearby property values depend upon the ability of developers, planners, and greenway propo- nents to successfully integrate neighborhood development and open space. Designing greenways to minimize potential homeowner - park user conflicts and maximize the access and views of the greenway can help to avoid a decrease in property values of immediately adjacent properties. 1-5 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Figure 1-1 The upper graph shows tho increase in property values duo to proximity to a park. Below that is the effect on property values due to a highly devel- oped and used park. o! F',~ty Increasing ($) Value el Park 1-6 Net Effects Curve for Property Value Increases Due to Proximity to Parks Increase in property value due to proximity to park Decrease in property value due to proximity lo highly developed park with nuisance factors I I I I I I I I I I I I I I I I ! ! Real Property Values Increased Property Values - Surveyed Survey methodology has also been used to document perceived increases in property values. Surveys can be less time-consuming, less expensive, and generally require less specialized expertise than detailed statistical analyses. The following findings are based upon surveys of property owners and real estate professionals. · Inarecentstudy, ThelmpactsofRaiI-Trails, landownersalongthreerail- trails reported that their proximity to the trails had not adversely affected the desirability or values of their properties. Along the suburban Lafayette/Uoraga Trail in California, the majority of the owners felt that the trail would make their properties sell m ore easily and at increased values. The other two trails stud led included the Heritage Trail in eastern Iowa and the St. Marks Trail in Florida. (National Park Service and Pennsylvania State University, 1992) · A study completed by the Oflce of Planning in Sea[tie, Washington, for the 12 mile Burke-Gilman trail was based upon surveys of homeowners and real estate agents. The survey of real estate agents revealed that property near, but not immediately adjacent to the trail, sells for an average of 6 percent more. The survey of homeowners indicated that approximately 60 percent of those interviewed believed that being adjacent to the trail would either make their home sell for more or have no effect on the selling pdce (Seattle Office of Planning, 1987). · In asurvey ofadjacent landowners along the Luce Line rail-trail in Minnesota, the majority of owners (87 percent) believed the flail increased or had no effect onthe value of their property. Fifty six percent of farmland residentsthought the flail had no effect on their land values. However, 61 percent of the suburban residential owners noted an increase in their property value as a result of the flail. New owners felt the trail had a more positive effect on adjacent property values than did continuing owners. Appraisers and real estate agents claimed that trails were a positive selling point for suburban residential property, hobby farms, farmland proposed for development, and some types of small town corn mercial property (Mazour, 1988). Increased Property Tax Revenues An increase in property values generally results in increased property tax revenues for local governments. Many arguments made for park and open space investment claim these acquisitions pay for themselves in a short period of time, due in part to increased property tax revenues from higher values of nearby property. A point to remember, however, is that many jurisdiction's ].-? Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I assessments of property values often lag behind market value. Furthermore, in those states which have passed legislation limiting real estate tax increases, such as California's Proposition 13, property tax revenues also lag behind increases in market value. I I · California's Secretary for The Resources Agency anticipated that $100 million would be returned to local economies each year from an initial park bond investment of $330 million. The returns were to be in the form of increased value of nearby properties and stimulated business (Gilliam, 1980). · A study of the impacts of greenbelts on neighborhood property values in Boulder, Colorado, revealed the aggregate property value for one neighborhood was appreximately $5.4 million greater than if there had been no greenbelt. This results in approximately $500,000 additional potential property tax revenue annually. The purchase price of the greenbelt was approximately $1.5 million. Thus, the potential increase in property tax alone could recover the intitial cost in only three years. In the study, the authors did note that this potential increase is overstated in part because actual assessments may not fully capture greenbelt benefits (Correll, Lillydahl, and Singell, 1978). I I I I I I I Construction/Development Perspectives Proximity to greenways, rivers, and trails can increase sales price, increase the marketability of adjacent properties, and promote faster sales. Clustering the residential development to allow for establishment of a greenway might also decrease overall development costs and result in greater profits for the developer. 1-8 · A land developer from Front Royal, Virginia, donated a 50 foot wide I seven-mile easement for the Big Blue Trail in northern Virginia after volunteers from the Potomac Appalachian Club approached him to provide a critical trail link along the perimeter of his second-home subdivision. The developer recognized the amenity value of the trail and advertised that the trail would cross approximately 50 parcels. All tracts were sold within four months (American Hiking Society, 1990). I I I I Real Property Values I I I I I I I I I I I I i I I I · Thirbj-five acres was set aside as a protected corridor through a 71-lot subdivision for approximately one-half mile of the Ice Age Trail in Wisconsin. The Ice Age Trail Foundation had purchased the parcel when the land became available for sale and was being considered for development. Later the Foundation sold the parcel to a subdivision developer, after placing an easement on the trail corridor. The developer now touts the easy access to the Ice Age Trail in promotional subdivision brochures (Pathways Across America, Winter 1991 ). · Hunters Brook (Yorktown Heights, New York), a cluster development of 142 townhouse-style condominium units ranging in price from $170,000 to $260,000, was designed to capitalize on the amount of open space in the development. The homes were clustered on 30 acres, preserving 97 acres of natural sloping woods, including a dense pine forest. Care had been taken to retain local wildlife, thus adding to the rural setting. One of the developers commented, "it may not be the woods that bring (buyers) to us initially, but it seems to make all the difference when they see what it's like" (Brooks, 1987). · In a 1970 study of a 760 square mile area in Maryland, noted planner lan UcHarg projected that uncontrolled development would yield $33.5 million in land sales and development profits by 1980. Profits resulting from development plans designed to accommodate the same population level, while preserving desirable open spaces, would exceed $40.5 million. The resulting additional $7 million translated into an increase in value of $2,300 per acre for the planned 3,000 acres of open space (Caputo, 1979). How To Use These Rationales in Your Community Quote examples. Usethe examplesgiven inthis section in your presentations, portfolios, letters to elected officials, newsletters to the public, and public meetings. Determine whether any studies have been done. Contact the local univer- sity and relevant agencies to see if anyone has documented the effects of greenways on property values in your community. If not, maybe someone is interested in doing so. 1-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Interview real estate sales people, appraisers, and assessors. These professionals have a good idea of how open space amenities affect land values. Askwhether properties near your greenway are easier or more difficult to sell; whether they sell for more or less than other properties; and whether agents use proximity to the greenway in their advertisements. Sample survey questions are listed in Appendix C. If your greenway is planned for a rural or undeveloped area, ask what effect the greenway will have on the development potential of surrounding land. In addition to being knowredgeable, these people can provide valuable community and business support. Survey local residents. Contact a sample of residents near and adjacent to the greenway. You may be able to get residents' names and street addresses from the Assessors Office. The larger the sample, the more reliable the results, especially if you will be dividing respondents into subgroups. The information will be easier to synthesize if you construct a standard questionnaire. Make questions clear and concise, and include the full spectrum of potential answers. Make sure the questions you ask elicit the exact information you need. Try to keep interviews to ten minutes or less. Test your interview on co-workers before you begin and get their suggestions on how to improve it. Also test your survey on homeowners. Instruct your interviewers on good interview techniques before they begin interviewing. Take a look at Appendix C for some examples of survey questions. The greenway may affect different resident groups in various ways. Thus, you may wish to categorize responses by condominium owners or single-family home owners; adjacent property owners versus nearby property owners; long- term owners versus new residents. Be certain you collect information needed to categorize the responses. These questions should be listed at the end of the survey. Summarize the results of the survey by including the total number of people interviewed and the relative percentages responding to various ques- tions. Document how the greenway has changed the design of the neighbor- hood. Where vacant lots existed, are people now building expensive homes? Did development orient houses to face the greenway? Has access from nearby homes changed? Have property owners constructed gate entries to the adjacent greenway where solid fences existed before? Photographs, slides, 1-10 I I I I I I I I I I I I I I I I I I Real Property Values I I I I I I I I I I I I I I I I and videos can be very useful to document these changes. This information will likely be qualitative but helpful, especially if residents who previously opposed the greenway now value their proximity to it. Document developers' use of open space in designing and marketing their properties. Where have developers incorporated open space into their design plans? Have they provided access (e.g. a bridge, spur trail, under- crossing) from developments to a nearby greenway? Ask them about their perception of the effect of open space on prices, sales or rental time, and the overall market response to their product. Collect examples where proximity to open space has been used in sales advertising. Check real estate listings, magazines, weeklies, and promotional announcements for descriptions of open space amenities. Document property sale price increases before and ~er the greenway was established. Obtain sales records for similar properties in the area from at least five years before the greenway was established to five years after. Or, you might contact real estate appraisers for information on property value increases. Real estate brokers may be able to provide general statements on property value trends. After correcting for housing inflation (see Appendix A), comparetrends in nearby property values overaten year period. You mayalso need to adjust for local housing inflation, which may be higher than the U. S. city average listed in Appendix A. Contact your local regional office of the U. S. Department of Labor and Statistics for more detailed consumer price index information for your community. Your estimates of property value increases will be more defensible if: ~you compare similar properties and include as many properties as possible in your sample Qproperties have resold more than once since the greenway was established ~the greenway (and not a shopping mall, landfill, etc.) has been the only major land use change in the ten year comparison period ~estimates are discussed with real estate experts 1-11 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Compare assessed values of nearby properties before and after the greenway was established. Obtain assessed values for nearby properties five years before the greenway was established and for the same properties five years after. Assessed values are usually separated into two categories: improvements and land. Use the land values for comparison and convert to a dollars-per-acre basis. Care must be taken with this method because assessed values often lag behind market values. You may consider discussing the potential of this method with your Assessor's Office, local appraisers, and real estate specialists familiar with the history ofthe market. Inflation in housing prices mustalso betaken into account (see Appendix A and consult your assessor). Property tax revenue increases may help pay for the greenway. Once again, your state may have passed legislation limiting property tax increases, and in many jurisdictions, assessments lag behind market values. Nonethe- less, in the long-term, increases in property tax revenues may help to offset greenway costs. The following illustrates how you might estimate increases in property tax revenues resulting from establishment of a greenway. Please keep in m ind, this calculation has been simplified for purposes of example only. (1) Assuming: a) 50 acres of property is to be acquired at $1,000/acre (also assessed at $1,000 per acre) to develop the greenway. b) The municipality will borrow the full acquisition cost at 5% interest for 20 years. c) Total acquisition cost, principal, and interest is $80,500. d) Development of the greenway will increase the value of nearby properties by 5%. e) 30 homes (on 1 acre lots) presently valued at $50,000 each, will be affected by development of the greenway. f) Property tax rate is $3.00 per $100 in assessed value. 1-12 I I I I I I I I I I I I I I I I Real Property Values {2) Increased property tax revenues: a) Present property tax for 30 homes: 30 x $50,000 = $1,500,000 $1,500,000 divided by $100 = $15,000 $15,000 x $3 = $45,000 per year b) Increased property tax due to greenway: $45,000 x 5% = $2,250 per year c) Taxes lost for greenway property: 50 (acres) x $1000 (assessed value) = $50,000 $50,000 divided by $1 O0 = $500 $500 x $3 = $1,500 per year d) Net annual increase in property tax revenues upon acquisition of the greenway: $2,250 - $1,500 = $750 per year Commission your own study. If you need specific and highly defensible information, you might consider commissioning your own study. Many of the above studies employed multiple regression statistical analysis, which can require a significant commitment of time and resources. If you have an economist and statistician on staff, they may be able to perform such a study. Otherwise, contact a nearby university. The departments of real estate, resource economics, economics, business, city and regional planning, statis- tics, or sociology may be able to assist, especially if graduate students need research projects in these departments. Or, if this resource is not available, you can hire experienced consultants. Sources of Information Planning/Engineering Departments. Zoning maps, available at local plan- ning departments, will assist you in determining similiar properties. Those properties within the same zone must comply with the same standards. The maps may also show public access to the greenway, which will allow the calculation of the distance to such access from different neighborhoods. Your planning or engineering department will likely have aerial photos of the areas adjacent to the greenway. These photos can also be used to identify "like properties". 1-13 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Real estate agents/local Board of Realtors. These people can be contacted for historic sales data, in addition to discussion of com parable market areas for determining 'like' properties. The Board may operate a multiple-listing service which includes records of sales prices, dates of sale, and housing character- istics. City/County Assessor. Your city or county Assessor's office can be an invaluable contact for qualitative and quantitative data on housing markets, such as how assessed values correspond to market prices, and how green- ways and open space affect assessed values. The city or county's Assessor's Office holds records concerning lot sizes and assessed values of taxable properties. They also maintain transfer tax records which include a description of properties which have changed hands, These records are usually attached to deeds. Banks, Savings and Loan, and other mortgage institutions. If you are dealing with a large market area and mortgage institutions have been operating in the area for a long time, you may be able to access mortgage records for properties near the greenway. These institutions may be reluctant to release specific information, but may be able to advise on trends. Appraisers/Appraisers' associations. The American Institute of Real Estate Appraisers (AIREA) certifies general appraisers and residential appraisal specialists. (If you look in the yellow pages under real estate appraisers, many will show the MAI symbol, denoting certification by AIREA.) Appraisers in your area may be able to provide historical information, information on appraisal procedures, and how proximity to open space is reflected in appraised values. Also, representatives of the association may be willing to discuss property value impacts at a city council, planning commission, or board of supervisors meeting. You might choose to enlist a representative for your organization's board of directors or advisory committee. Corporate Iocationfirms. Thesefirms helpcorporationstransferemployees by purchasing a transferred employee's home if the employee is unable to sell it in a specified period of time. Appraisals for these homes help determine how much the firm will pay for the house. Get an opinion concerning the greenway's influence on property values or sales time. 1-14 Real Property Values Meil end Telephone Surveys: The Totel Design Method. This 1978 text by Don Dillman is a good reference for constructing and implementing mail and telephone surveys. Contact your local university library or the publisher, dohn Wiley and Sons, (201) 469-4400. Considerations in Using These Rationales Be careful in constructing your case. Increased property values are more complicated than proximity to the greenway. It also depends upon the greenway's character. The studies in this section show the highest increase in property values occurs in cases where parks highlight open space, with some recreational access and limited use. Open space zoning, without access, also increases adjacent property values. While highly developed and heavily used areas may decrease the value of immediately adjacent property, usually increases the value of property nearby. This diversity highlights the need to make reasonable assumptions, carefully justify them, and explain that your conclusions are only estimates. Talk to as many experts as possible to construct your case and build support. Numbers will withstand scrutiny if they are reasonable, supported by sound logic, and good homework. Measure the real change in values. When calculating changes in property values, be certain you are measuring those changes that are attributable to the greenway. This means you must always subtract fluctuations in the general housing market from fluctuations in values of property near the greenway. Be careful in trying to outbid development. Deveropers may argue you should consider property tax revenues which might be generated if the land were developed with homes rather than open space. This would generate greater property tax revenues; however, residential development would also result in a greater demand for public services. The costs to the local government for providing these services may exceed the property tax reve- nues collected. Furthermore, developmentofthe property versus perservation of open space is generally irreversible. (See Section 7, Public Cost Reduction) Get current information. Recent information will best reflect the character of the current market. If you are looking at assessed values, or sales prices, choose only those that have been updated in the last five years. 1-15 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I References American Hiking Society. Summer 1990, "Pathways Across America." Barnwell, Brian. Appraiser. August 1989. Personal communication. Brooks, Andrea. May 8, 1987. "Cluster Builders' New Enticement: Adjacent Woods." The New York Times. Brown, Tommy L., and Nancy A. Connelly. "State Parks and Residential Property Values in New York." Ithaca, NY: Cornell University, Department of Natural Resources. Caputo, Darryl F. 1979. Open Space Pays: The Socioenvironomics of Open Space Preservation. Uorristown, NJ: New Jersey Conservation Foundation. Cohee, Melville H. 1974. ImpactofState Land Ownership on Local Economy in Wisconsin. Madison, WI: Wisconsin Department of Natural Resources. Colwell, Peter. 1986. "Open Space on Real Estate Values." Proceedings of the Governor's Conference on the Economic Significance of Recreation in Illinois. Springfield, IL: Office of the Governor. Cooper, John D. Director of Parks. Boise, Idaho. 1988, 1989. Personal communication. Correll, Lillydahl and Singell. May 1978. "The Effects of Greenbelts on Residential Property Values: Some Findings on the Political Economy of Open Space," Land Economics Diamond, Douglas B. February 1980. "The Relationship Between Amenities and Urban Land Prices." In Land Economics 56(1 ):21-32. East Bay Regional Park District. 1978. A Trails Study. Oakland, CA: East Bay Regional Park District. Fox, Tom. March, 1990. Urban Open Space, An Investment That Pays. Monograph published by Neighborhood Open Space Coalition, New York, NY. 1-16 I I I I I I I I I I I I I I I I Real Property Values Gilliam, Harold. May 18, 1980. "Our Resources are Being Depleted." San Francisco Examiner/Chronicle. Goodenough, Richard D. 1965. "Saving Open Space Saves on Local Taxes." Far Hills, NJ: Upper Raritan Watershed Association. As cited in Caputo, 1979. Hagerty, J.K., T.H. Stevens, P.G. Allen, and T. More. 1982. "Benefits from Urban Open Space and Recreational Parks: A Case Study." Journalofthe Northeastern Agricultural Economics Council 11 (1):13-20. Hammer, Thomas R., Robert E. Coughlin and Edward T. Horn IV. July 1974. "Research Report: The Effect cfa Large Parkon Real Estate Value." Joumalofthe American Ins~tuto of Planners Kimmel, Margaret M. 1985. "Parks and Property Values: an Empirical Study in Dayton and Columbus, Ohio." Thesis. Oxford, OH: Miami University, Institute of Environmental Sciences. Lacy, Jeff. August, 1990. "An Examination of Market Appreciation for Clustered Housing with Permanently Protected Open Space." Center for Rural Massachu- setts Monograph Series. Amherst, MA: University of Massachusetts. Land Design Research, Inc. 1976. Cost Effective Site Planning." National Association of Home Builders. Lyon, David W. 1972. "The Spatial Distribution and Impact of Public Facility Expenditures." Ph.D. Dissertation. Berkeley, CA: University of California, Depart- merit of City and Regional Planning. As cited in Spickard, 1978. Mazour, Leonard P. 1988. "Converted Railroad Trails: The Impact on Adjacent Property." A MastersThesis. Manhattan, KS: KansasState University, Department of Landscape Architecture. More, Thomas A., Thomas Stevens and P. Geoffrey Allen. August 1982. "The Economics of Urban Parks." Parks and Recreation. National Park Service and Pennsylvania University, 1992. The Impacts of Rail- Trails. Washington, D. C.: Rivers, Trails and Conservation Assistance Program. 1-17 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Nelson, Arthur C. 1986. "Using Land Markets to Evaluate Urban Containment Programs." In APAJoumal. Spring, 1986:156-171. Nelson, Arthur C. April 1985. "A Unifying View of Greenbelt Influences on Regional Land Values and Implications for Regional Planning Policy." Growth and Change. People for Open Space. Economic Impact of a Regional Open Space Program for the San Francisco Bay Area. Los Angeles, CA: Development Research Associates. Seattle Office for Planning. May 1987. "Evaluation of Burke-Gilman Trail's Effect on Property Values and Crime." Seattle, WA: Seattle Office for Planning. Spickard, Steven E. June 1978. "The Economic Benefits Generated for the East Bay Community by its Regional Park System; A Report to the East Bay Regional Park District." Berkeley, CA: University of California, Department of City and Regional Planning. Weicher, John C. and Robert H. Zerbst. 1973. "The Externalities of Neighbor- hood Parks: An Empirical Investigation." Land Economics 49(1):99-105. Wonder, Robert L. 1965. "An Analysis of the Assessed Valuation of Private Properties in Proximity to Public Parks.' Prepared by Core Foundation intern for Oakland Parks Department. San Francisco, CA: Core Foundation. Wright, David. The Value of Urban Open Space. The Trust for Public Land. 1-18 I I I I I I I I I I I I I I I I Expenditures by Residents Contents Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Leisure, A Spending Pdority Page 2-3 Resident Expenditures 2-5 Trends and Expenditures by Activity 2-5 How to Use These Rationales in Your Community 2-9 Sources of Information 2-14 Consideralions in Using These Rationales 2-15 References 2-17 2-2 I I I I I I I I I I I I I I I I I I I I I Expenditures by Residents I I I I I I I I I I I I I I I I This section explains how expenditures by residents on greenway, river, and trail-related activities can help support the economy. The section covers overall expenditures on leisure and outdoor recreation, and how these contribute to national and state economies. Also discussed, is how resident recreation expenditures can contribute to a local economy. The last subsection lists specific expenditure levels for various river, trail, or greenway-related recrea- tion activities. This is the first of several sections in the Resource Book which discuss actual expenditures related to greenways, rivers and trails. The other sections - Commercial Uses, Agency Expenditures, and Tourism- focus on the impacts of spending by visitors and the agency(les) which manage(s) the greenway. The concepts and applications within these sections overlap. Leisure, a Spending Priority Leisure is often considered to be discretionary, or free time, away from workand other responsibilities, where participants choose and control their activities. Leisure activities can vary from mountain climbing, walking for health, or watching a football game on television. Outdoor recreation is a major compo- nent of leisure, usually included in leisure spending figures unless reported otherwise. Leisure and recreation expenditures can account for a substantial part of people's discretionary spending. However, depending upon the strength of the economy, leisure spending may fluctuate. If the economy is in a recession, leisure spending may decrease. · In 1982, people spent more on leisure and recreation than the U.S. Government spent on national defense or housing construction. It is projected that leisure expenditures will continue to increase as discretionary (spendable) income increases, much accredited to increases in two-income families. Leisure expenditures were forecast to be over $400 billion by 1990, double the level of 1980 (National Park Service, 1983). · In 1990, 8.8 million people jogged at least ~ice a week throughout the year, an increase from 8.1 million in 1987. Nearly $12 million was spent on athletic footwear in 1990. (U.S. News andWorld Report, April 1, 1991) 2-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I · In Pennsylvania, residents spent approximately $11.8 billion or 12.6 percent of their total personal consumption dollars on leisure pursuits in 1981. Of this total, over 47 percent (an estimated $5.6 billion) was spent for outdoor recreation activity alone. Leisure was the third largest item in personal budgets, exceeded only by housing and food costs (National Park Service, 1983). · In 1988, recreation and leisure was the third largest industry in California. More than $30 billion per year is spent by Californians on recreation and leisure. This amounts to approximately 12 percent, or one of every eight dollars, of total personal consumption expenditures in the state (California Department of Parks and Recreation, 1988). · One study estimated that $620 million is spent annually by California residents for urban recreation activities (playing sports, visiting parks, jogging, bicycle riding). This generates an estimated $400 million in personal income and 22,800 jobs (Loomis, t 989). How much outdoor recreation and leisure is attributable to the activities pursued along greenways, rivers and trails? Many outdoor recreation activities can be observed along a greenway. Patterns vary significantly due to factors such as proximity, accessibility, weather, recreation opportunities, income, and educational levels. Greenways are likely to provide increased opportunities for the more popular outdoor recreation activites. According to Lifestyle Market Analysts, a new report by National Demographics and Lifestyles Inc., a survey of households in 212 metropolitan areas revealed overall participation rates for several related activities: · 40.4% Walk for health · 32,8% Pursue physical fitness/exercise · 14.9% Bicycle · 13.75% Boat orsail · 12.4% Run or jog 2-4 I I I I I I I I I I I I I I I I I I Expenditures by Residents I I I I I I I I I I I I I I I I Resident Expenditures You can define your local economy as the area for which you want to quantify the recreation activity and expenditures related to your greenway project. A greenway project can attract residents not only to the greenway, but also to nearby businesses, and encourage residents to purchase recreation-related equipment and services. These greenway-related expenditures help support the local economy through generation of employment and income. Specifically, local residents who use the greenway may spend money to get to and from the site, on supplies and equipment to pursue their recreation experience, at on-site concessions and events, and nearby attractions. The m ag nitude of the i m pact of these expend itu res depends upon the boundary and character of your local economy and the level of spending by local residents. If a new resource is created which attracts visitors, or non-residents, then outside dollars may be brought into your Ioca! economy. River, trail and greenway resources which attract visitors can stimulate economic activity and create new jobs and income. These non-resident expenditures are discussed in the Tourism section of the Resource Book. Trends and Expenditures by Activity The following discussion provides information on trends associated with uses of greenways and provides evidence where spending associated with green- way-related activities has been quantified. Activities include wildlife-related recreation, river boating, trail-related recreation, and traditional park pursuits. Fish and wildlife-related recreation Fishing Hunting Birdwatching Wildlife photography 2-5 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I River boating Rafting Rowing Kayaking Canoeing Motorboating Sailing Sailboarding Houseboating Jet skiing Trail-related recreation Pleasure walking Walking for health Jogging Hiking Volksmarching Bicycling/Horseback riding Cross-country skiing Traditional park pursuits Photography Camping Hosteling Attending special events Concerts Festivals Driving for pleasure Fish and Wildlife-Related Recreation. Activities associated with fish and wildlife-related recreation inlcude: fishing, hunting, birdwatching, and wildlife photography. According to the U.S. Fish and Wildlife Service, 77 percent of the U.S. population, or 140 million people, take part in wildlife-related recreation each year. Annual expenditures by these participants in 1985 were $55.7 billion. Of the total expenditures on wildlife-related recreation in 1985, over 74 percentwas spent on hunting and fishing (U.S. Fish and Wildlife Service, 1988). · Hunting, fishing, and wildlife viewing result in $2.9 billion of annual spending in California. This generates $1.66 billion in personal 2-6 I I I I I I I I I I I I I I I I I I Expenditures by Residents I I I I I I I I I ! I I I I I I income to California business owners and employees. Over 100,000 jobs in California are related to wildlife or fishing recreation (Loomis, 1988). According to the U.S. Forest Service (1989), sport fishing is one of the most popular outdoor recreation activities in the U.S. A steady increase in fishing has been occurring nationwide, from 17.6 percent of the U.S. population in 1955 to 25.4 percent in 1988. The number of anglers doubled in this peded and the days spent angling increased two and one-half times (Manfredo, 1986). In 1985, nearly 60 million U.S. anglers spent approximately $28 billion in pursuit of their sport (U.S. Forest Service, 1989). Average angler expendituresperyear have been estimated at approximately $900 for food, lodging, equipment rental, licences, and subscriptions. Start up expenditures for fly fishing equipment can range from$500 to $2000. Demand for fishing is expected to continue to increase. Viewing wildlife was another rapidly growing recreation activity in the 1980's and is the most common form of wildlife recreation in California, where nearly 75 percent of state residents participate. As reported by the U.S. Fish and Wildlife Service, over one-fourth of the total national wildlife-related recreation expenditures, $55.7 billion in 1985, was related to bird watching and wildlife photography (U.S. Fish and Wildlife Service, 1988). · The typical birdwatcher spends $13 per day, with almost half spent on food and beverages, one-fourth on gas and oil, and most of the remainder on lodging. Spending by birdwatchers contributed atotal of $27 million in wages and business income to California's economy in 1987. A total of nearly 2,000 California jobs are supported by birdwatchers (Loomis and Unkel, 1989). Interest in wildlife viewing should continue to increase over the next decade in areas where urbanization, education, and income levels continue to rise. River Boating. Recreational river boating is one of the nation's most popular outdoor activities and includes rafting, rowing, kayaking, canoeing, motorboat- lng, and more recently, jetskiing. In the last two decades a dramatic growth in whitewater boating has been evidenced (Shelby and Lime, 1986). Use of wild and scenic rivers in national forests m ore than doubled in the six years between 1976 and 1984 (Feuchter, 1984). 2-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors · In Colorado, river running brings in more than $50 million annually to the state's economy and fishing contributes over $1 billion annually (Finken, 1988). · Americans purchased approximately 90,000 canoes in 1988, a fourteen percent increase over purchases in 1985 (Ingrassia, 1989). Canoeing by residents and visitors contributes $20.1 million per year to the Arkansas economy. Overall economic impact of outdoor recreation in Arkansas is $1.5 billion per year (Wilson, 19B6). it has been forecasted that there will be participation by a wider segment of society in river boat activities and that there will be increased representation by familygroups. There is also likelyto be longer participation throughout people's lifetimes, increased numbers of participants from older age groups, and increased sport expertise and equipment ownership. These trends are expected to increase the demand for quality river trips and for challenging whitewater experiences, technical innovation in creating new river equipment, better skill and safety instruction, and more sponsored events (Lime, 1984). Trail-related Recreation, Much of the population enjoys trail-related recrea- tion such as: walking for pleasure and health, jogging, hiking, volksmarching, bicyling, horseback riding, and cross-country skiing. Research has shown ! ,.~ walking and hiking have played a significant role in the nationwide growth in outdoor recreation. There are over 26 million day hikers in the U.S., and over half the American public says they walk for pleasure (Spitzer, 1988). Also, running has increased significantly since the early 1960's. According to a national recreation survey conducted for 1982-1983, over 25 percent of the U.S. population ran for conditioning during that tim e period (Van Horne, et al., 1985). · Trail users of three rail-trails generated a total economic impact of over $1.2 million for each trail, according to the recent study The Impacts of Rail-Trails. These trails were used mostly by people living nearby who visited frequently. "Users spent an average of $9.21, $11.02, and $3.97 per person per day as a result of their trail visits to the Heritage, St. Marks, and Lafayette/Moraga Trails respectively." (National Park Service and Pennsylvania State University, 1992). I I I In the United States, the rate of participation in bicycling tripled since the early 1960's. As of 1988, bicycling has been one of the most popular and rapidly growing outdoor sports in America. Over one-third of the U.S. population, or88 million people, are bicyclists; 47 million are adults, 41 million are children. 2-8 I I ! ! Expenditures by Residents Twelve million bicycles were sold in 1987, more than the number of cars sold that same year. Bicycles are used for commuting to work as well as pleasure and fitness. There were 2.7 million bicycle com m uters in the U.S. in 1987, m ore than double the number in 1982. All-terrain bicycle use, or mountain biking, has increased dramatically from 200,000 in 1983, to 7.5 million in 1989 (Hecker, 1989). Bicycling attracts people of all ages and interest in this activity is retained from childhood into later years. With the aging of the U.S. population, bicycling will likely retain its popularity as a "lifetime" activity. Since the 1960's, participation in horseback riding has been fairly constant, with a greater number of participants being female. Horseback riding is a very high expenditure activity. Another rapidly growing trail-related activity is cross-country skiing which experienced an 80 percent increase during the period be~een the 1982 to 1983 and 1987 to 1988 ski seasons. Over 50 percent of participants interviewed were be~een the ages of 25 and 44 and over 50 percent had skied less than five years (Ski Industries America, Inc., 1988). How to Use These Rationales in Your Community Demonstrate how leisure and recreation expenditures are important in your state, region, or community. Cite some of the examples given to show how people value recreation and open space opportunities. Gather similar information for your state, region, or community and present them at meetings and in publications. Quote the above examples to show how greenway-related expenditures are important to other economies. The examples provided focus upon a variety of aspects of how recreation/open space expenditures support local, regional, state, and national economies. If appropriate, local examples can be found and listed. Choose the activities relevant to your planning area; the size of the economy, and the type of impact. Calculate the economic impacts of your project. The following are the four steps you might work through to determine what to calculate, as well as how to do it. Be sure to use constant dollars. (See Appendix B) Step 1: Define your economy and your project. An economy can be a commercial area, a town or city, a region, state, nation, or any other unit. It is where the majority of users and employees live and spend their money. Usually, the larger the economic land unit, the 2-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I 2-10 greater the economic impact, because more dollars circulate within the defined economy. Often the economy is defined for political reasons. If the County Supervisors are the relevant decision-makers, they will be interested in how the existing or proposed greenway affects the County. A project can be an existing greenway, or one that is proposed. You should be as specific as possible regarding the geographic extent of the project, the type of recreation activities that occur there, who the users are and where they come from, and the resources necessary to construct/maintain it. Step 2: Determine user expenditures per site visit. An effective method to determine resident expenditures associated with the greenway is to hand out a mail-back questionnaire to a random sample of users. Make certain to provide a map with the survey which includes the greenway and the boundaries of the economy you have defined. You may also wish to consider on-site interviews and/or telephone surveys using staff, volunteers, and/or user groups. Con tact a local university for examples of questionnaires and assistance in constructing and analyzing the survey. Test the survey before conducting the actual survey. When you hand out mail-back surveys, ask for the name and phone number of the respondents so you can contact them if the completed survey is not returned promptly. Examples of survey questions are included in Appendix C. The survey results should allow you to determine the number of users, num ber of visits, expenditures per user in the local area, activities they are participating in, how much of their activity occurs within the greenway, frequency of use, percentage of residents compared to non-resident users. From this, calculate local expenditures per day for each type of user surveyed. Multiply those expenditures by the number of annual users in each category, then add these together for an estimate of total annual expenditures associated with your greenway. If use varies by season, day of the week, or time of day, be sure your calculations incorporate an annual average. If you are proposing a greenway, make some assumptions about likely expenditure patterns. Base your assumptions on sound logic. I I I I I I I I I I I I I I I I I I Expenditures by Residents I I I I I I I I i I I I I I I I Step 3: Apportion expenditures on recreation equipment, supplies, and clothing. This survey could include questions regarding annual expenditures made on equipment, supplies, and apparel. If so, to assess effects on the local economy, only those expenditures that were made within the region outlined on the survey map can be counted. Also, you can only attribute the portion of the equipment expenditures that relate to the proportion of the total use that occurs at the greenway. For example, if a person spends $50 per year on running clothes and half of their running is done at the greenway, the greenway-related expenditure is $25. If purchases are made that will last a number of years, divide the expenditures by the typical life of the equipment, then apportion for annual information. To make these calculations, calculate the annual amount your users spent on equipment, supplies, and clothing for their activity. Determine if the equipment and supplies were purchased from businesses in your local economy. Find out what percentage of time they pursue their activity within the greenway. Then multiply this percentage by the amount spent on the equipment within the local economy. Table 2-1 can be used to estimate the expenditures for new entrants into a particular recreational activity. Make an assumption on how many new entrants could be expected as a result of greenway, river, or trail protection. Multiply the number of entrants by the appropriate entry in Table 2-1. Estimates will vary by community. You may wish to contact local retailers for more appropriate estimates for your project. Step4: Show howyour project supports the local economy. Total the resident expenditures in the region from the preceding steps and summarize your findings. Determine the potential impacts of a proposed project. Your project can stimulate the local economy by increasing the demand for recreation-related goods and services.To estimate expenditures which may result from establish- ing your greenway, river or trail project, work through the calculations in steps 1 through 4 listed above. Rather than conduct a survey to determine actual expenditures, you can forecast the types and number of users your project is likely to attract. Document your assumptions carefully and thoroughly. 2-11 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Table 2-1 Estimated Start-up Costs by Activity (Per New Enlrant) I I Activity Bicycling Hiking Birdwatching Cross-country Skiing Horseback Riding Skating Purchase Low-end Cost Mid-Range Bicycle $ 300 $ 800 Helmet 50 50 Lock 30 30 Bicycle Rack 25 Bicycle Pack 50 Water Bottle 10 Shoes 45 Clothing 50 Car Rack 150 Total 380 1,210 Shoes/Boots 45 120 Socks 10 15 Daypack 20 40 Water Bottle 5 5 Total 80 180 Binoculars 50 150 Spotting Scope 200 Field Guide 10 50 Camera, lenses, etc 1000 Total 60 1,780 Skis 85 250 Boots 40 90 Bindings 10 30 Poles 15 30 Wax 15 60 Clothing 1 O0 Gaiters 25 Total 165 505 Lessons 250 250 Hard Hat 40 40 Boots 100 100 Crop 15 15 Horse 1,000 Tack 500 Boarding (annual) 2,400 Total 405 4,305 Inline Skates 85 175 Wrist Guards 20 20 Knee and Elbow Pads 40 60 Total 145 255 2-12 Cost I I I I I I I I I I I I I I I I I I Expenditures by Residents I I I I I i I I I I I I I I I I Activity Canoeing Kayaking Rafting Fishing Cold Water Fishing WarmWater Estimated Start-up Costs by Activity (Per New Entrant) Purchase Canoe Life Jacket Paddles Car Rack Foul Weather Gear Drybaos Safety Equipment Total Low-end Cost 250 40 100 390 Kayak Paddle Dnysuit Sprayskirt Helmet Safety Equipment Car Rack Total 7OO 9O '200 5O 40 1,080 Raft Frame Oars Safety Equipment Life Jackets (for 4) Car Rack Clothing(for 4) Lessons/Training Total 1,500 25O 2OO 150 2OO 475 2,775 Rods, reels, line Flies, lures, tackle Accessories Waders Total 90 60 70 70 290 Rods, reels, line tackle Accessories Total 65 45 70 180 Mid-Range Cost 500 5O lO0 150 1,000 1800 7OO 9O 2OO 5O 4O 75 150 1,305 3,000 250 200 150 200 100 200 475 4,575 2O0 150 200 150 7O0 150 150 200 500 2-13 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Recognize the multiplier effect of greenway expenditures. The effect of greenway spending is multiplied as local businesses patronized by greenway users purchase supplies and services from manufacturers and other busi- nesses. This concept is further discussed in Section 4, Tourism, under the subsections ~Direct, Indirect and Induced Effects" and ~Uultipliers.' Compare the economic effects of the greenway to those of another facility or program. Compare the number of jobs supported or created by your greenway to those supported by a well-known local employer. Discuss effects of decisions that could alter visitation. Many activities such as natural area restoration, fish habitat improvement, increased publicity, better access, etc, can increase recreational use. If such activities are proposed, calculate the effects of such a change. Use this information as base data for illustrating how changes in management (supply) or visitor needs (demand) affect the greenway's impact on the local economy. Sources of Information Recreation and Sports Associations. The National Sporting Goods Association (NSGA) publishes survey results of participation in 26 sports throughout the nation. This information includes average prices paid for equipment, shoes, and clothing. The most recent version, "Sports Participation in 1988," can be obtained from NSGA, at (708) 439-4000. The results are also available on a state-by-state basis. There may be fees charged to obtain this information. Information can also be obtained from individual recreation organizations. A partial listing of national organizations, their location, and phone number, is below. Contact state and local recreation associations in your area for additional information. American Hiking Society Washington, D.C. (703) 385-3252 American Nature Study Society Homer, NY (607) 749-3655 American Recreation Coalition Washington, D.C. (202) 662-7420 American Rivers Washington, D.C. (202) 547-6900 2-14 I I I I I I I I I I I ! I I I I I I Expenditures by Residents I I I I I ! I I I I I ! I I I I Heritage Trails Fund (Equestrian and Hiking) (415) 672-5072 International Mountain Biking Association Bishop, CA {619) 387-2757 League of American Wheelmen Baltimore, MD (301) 944-3399 National Organization for River Sports Colorado Springs, CO (303) 473-2466 The National Recreation Survey. This is a summary of the results of a national household interview survey conducted in 1982 and 1983. The survey covered the current participation status of 36 recreation activities. Expected trends in participation were also covered. Information concerning the survey can be obtained from the Recreation Resources Assistance Division, National Park Service. Contact Merle Van Home at (202) 343-3780. It is important to note, however, recreation activities have changed during the last decade ( i.e. mountain bicycling has experienced dramatic growth) and that recreation activities may be different in your area. Assistance with surveys, The National Park Service social sciences and reporting programs are located in the Office of the Assistant to the Director, Science and Technology. This office may provide assistance by explaining sampling methods and providing copies of tested questionnaires. For further information contact (202) 343-8123. Media. Recreation is covered by the news almost daily. Look for feature articles and relevant information. Review newspapers, periodicals, and newsletters for information relevant to trends, activities, and expenditures that could be useful in building your case. Keep a file of related clippings. Considerations in Using These Rationales Be cautious. Your greenway may have opposition. If economicsbecome a point of contention, your analyses may be closely scrutinized. Document all your assumptions and be able to retrace your calculations upon request. The best defense is a good offense. Be knowledgeable concerning your method, results, and potential limitations. This will also put you in a good position to scrutinize other economic analyses presented by opposing interests. 2-15 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Realize the policy implications of your data. This information can be helpful in setting economic development policy. Knowledge ofwho spends the most, where these people are from, and what services they desire, can assist in providing direction for development or changes aimed at increasing the economic benefits to an area. Bear in mind that more is not necessarily better, especially in sensitive resource areas, which might be adversely impacted by overuse. Make protection of the greenway resources your bottom line and manage use accordingly. 2-16 I I I I I ! I I I I I I I I I I Expenditures by Residents I I I I I I I I I I I I ! I I I Re;erences Arizona State Parks. 1989. "Creative Funding for Trails." Arizona Trail News Phoenix, AZ: Arizona Hiking and Equestrian Trails Committee, Arizona State Parks Board. Sue Thomas, Editor. California Department of Parks and Recreation. June 1988. California Recreation Plan. Sacramento, CA: State of California. Davis, John S. 1986. "The National Trail System Act and the Use of Federal Protective Zoning." Harvard Environmental Law Review10(1):189-255. Doyle, Thomas B. Letter of April 24, 1989. Director of Information and Research, National Sporting Goods Association, Mt. Prospectus, IL. Feuchter, Ray. 1984. "Perspectives on River Recreation in the National Forests." In Popadic, et al., eds. Proceedings of the 1984 National River Recreation Symposium. Baton Rouge, LA: Louisiana State University, School of Landscape Architecture. Finken, Mary. April 1988. "What It's Worth." River Runner Magazine. Hecker, Rob. September, 1989. "Land Claims! Are Mountain Bicyclists Getting Their Share?" California Bicyclist. I ngrassia, Paul. July 24, 1989. "Today it is Possible to Sail a Freighter and Call it a Canoe." Wall Street Journal. Kelly, Timothy J. and Ronald M. Sushak. 1987. "Significance of Water-Related Outdoor Recreation to the State and Regional Economies in Minnesota." MN: Minnesota Department of Natural Resources, Division of Watem, Office of Planning for the Water Allocation Project. Klar, Lawrence R. and Jean S. Kavanagh. 1986. "Hiking Trail Systems in the United States." A Literature Review- President's Commission on Americans Outdoors. Washington, D.C. 2-17 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Klar, Lawrence R. and Jean S. Kavanagh. 1986. "Hiking Trail Systems in the United States." A Literature Review- President's Commission on Americans Outdoors. Washington, D.C. Langenau, Ed. 1986. Literature Review. President's Commission on Americans Outdoors. Washington, D.C. Lawton, Kate. May 1,1986. The Economic Impact of Bike Trails: A Case Study of the Sugar River Bike Trail. Lime, David W. 1984. 'Who Uses Rivers for Recreation and What of the Future?' In Popadic, et al., eds. Proceedings of the 1984 National River Recreation Symposium. Baton Rouge, LA: Louisiana State University, School of Landscape Architecture. Loomis, John. Summer 1989. "Estimating the Economic Activity and Value from Public Parks and Outdoor Recreation Areas in California.' Journal of Park and Recreation Administration. Loomis,John. 1989. EconomicActivityandVaiueAssociatedwithPublicParksand Outdoor Recreation Areas in Californi~ Cosponsered by California Association of Recreation and Park Districts and California Park and Recreation Society. Davis, CA: University of California, Division of Environmental Studies. Lcomis, John and Chris Unkel. 1989. "The Economic Contribution of WiJdlife Viewers." OutdoorCalifomia. Loomis John, Michael Creel, and Joseph Cooper. October 1989. Economic Benefits of Deer in California: Hun~ng and Vie~ng Values. Davis, CA: University of California, Institute of Ecology. Report ~2. Manfredo, Michael. 1986."Recreational Fishing." A Literature Review- President's Commission on Ame#cans Outdoors. Washington, D.C. National Park Service and Pennsylvania State University, 1992 The Impacts of Rail-Trails, Washington, D. C.: Rivers, Trails and Conservation Assistance Program. Nationai Park Service. 1983. Winning Support for Parks and Recreation. State College, PA: Venture Publishing. Na~onalWi~life Feder~on. 1988. 1988 C, onseva~on Directory. Washington, D.C. 2-18 I I I I I I I I I I I I I I I I Expenditures by Residents President's Commission on Americans Outdoors (PCAO). 1986. Hearing testimony. Schmidt, Adolph. November 1982. "Equestrians in California and Their Contribution to the Economy.' Concord, CA: Heritage Trails Fund. Schwecke, Tim, Dave Sprehn, Sue Hamilton, and Jack Gray. January 1989. A Look at Visitors on Wisconsin's E/roy-Sparta Bike Trail. Madison, WI: University of Wisconsin- Extension, Recreation Research Center. Shelby, Bo and David W. Lime. 1986. "Whitewater River Recreation." In A Literature Review- President's Commission on Americans Outdoors. Wash- ington, D.C. Ski Industries America. 1988. Southwick, Robert I., and David B. Rockland. October 1989. How to Conduct an Economic Impact Analysis. Washington, D.C.: The Sport Fishing Institute. Spitzer, W.T. September 13,1988. Speech to Ninth National Trail Symposium. Helena, GA. SportFishinglnstitute. 1988. Tho Economic lmpact of Sport Fishing in the U. S. Washington, D.C.: Sport Fishing Institute. U.S. Fish and Wildlife Service. 1988. 1985 National Survey of Fishing, Hunting and Wildlife Associated Rect:eation. Washington, D.C.: U.S. Department of Interior, Fish and Wildlife Service. U.S. Forest Service. March 1989. "Progress Report- Rise to the Future: Fish Your National Forests." Washington, D.C.: U.S. Forest Service, Wildlife and Fisheries. U.S. News and World Report. October 9, 1989. "The Price of Fun.' Van Horne, Merle. 1987. "Economic Impact of Parks Methods Assessment." Draft memo. Washington, D.C.: National Park Service, Recreation Resources Assistance Division. 2-19 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors ! ! Van Home, Merle J., Laura B. Szwak, and Sharon A. Randall. 1985. "Outdoor Recreation Activity Trends- Insights from the 1982-1983 Recreation Survey." Proceedings: 1985 National Outdoor Recreation Trends Symposium IL SC: Clemson University, Department of Recreation and Tourism Management. Wilson, J. L. 1986. Testimony at President's Commission on Americans Outdoors. 2-20 I I I I I I I I I I I I I I I I Commercial Uses Contents Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors / Concessions, Permittess, and Partn(~ships Page 3-3 Special Events 3-4 Filming and Advertising 3-6 How to Use These Rationales in Your Community 3-6 Sources of Information 3-8 Co~sideralions in Using These Ratioaales 3-9 References 3-2 3-10 I I I I I I I I I I I I I I I I I I ! ! Commercial Uses Greenways can provide business opportunities, locations, and resources for commercial activities. These activities may include on-site concessions, permittees, partnerships be~sen the managing agency and olher groups, special events, and commercial filming activities. Compatible business ven- tures can provide a wide range of visitor services and facility improvements. Documenting and estimating the economic impacts of the commercial uses associated with rivers, trails, and greenways can be useful in promoting your corridor project. Demonstrating these impacts might also help to expand a projector provide information to assist greenway promotion in other communities. Concessions, Permlttees, and Partnerships Concessionaires, permittees, and partnerships are recruited and usually bid for the right to provide a wide range of on-sits visitor services which a public agency chooses not to operate. Typical examples include food services, recreation equipment rentals and sales, lessons, lodging, and convenience items. These services directly serve and enhance the recreational exparience of greenway users. Concessions, permittees, and licensees are usually privately operated enti- ties, mostly for-profit though sometimes non-profit, that operate on public land by authorization of the managing agency or group. A partnership is similar, but most often involves non-profit entities. These activities can have a significant effect on a local economy. · Along the lower Colorado River (Arizona), thirteen concossairas under permit to the Bureau of Land Management generate more than $7.5 million annually in gross receipts, with a major spinoff effect in the local economy (Bureau of Land Management, 1987). · Golden Gate National Recreation Area (GGNRA), a National Park Service unit in San Francisco, California, has contracts with ten primary concessionaires. Total 1988 gross revenues for these concessionaires were over $16 million, over 25 percent of which was spent on payroll. GGNRA also has cooperative agreements with non-profit park partners who operate within park boundaries. 3-3 Economic Impacts of Protectins Rivers, Trails, and Greenway Corridors I I The seven primary partners generated over $6 million in total revenue in 1988, almost half of which went for payroll, which provided local jobs (National Park Service, 1989). Revenues may also be generated through agricultural leases within a green- way. For example, grazing leases on lands owned by the California State Department of Fish and Game in Northern California generated net revenues averaging more than $10,000 par year from 1981 through 1989. Cattle grazing on a portion of these lands, located at Earl and Talawa Lakes, was used as a resoume management tool to restore and improve habitat for the endangered Aleutian Canada Goose. The revenues generated from grazing were then utilized to improve recreation on the site. Special Events Special events not only generate revenues to sponsors and the community, but promote the greenway itself to residents and visitors. · Eppie's Great Race consists of a 6 mile run, 12.5 mile bike ride, and 6.35 mile paddle down the American River in California. The Sacramento County Department of Parks, Recreation and Open Space sponsors this annual event, held along the American River Parkway. All proceeds are donated to Adaptive Leisure Services (ALS). The 1989 Great Race raised $40,000 and race donations to date total over $260,000. These proceeds have allowed ALS to expand programs to meet the leisure interests and needs of persons with disabilities (County of Sacramento, 1989). · The 12th annual 'Great Race" in Pittsburgh attracted 12,807 runners to the city. Those runnem living outside Pittsburgh, but within Allegheny County, spant an average of $14.40 on race-related items, with 54 parcent spant within city limits. Pennsylvania runners travelling to the race from beyond Allegheny County spent an average of $28.29 within Allegheny County, 75 pement of which was spent within Pittsburgh. Not only did the event attract runners to the city of Pittsburgh, but it is estimated that over 40 percent of all travelling parties brought at least one non-runner to the event. In fact, 3-4 I I I I I I I I I I I I I I I I I I Commercial Uses I I I I I I I I I I I I I I I I one estimate showed that those runners living outside city limits brought over 4,000 spectators to the event. · Overall, the 1987 Great Race generated an estimated direct economic impact of $220,000 within Allegheny County. Adding registration fees paid by race participants, this total exceeds $330,000. This total does not include spectator expenditures except for those spectators brought by runners. Thus the overall total expenditures associatedwith the event would likely be much higher (Gitelson, et al., 1987). Special events can also be used to raise money and promote the greenway or trail itself. Such events can serve as a catalyst to gain support, strengthen volunteer organizations, and raise public awareness of your project. You should report this economic activity as testimony of support for your greenway. · flake a Walk on the Wild Side Ice Age Trail Hike-A-Then', in Wisconsin, drew over 1,200 hikers and raised $30,000, against $15,000 in expenses. The Ice Age Trail Council and Ice Age Park and Trail Foundation sponsored the event to raise money to support the development and maintenance of the trail, raise public awareness, and strengthen organizations by providing a rallying paint. Marketing techniques included distribution of several thousand posters featuring a "hiking mammoth,' advertisements and a feature article in Wisconsin Silent Sports, and a steady stream of articles in state and local newspapers (Pathways Across America, Fall 1988). · The San Joaquin River Parkway and Conservation Trust in Fresno, California, organizes a variety of annual events to raise money for the Trust. One of the most successful events was "Evening on the River," which featured dinner and entertainment at $100 per person. This event raised approximately $10,000. Another popular event is a bike rally, featuring a variety of distance rides, which raises public awareness of the Parkway in addition to money. The Executive Director of the Trust, Donn Furman, stresses the key to successful events is to get as many sponsors as possible. Sponsors can donate t-shirts, food, printing, and other services. Sponsors help to defray 3-5 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I event costs, thereby increasing the amount you raise for the greenway (Bonn Furman, 1990). · The Greenway and Nature Center of Pueblo, one of the most active trail-related organizations in Colorado, sponsors several events annually, as well as renting bicycles and rafts. One special event is the Bluegrass Festival and Crafts Fair. This event not only raises public awareness and money for the Greenway and Nature Center, it also provides opportunities for local artisans and food establishments ('lqm Merriman, Executive Director, Greenway and Nature Center of Pueblo, 1990). Filming and Advertising Unique and scenic areas are desirable as location backdrops for movies, television, and photo sessions for magazine and newspaper advertising. Fees paid to use these areas, in addition to the money spent locally by film production crews during filming sessions, are beneficial to the managing local agency and the local economy. Media exposure of a river, trail, or greenway can also help to promote the area and attract visitors. · Full-length motion pictures and commercial filming activities on public lands in Nevada contribute millions of dollars each year to the State's economy. Movies and television shows, commercials and advertisements filmed on BLM Public Lands in Utah have added income to Moab, Kanab, and other Utah communities (BLM, 1987). How to Use These Rationales in Your Community Show how concessions and events have affected other communities. Use some of the examples given to show how concessions and events have benefited other communities. Estircate concession expenditures. If you have concessions at your green- way, determine the following: 1. How much do they pay in contractual fees to the managing agency? This amount could be considered a revenue offset that the I I I I I I I I I I I I I I I I I I Commercial Uses I I I I I I I I I I I I I I I I agency would otherwise have to collect in taxes or other means. 2. What is their gross revenue? This is the amount the concessions collect from greenway visitors which is likely to cycle through the local economy. 3. What percentage of revenues are likely from non-residents? When you have defined your 'economy,' ask concessionaires to estimate what percentage (annual average) of gross revenues is likely from visitors from beyond the boundaries of the economy. These non-resident concession expenditures are considered "new dollars,' and a stimulus to the local economy. 4. How much of the concessionaires' gross revenue goes toward payroll? How many jobs are provided? Estimate Impacts of partnerships. If you have cooperative agreements with non-profit groups who operate in your greenway area, follow the same proce- dure outlined for concessions to determine their economic impacts. Estimate the Impacts of special events. If an upcoming event involves ticket sales, the total number of visitors and their expenditures can be calculated. Get data on gross receipts es a measure of economic activi!.y. If you have the opportunity to determine whether ticket buyers live within the economy, you will be able to determine resident versus visitor expenditures. If an upcoming event involves a promotion and operating budget, estimate the percentage of the total budget that is spent in the local economy. Include expenditures from event sponsors, promoters, and contributors. Add this amount to the gross revenues realized by concessionaires or non-profit entities involved. If the event does not have ticket sales, you may wish to conduct a survey of visitors. The purpose of the survey is to estimate how much visitors spent while attending the eventand how much was spent within the local community. You might also compare resident and visitor expenditures. Suggested questions for questionnaires are listed in Appendix C. A survey will be easier to conduct 3-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors if there are only a few exit points. If there are many exit points, interviews can be conducted within the event area. You should devise a systematic sampling method to avoid biasing results. Once you haveconducted asurveyand analyzedthefindings, you can multiply the average amount spent by the total number of people attending the event. This will give you an estimate of the total direct economic impact within your community. This assumes that the dollars spent ara on local businesses. If event concessions, their employees, and suppliers ara from beyond the local economy, the local economic effects may be negligible. If it is not feasible to conduct a survey, you might interview the event sponsors or promoters about the general characteristics of event participants. They may be able to give you information you can use as the assumptions neces- sary for your estimates. Determine Impacts of filming and advertising. If you have filming activities on your greenway, estimate permits paid, or donations, and the average expenditure per employee, per day, in the local economy. Many of these businesses operate on well defined budgets. Interview firms about their range of average location shoot costs and the variables involved. Multiply by total number of employees and total filming and production days in the local economy for total film and advertising-related expenditures in the local economy. Promote greenway events. If you ara not already doing so, use and promote special events in newsletters, brochures, fliers, and magazines. Remember, events bring people who will discuss their experience at your greenway with their family and friends when they re!urn home. Word-of-mouth can be a powerful and cost-effective means of promoting your greenway. Sources of Information Activity and Club Magazines. Magazines such as Walking Magazine, River Runner, etc., usually have listings and/or advertisements for events related to these activities and may be interested in covering your event, or publishing a news release that you provide. Regular review of these magazines may also give you ideas for events you could plan for your greenway. These magazines I I I I I I I I I I I I I I I I I I I Commercial Us~s I I I I I I I I I I I I I I I I may also identify clubs and organizations which regularly sponsor special events. Such groups could be encouraged to promote your river, trail, or greenway by using it as an event site or staging area. Operations. Fees paid to public agencies to operate businesses within greenways are a matter of public record. Contact the appropriate agency. Annual financial reports of concessionaires, psrmittees, and licensees to public agencies will provide information on how funds are spent. You might also contact them directly for more information. Considerations in Using These Rationales Develop guidelines for commercial uses. Some areas of your river, trail, or greenway project may be incompatible with commemial uses. Protection of the resoume should be your first priority. You should carefully determine which areas are less sensitive and would allow commemial use. Determine appro- priate levels of use. Issue perm its based on preferred levels of visitor Use and type of experiences you want to provide. Attach restrictions to the permit to ensure adequate protection of the resource. Use good survey methods. The better the survey method, the more useful the results will be. Plan your information gathering to best utilize the resources available. A local community college or university may be interested in helping with surveys as a class project. (See also "Sources of Information' in Expenditures by Residents, Section 2). Be careful. Document your assumptions and calculations, and backthem with sound logic. Peer review of your calculations is a must. If you have staff members with some background in economics or finance, their review and support would be especially important. Be sensitive. Private businesses may not wish to have their records a matter of public record as it may be perceived as potentially harmful to their competi- tive business position. While gross receipts and franchise, contract and permit fees are usually a matter of public record, levels of profit may not. 3-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I References Bureau of Land Management. 1987. Racreation2000. Washington, D.C.: U.S. Department of the Interior, Bureau of Land Management. County of Sacramento. 1989. 'Sweet Sixteen." In Newsline. Sacramento, CA: County of Sacramento, Department of Parks, Recreation, and Open Space. Gitelson, Richard, Frank Guiadagnolo, and Roger Moore. 1987. Tho Great Race Economic Impact Study. State College, PA: Center for Travel and Tourism Research, Department of Recreation and Parks, Pennsylvania State University. Koeberar, John. May 11,1989. President, Urban Park Concessions. Speech given to Economics Institute, May 10-11,1989. Sponsored by California Parks and Recreation Society. Long, Patrick T. "The Economic Impact of Rural Festivals and Special Events: Assessing the Spatial Distribution of Expenditures." Boulder, Colorado: University of Colorado, Boulder. National Park Service. Mamh 1989. 'Economic Impact Profile - Golden Gate National Recreation Area, San Francisco, CA." San Francisco, CA: National ParkService, Western Region, Division of Planning, Grants and Environmental Quality, and Golden Gate National Recreation Area. Sheffield, Emilyn and Glenn Weaver. March 25, 1989. Memo to Poplar Bluff Chamber of Commerce. 3-10 I I I I I I I I I I I I I I I I Economic Impacts of Protec~ng Rivers, Trails, and Greenway Corridors Agency Expenditures Contents Page Level of Expenditures 4-3 Local Business Suppoa 4-4 How To Use These Rationales in Your Community 4-5 Sources of Information 4-7 Co~sidera/~ons in Using These Rationales 4-7 References 4-8 4-2 I I I I I I I I I I I I I I I I I I I Agency Expenditure~s This section of the Resource Book presents how the expenditures of the agency responsible for managing a river, trail, or greenway can contribute to the local economy. Agency expenditures contribute to economic activity, providing payrolls and support to a myriad of businesses. _ Level of Expend,tures The managing agency supports the local and regional economy by providing jobs and purchasing supplies and services to develop, operate, and maintain the greenway and related improvements. Benefits to the local community are greater if supplies and services are purchased from local businesses. The following examples illustrate the level of expenditures which potentially impact the local community. Expenditures must be reviewed in detail to determine how much is spent locally. I I I I I I I I I I · The American River Parkway accounted for over $1 million in expenditures by the County of Sacramento Parks and Recreation Department in fiscal year 1989-1990. This 5,000 acre greenway includes 23 miles of paved trails and over 50 miles of riding and hiking trails. Approximately $600,000 of the expenditures were made for services and supplies, and $450,000 for salaries and benefits. Expenditures on services and supplies range from professional planning services to paper products (Wright-Woodruff, 1990). · Boulder Creek Corridor in Boulder, Colorado, is maintained by both the City Public Works Department and the Parks and Recreation Department. The Parkand Recreation Departmenrsgroundskeeping maintenance generates annual expenditures of $6,000 for salaries and $3,000 for services and supplies per mile. The Transportation Division of Public Works spends $1,600 in salaries and $850 per mile for trail maintenance (Barnett, 1990). · A 1978 study completed for the East Bay Regional Parks District in California, assumed that for every $1 received by the District in tax funds, grants or gifts, $3 was returned to the community through supplies, contracts, equipment, payroll, and transportation (Spickard, 1978). 4-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I · In 1989, the East Bay Regional Park District spent over $27 million for employee salaries and benefits (Cobb, 1989). Employment generated by a greenway project can be targeted by the manag- ing agency to benefit particular needs of the community. For example, programs may be implemented to employ population segments suffering from high unemployment. · In response to community needs for youth employment and job training, the city of Battle Creek, Michigan, and the Urban League joined in a program to hire youths to construct the city's Linear Park. The program provided employment and training for approximately 200 youths over four summer seasons between 1984 and 1987. The Urban League of Battle Creek was responsible for hiring, while city staff performed planning and engineering (Kracht, 1990). This program not only provided employment, but helped the youth develop work skills and a "sense of Fide in their contribution to the City of Battle Creek in general and the Linear Park in particular" (City of Battle Creek, 1985). · Youth and the environment are also brought together under the California Conservation Corps (CCC). Each year the CCC employs approximately 2,000 young adults, 18 to 23 years old, to work on conservation projects sponsored by local, state, federal government, and non-profit organizations. This mutually beneficial program not only provides young adults with employment and the development of work skills, it also gives conservation-related organizations access to an affordable labor force. Corps' accomplishments include: construction or rebuilding 2,500 miles of trails, nearly four million work hours in park improvement, and more than 900 miles of stream clearing for salmon and trout migrations (California Conservation Corps, 1990). Local Business Support Agency expenditures are more important to some businesses than others. Some businesses or contractors may be dependent upon local recreation/ open space agencies for a significant portion of their revenues. 4-4 I I I I I I I I I I I I I I I I Asency Expenditures · In one year, local recreation agencies in Illinois spent $136 million in a diversity of economic sectors. The top ten sectors were utility services, insurance, vehicles, sporting goods, lumber and building materials, legal agencies and service, swimming pool supplies, chemical lubricant and gasoline supplies, food purchases, and play ground equipment (Sheffield, 1986). · A T-shirt printing shop in the St. Louis area estimated that 15 to 20 percent of their 1987 revenues came directly or indirectly from the area's municipal agencies and that this market was increasing (Sheffield, 1988). · The sporting goods manufacturing firm, Wilson, noted that park and recreation agencies directly or indirectly supported as much as 30 percent of the company's corporate/domestic sales (Sheffield, 1988). How to Use These Rationales In Your Community List specific greenway-related expenditures. Determine all agencies and groups directly involved in managing the greenway. List expenditures for their greenway-rslated activities. Itemize annual expenditures by activity. Ex- amples of expenditure categories are: planning, acquisition, development, operation, and maintenance. Include all annual expenditures for personnel, supplies, and equipment. For each, estimate the percentage of these expen- ditures which are made within the local economy. Annual expenditures can be calculated either for the calendar year or fiscal year. Calculate the total expenditures made within the local economy and the number of jobs provided. If your greenway has not yet been implemented, go through the same process, but project future annual expenditures. Apportion other greenway.related expenditures. Some agency expendi- tures will be for administration, personnel, supplies, and equipment that may be used only partially for the greenway. If this is the case, estimate the proportion attributed to the greenway and catalogue these expenditures. If these are annual expenditures, figure the percentage of time staff or equipment is involved and apportion the expenditures accordingly. For heavy equipment, or other long-term investments, you need to calculate the annual cost of the investment. This is also termed'annualizing' and may include calculations for 4-5 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I depreciation. Askaccounting or finance specialists for the appropriate figures to convert long-term expenditures to annual costs. Total the annual expendi- tures that can be attributed to the greenway and add to the costs calculated for the greenway-specific expenditures given above. This total is the direct impact of greenway-relatad agency expenditures. Calculate greenway-related employment. Keep track of the number of employees necessary to operate the greenway. The managing agency should be able to provide employment figures. Seasonal jobs should be converted to full-time, year-round equivalents. For example, three four-month seasonal positions can be counted as one full-time, year-round position. Many graenways involve multiple managing agencies since the corridors pass through different political jurisdictions. Be sure to add up the jobs and expenditures of all managing agencies and their respective suppliers and contractors. If possible, determine which city or countygreenway employees reside. Divide the total number of employees into percentages based on where they reside. Since employees typically spend most their paycheck in the community they live in, this will give a good indication which jursidiction benefits from greenway- related expenditures. Determine greenway.<lependent businesses. Talk to businesses that receive agency expenditures. Determine what proportion these expenditures comprise of the businesses' total revenue. Keep this information on file. Communicate results. Use a simple graphic format to show how expendi- tures and jobs are supported by greenway managing agencies, their suppliers, and contractors. Computer desk-top graphics can be very effective, particu- larly for pie-charts and bar-charts. You can also show the distribution of economic activity by jurisdiction. 4-6 I I I I I I I I I I I I I I I I I I Agency Expenditures I I I I I I I I I I I I I I I I Sources of Information Public and non-profit agency budgets are a matter of public record. U,$. Census. Census documents list average incomes for different occupa- tions, by specific areas. Call your local library's government documents department for the appropriate volume and location. Budget and Finance Specialists. Agency budget and finance specialists are the experts on what and where greenway expenditures are being rnade. These specialists might also be helpful in case methodological questions arise. Considerations in Using These Rationales Interpretation of expenditure information. You may wish to give sttonger emphasis to the other impacts of your proposed project before discussing agency expenditures. This information might be used to show how expensive the greenway will be. The bottom line, however, is that agency expenditures can help support local businesses and should not be considered a drain on thelocal economy. This rationale is pest for a greenway that has already been implemented. It is also good for situations where agency programs are threatened by cut-backs. Calculate how many jobs would be lost due to cutbacks. 4-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I References Barnett, John, Greenways Coordinator. May 11,1990. City of Boulder Public Works, Transportation Division, Boulder, Colorado. Telephone Communica- tion. Bureau of Land Management. 1987. Recreation 2000. Washington, D.C.: U.S. Department of ~he Interior, Bureau of Land Management. City of Barde Creek..1985. Annual Report: The Battle Creek Metropolitan Linear Park. Kracht, Linn, Recreation Superintendent. May 8, 1990. City of Battle Creek Parks and Recreation Department, Batlle Creek, Michigan. Telephone com- munication. National Park Service. March 1989. 'Economic Impact Profile - Golden Gate National Recreation Area, San Francisco, California.' San Francisco, CA: Western Region, Division of Planning, Grants, and Environmental Quality, and Golden Gate National Recreation Area. Sheffield, Emilyn. May 1988. "The Economic Importance of Public Sector Recreation.' Missoutf Municipal Review. Wright-Woodruff, Lois, Community Relations Officer. May 7,1990. County of Sacramento Parks and Recreation Department. Telephone communication. 4-8 I I I I I I I I I I I I I I I I Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I Contents Page The Travel Industry 5-3 Natural/Cultural Areas Attract Travellers 5-4 Attributing Expenditures to Greenways 5-5 Direct, Indirect, and Induced Effects 5-7 Multipliers 5-10 Economic Impact Models 5-12 Marketing Potential 5-13 I I I I I I How To Use These Rationales in Your Community 5-14 Sources of Information 5-19 Considerations In Using These Rationales 5-20 I References 5-22 .5-2 I I I Toudsm I I I I I I I I I I I I I I I I Greanways, rivers and trails which attract visitors from outside the local area can stimulate the local economy. This section begins with examples stressing the importance of natural and cultural areas for attracting visitors, followed by examples showing how rivers, trails, and greenways can contribute to the travel and tourism sectors. There is a subsection on indirect and direct impacts and a discussion on how local economic effects of graenway-related spending can be estimated using computerized input-output models. The last subsec- tion demonstrates how corridor projects can increase tourism appeal and marketing potential of a local community. The Travel Industry Travel and tourism is the leading employer in several states and has been predicted to be the leading industry in the United Sates and the world by the year 2000. Travel is also a leading industry and source of jobs within regions and local communities, and is increasing in relative economic importance. Expenditures for travel and tourism impact transportation, lodging, eating es- tablishments, retail, and service businesses. These expandituras support jobs, personal income, and government tax revenues. · Travel industry employment for 1989 increased by nearly 3 million jobsfrom 1988. This employment includesair transportation,intercity highway travel, eating and drinking establishments, hotels and motels, and amusement and recreation services. The travel industry has continually out-performed the overall economy in creating new jobs. (U.S. Travel Data Center, 1989, 1990). · On an average, every $1 million in 1988 travel-generated visitor expenditures in California generated $25,000 in local taxes, $39,000 in state taxes, 18.5 jobs, and $198,000 in payroll expenditures (California Department of Commerce, 1988). For purposes of this section, 'travel and tourism-related expenditures' refer to those visits that originate fram beyond the boundaries of your local economy. Typically, these are trips fram at least 50 miles away and any trips which may involve an overnight stay. Expanditura patterns for visitors are usually higher than for local users. Spending by residents is discussed in Section 2 of this Resource Book. 5-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I A greanway, which provides local opportunities and enhances tourist draw, can be an important asset to your community. Recent trend analyses show that weekend trips to nearby areas are on the increase, while the traditional two-week summer vacation is on the decline for today's travellers. This is due to the job complications of two-income families, limited time budgets, interest in more specialized recreation experiences, increased mixing of personal and business travel, and year round schools. I I I Natural/Cultural Areas Attract Travellers Outdoor recreation, natural, historical, and cultural resources are increasingly important attractions for travellers. Recreational and environmental tourism, as well as historic and cultural, can be very relevant to greenway projects. Greenways often link together cultural and natural resources. Environmental- minded travel or ecotourism, in which the attraction is nature and conservation has also emerged during the 1980s and is expected to increase during the 1990s. · A poll commissioned by the President's Commission on Americans Outdoors found that natural beauty was the single most important criterion for tourists in selecting a site for outdoor recreation (Scenic America, 1987). I I · In a recent report, the governors of tive New England states officially recognized open space as a key element in the 'quality of life' in their region. They credited 'quality of life' as providing the foundation of a multi-billion dollar tourism industry and bringing rapid economic growth to the region (Governor's Committee on the Environment, 1988). I I I In 1988, 75 percent of all travel was for pleasure. Outdoor recreation and entertainment are growing in importance and accounted for 41 percent of pleasure travel, while 34 percant,was attributed to visiting family and friends. Business travel amounted for 17 percent of all travel in 1988, with the remaining 8 percent attributed to personal and other reasons. Travellers are also increasingly attracted to educational-oriented experiences provided by cultural and historic sites. One of the fastest growing areas of 5-4 I I I I I I Tou~sm I I I I I I I I I I I I I I I I tourism includes cultural and historic community festivals, events, and compe- titions. This will be a boon to community-based tourism. Greenways and trails can provide a link between historic and cultural sites. For example, the Azalea Trail in Mobile, Alabama, serves as a city beautification project and attracts tourists. Because preservation of these historic sites serves as a stimulus for tourism, there can also be significant impacts to the local economy. · In less than a decade, the establishment of Lowell NHS in Massachusetts, spurred the economic renewal of a repressed economy. The city of Lowel is prosperous and vibrant today. Investment by the public sector has totalled $122.7 million (including $18.7 million from the National Park Service to establish the National Historic Site.) For every $1 of public investment there has been a total private investment/return of $7. (Cassandra Walter, Superintendent Lowell National Historic Park, 1989) Attributing Expenditures to Greenways Greenways, rivers, and trails can have varied levels of tourist draw. They can be travel destinations in themselves, encourage area visitors to extend their stay in the area or enhance business and pleasure visils. The 'level of tourist draw' determines the appropriate proportion of the visitor's time and travel expenditures that can be attributed to the greenway, if visitors extend their trip an extra night to visit a greenway, the additional night's lodging and meals can be attributed to the greenway. · San Antonio Rive~valk is considered the anchor of the tourism industry in San Antonio, Texas. Tourism is the second largest economic sector in the the city, accounting for $1.2 billion annually. An auto survey concluded that the Riverwalk is the second most important tourist attraction in the state of Texas (Richard Hurd, San Antonio Department of Parks and Recreation). · In 1988, users of the Elroy-Sparta Trail in Wisconsin averaged expenditures of $25.14 per day for trip-related expenses. Total 1988 trail user expenditures were over $1.2 million. Approximately 50 percent of the usem were from out-of-state, and the typical user travelled 228 miles to get to the trail (Schwecke, et al., 1989). 5-5 Economic Impacts of Protecfir~ Rivers, Trails, and Greenway Corridors I I · In Montana, an estimated 75,000 visitors to the upper Missouri Wild and Scenic River, and Lewis and Clark National Historic Trail, contribute $750,000 annually to the economy of the area around the 149 mile river corridor (Bureau of Land Management, 1987). · More than 600,000 Americans took a bicycle vacation in 1985. Touring cyclists, when travelling in a group, spent $17 par day (camping), and $50 par day (staying in motels). Cyclists travelling alone spant an average of $22 par day (camping) and $60 par day (motels) (Moran, Wilkinson, and Fremont, 1988). · The Gauley River is a high quality whitewater rafting and kayaking resource in West Virginia. It is growing in popularity and increasing its economic impact on the surrounding region. Dam releases provide whitewater opportunities on a 24 mile stretch of the Gauley for 10 to 25 days in the fall. The rafters, during this short season, generate almost $20 million in economic activity in the region. Every $1 spent par visitor day generated $2.27 of sales in the state. Each visitor day generated an average of 1.79 days of employment. Economic rationale was instrumental in precluding potential additional dam construction on the Gauley; it was recently designated a National Recreation Area (Logar, et al, 1984). · On North Carolina's Nantahala River, raft trip participants increased approximately 700 percent between 1972 and 1981. Rafters generated $1.8 million in expanditures in 1 982. (Swain County Board of Commissioners, 1982). Tour oparators, outfitters, and guides are also important to local economies due to the expenditures their businesses generate, the fees they pay to oparate, and their advertising and promotion of local resources. Some companies such as'A Day In Nature,' based in San Francisco, which offers a day in nature complete with a gourmet picnic and door-to-door transportation, have capitalized on the demand for nature-oriented experiences. · An Oregon study of guides and packers indicates that in 1986, the outfitter/guide industry in Oregon (for, river, land, and marine activities) had a direct economic impact of $42.5 million. This resulted 5-6 I I I I I I I I I I I I I I I I I I Tourism I I I I I I I I I I I I I I I I in a total economic impact of $300 million (Bureau of Land Management,1987). · For every $1 paid to canoeing outfitters, custom ers spent $5 for gas, groceries, restaurants, campgrounds, and other lodging. 70 canoe liveries in Florida generate $38.5 million per year (Stout, 1986). · Commercial river outfitters are estimated to account for $70 million annually in Colorado. BLM fees for outfitter permits in Colorado totalled $110,000 in 1986 (Bureau of Land Management, 1987). ~Volkssporting,' 'Votksmarching ,' and other sim ilar types of activities may also be ideal for attracting tourists to local communities. Volkssporting, meaning "sport of the people,' organizes non-competitive public events open to all ages. The events include walking, bicycling, swimming, and skiing. Many partici- pants travel to events regionally. · An issue of the American Wanderer advertised volkssport events on trails in the state of Washington. Sponsored by the Washington Bed and Breakfast Guild, trail maps and event information are available from the Guild and local inn owners. (American Volksspporting Association, 1989) Direct, Indirect, and Induced Effects The actual amount spent by greenway visitors, from out of the local area, at businesses within your local economy represents only a portion of the total economic activity resulting from this spending. For instance, greenway visitors pumhase goods and services from local businesses. In turn, these businesses and their employees purchase goods and services from other businesses, thereby creating a chain reaction. These purchases of goods and services between firms occur between different economic sectors, such as manufactur- ing, agriculture and transportation. Therefore, an increase in visitor expendi- tures is likely to impact related sectors in the economy. The total impact resulting from an increase in visitor expenditures can be described in terms of direct, indirect, and inducedeffects. Understanding these three levels of effects is important because they show how the initial greenway- 5-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Figure 5-1 Economic Effects of Greenway Expenditures DIRECT EFFECTS Purchases by greenway users + INDIRECT EFFECTS Purchases of supplies and materials by the producers of greenway-related products and services, and the purchases made by the producers of the supplies and materials + INDUCED EFFECTS Purchases of production supplies and materials by producers, resulting from purchases by households TOTAL ECONOMIC EFFECTS OF GREENWAY EXPENDITURES related expenditure generates additional economic activity within your local or regional economy. Visitor expenditures that may be attributed to a protected river corridor, for example, may include food and beverage, fishing equipment, and gasoline for vehicles and boats. Direct effects result directly from the actual purchases by visitors. Local businesses meeting the river visitors' demand for goods and services, must purchase supplies to meet this demand. These pumhases (of food and beverage supplies, fishing equipment and gasoline, for example,) by the local businesses, are direct effects. Direct effects are also referred to as first round purchases in some studies. Indirect effects occur when the suppliers to these local businesses must increase their purchases of production materials and services from other businesses, and those businesses in turn increase their purchases. A chain reaction is created as each supplier must increase their purchase of inputs. Each exchange increases the total indirect effects. For food and beverage, indirect effects are when the local food manufacturers purchase additional produce from local farmers, and the farmers then purchase additional supplies in order to grow products necessary to meet the demand. Another example 5-8 I I I I I I I I I I I I I I I I I I Tourism I I I I I I I I I I I I I I I I might be fishing equipment. For instance, the indirect effects attributed to a fishing rod would include purchases by the rod manufacturer for graphite and other materials, and the graphite manufacturers (if local) purchases of local supplies. Thus, indirect effects extend to sectors of the economy beyond recreation-oriented businesses, such as agriculture, manufacturing, and transportation. The direct and indirect effects of increased spending by greenway visitors can result in an overall increase in the production of goods and services in the local economy. This increase in economic activity can also increase jobs and household incomes within the economy. A portion of the incomes is then spent on other goods and services. Consumer purchases resulting from the increased income of business owners and households set in motion another sequence of expenditures and pur- chases. The sum of these impacts over and above the directand indirect effects are the induced effects. For example, the induced effects would include all the purchases made by households which receive wages from their employment at the rod manufacturer or local market. Induced effects result from wages paid to households by both directly and indirectly affected businesses. These induced effects can be estimated from economic impact models. If you estimate the direct, indirect, and induced effects of visitor expenditures, you can show the total economic activity which can result from your greenway project. For recreation expenditures, thetotal economic effects,whethersales, jobs or incom e, are often approximately one and a half to three tim es m ore than the amount of the actual recreation-related expenditures. The magnitude of direct, indirect, and induced impacts depends on the number of visitors attracted to the greenway; the amount they spend; the structure and diversity of the local economy; and the quantity of input supplies purchased within your local community. If the local businesses purchase all their input supplies from outside the area, the direct and indirect impacts on the local economy would be zero. Similarly, if employees reside outsidethe communitytheyare much less likely to spend their income at local businesses and induced impacts are likely to be minimal. ,5-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Table 5-1 Multipliers How are the direct, indirect, and induced effects estimated? Economists often use m ultipliers to estimate whatthese effectswill be. A multiplier is a ratio, which can be defined as the total effects divided by the direct effect. Multipliers may also be used for indirect or induced effects only. Multipliers are usually written in decimal format such as 1.7. The greater the multiplier, the greater the potential increase in economic activity in the local economy. Multipliers are derived from rather complex economic models. To estimate what the total effects (direct, indirect, and induced) will be, you multiply the direct effect (first round purchases) by the multiplier to obtain the total effects. Thus, by using multipliers you can show the total amount of economic activity in your community per dollar of direct effect of greenway visitor spending. Multipliers can be used to estimate the total or indirect economic effects in terms of the number of jobs, sales, household income, or other measures of economic activity. For a greenway project, an economist could use an employment multiplier to estimate how many jobs would result from a specific level of greenway-related expenditures. An economist could also use an income multiplier to predict the additional income which would result from an increase in greenway-related expenditures. Table 5-1 presents economic multipliers for recreation spending at five state parks in Georgia. For this study, the local economic impact region was the county in which the state park was located. This study found recreational spending appears to be associated with relatively large m ultipliers. This means new or expanded recreation facilities within these regions would bring new dollars into the area, which through multiplier effects, would stimulate consid- erable economic activity. Multipliers vary by county, in part, because the structures of the local economies are different. Local Economic Multipliers for Recreational Spending at Representative Georgia State Parks F.D. Oahlonega Little Economic Indicator Unlcoi Red Top Roosevelt Gold Museum Ocmulgee Gross Output 1.,56 1.79 1.51 1.48 1.97 Total Income 1.68 2.08 1.68 1.55 2.14 Value Added 1.67 2.06 1.66 1.55 2.12 Employment 1.21 1.23 1.23 1,21 1.32 5-10 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Table 5-1 lists four multipliers which are commonly used: gross output, total income, value added, and employment. The gross output multiplierisgenerally the highest, however, the other multipliers are generally more useful indicators of economic activity in your local economy. Definitions of these multiplier terms are as follows: Gross output Value of all outputs produced in the local region; an indicator of economic activity similar to the gross national product (GNP) of the U.S. Total income Wages and salaries paid to employees and property income Value added Sum of employee wages and salaries, indirect business taxes, and property income Employment The number of people employed by firms and businesses in the local region Remembering that the multiplier for totat effects is the ratio of direct effects to total effects, this table can be used to estimate the total effects (direct, indirect, and induced) per unit of a direct effect. Using Table 5-1, the employment m ultiplier for Red Top State Park is 1.52. This means that there will be 1.52 jobs created in the local economy for every one job resulting from the direct impacts of recreation spending at Red Top. Therefore, if 10 new jobs resulted from the direct impacts of recreational spending, 15 total new jobs would eventually be created. Ten of these 15 would be the result of the direct impacts, and five additional jobs from the indirect and induced impacts. Remember the direct impact on employment results from the jobs provided by the recreation-related businesses themselves. The indirect impact on employment results if the recreation business buys production materials and services locally from other businesses, thereby increasing the number of jobs in those businesses. In another study, total effects were computed for three National Park Service river sites in the eastern United States. In this study, employment multipliers ranged from 1.57 to 1.84. The total gross output multiplier was approximately 2 for recreational expenditures at each of the river areas. Similar to the Georgia State Park study, the authors concluded that recreation expenditures do 5-11 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors ! I stimulate economic activity. The study also noted that as the local economies around the river sites diversify and become more self-sufficient, visitor spend- ing on river recreation will have an even larger effect on the local economy (Cordell, et al., 1989). Once again, multipliers are derived from-rather complex economic models. However, in many cities, counties, and states, multipliers have already been calculated and may be appropriate for your project. Caution should be exercised when using or interpreting multipliers. Make certain you know what the multipliers are describing. To use multipliers correctly, it is bestto workwith an economist or someone very familiar with their use. Economic Impact Models Economists often use computerized input-output models to derive multipliers. These models are very helpful for understanding the inter-relationships in a local economy. An input-output model which can be used to estimate the impacts ofoutdoorrecreation is the USDA Forest Service's IMPLAN. There are other types of economic impacts analysis models used, such as economic base and econometric models, but they are not discussed here. An input-output analysis usually shows the relationships bebNeen industries in a particular local economy using a matrix or table. This dollar flow table lists all the sales and purchases made by the different sectors of the economy over a period of time. For example, in the Georgia state parks study, to construct the dollar flow table researchers had to determine how recreation expenditures would be allocated through increased purchases of materials and supplies across various economic sectors. Recreational spending was determined to include purchases of gasoline for automobiles, recreational vehicles, and boats. Thus an increase in purchases of gasoline by park visitors would result in increased purchases by producers of gasoline, i.e., lubricating oils and greases, petroleum and coal, etc. Once the dollar flow table is constructed, another table is then constructed to derive the multipliers. This final table shows the total dollar amount change in each economic sector caused by a $1 change in output in any particular sector. Once again, using multipliers in calculating the direct, indirect, and induced 5-12 I i I I I I I I I I I I I I I I I I I I i I I I I I I I I I I I I I economic effects of your project will probably require the expertise of an economist. However, if this level of analysis is not feasible or warranted, it is still important to recognize that multiplier effects will be generated in the economy, even if they cannot be calculated. When multipliers are used, they can clearly show how attracting new visitor dollars into a region can stimulate considerable economic growth. Multipliers can also be used to show how a decline in visitor expenditures results in decreased local economic activity. · In 1985, purchases assoda~:l with water-related (dyes and lakss) outdoo~ recreation in Minnesota totalled nearly $1.2 bilion. Ad~ng ~qe multiplier effects of these purchssss brought the total impact to $1.9 billion. This level of expenc~ was linked to 37,600 jd~s in Ihe state, or 2.1 percent of t~tal state employment (Kdly and Sushak, 1987). Marketing Potential Rivers, trails, and greenways provide unique resources which nearby travel and tourist-serving establishments, chambers of commerce, and local visitors bureaus can capitalize on and feature in their advertising. Because a. greenway is a desired and profitable amenity for these businesses, they may also be willing to contribute to the funding and development of the greenway. · As a condition for development, the Campbell Inn (Campbell, California) was required to provide an easement for the Los Gatos Trail. Upon realizing the marketing potential of the trail, developers constructed part of the trail, an additional spur, and now provide rental bicycles for hotel guests. They also promote the trail in their brochure: "For fitness and fun, The Campbell Inn offers a jogging/biking trail connecting to a full series par course which.., runs along a scenic trail, passing through forests and alongside a stream and two beautiful lakes." Room rates at the Campbell Inn range from $80 to $275 per night. · Implementation of the Yakima Greenway spurred many business changes in the city of Yakima, Washington. The Rio Mirado motel credits their almost year-round occupancy to their proximity to the Greenway. Marti's restaurant built a patio adjacent to the Greenway and enjoys increased business from trail users and hotel guests. 5-13 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Svend's Mountain Sports, a mountain climbing and cms-country ski shop, now stocks mountain bikes and roller blades due to the opportunities created by the Greenway. Svend's would like to set up a rental concession on the Greenway during the summer season. Even nearby auto dealerships invite people to buy their next car at the "Greenway Auto Plaza" (Feasey, 1989). How to Use These Rationales in Your Community Quote examples. Choose relevant information from the examples provided to include in newsletters and presentations. Gather your own testimonies from lodging, restaurant owners, and travel agents in your community. Cite quotes from their promotional materials and advertisements. Find out whether any studies have been done in your area. Contact local university departments of tourism, recreation, business, or economics, to see if anyone has done research or special projects related to the economic impacts of tourism in your area. Discuss your greenway with them. Also contact federal, state, regional, and local agencies to see if there are any relevant studies. At the state level, try the agencies that govern corn m erce and tourism. At the regional and local levels, try local convention and visitors bureaus, chambers of commerce, marketing specialists, and major banks. There may be current reports on average tourism expenditures in your community. Depending upon what studies you can acquire, and their focus, you may be able to adapt them to your needs. Consult the authors of those studies, or other specialists, before doing so. Determine the influence of natural/cultural resources on travel trends, Determine how natural/cultural greenway-related resources play a part in determining travel preferences and trends in your area. Cite examples with which your audiencewillbe familiar. Lookat promotional materials in your area, including newspapers, brochures, magazines, and phone books to see how resource-based attractions are being promoted and featured in advertise- ments. Check with your local visitor information center. 5-14 I I I I I I I I I I I I I I I I ! ! Tou~sm Get to know your visitors. Find out who your visitors are; where they come from; why they visited the graenway; how long they ara staying in the area; what brought them there; and their expenditures while in the area. This can be accomplished in a variety of ways, ranging from casual conversations with visitors at the graenway, to intensive phone, mail, and/or visitor interviews at greenway entrances. It may be pessibie to do surveys of local overnight ac- commodations and businesses along the greenway. The appropriate m ethnd will depend upon the desired level of detail and reliability of results. · A survey of visitors to the Northwoods area in Wisconsin found that almost 1.5 million non-residents visited this araa in July and August of 1987. These non-resident guests spent almost $153 million in July and August of 1987, with an average daily expenditura of $14.66 per person. Table 5-2 wes generated from this information. Many tourism expenditure studies focus upon guests staying in commercial lodging facilities. This study illustrates that those staying in camp grounds, or with friends and relatives, are also an important part of total visitor expendituras. Northwoods Non-Resident Visitors; Type of Lodging, and Percent of Total Expenditures by Type of Lodging P~rcent of Total Percent of Total Lodging Non. Resident Non-resident Type Visitors Expenditures Resods 25.8% 39.7% W'~ Friends and Rela~ves 17.3 10.8 Second Homes 15.2 29.6 Motel/Hotel 8.6 7.1 Campgrounds 16.7 10.4 Day Trip 12.3 1.6 En Route Somewhere Else 3.9 0.8 Source: Gray, Hamilton, and Mistele, 1987. Table 5-2 5-15 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Determine the level of visitor draw of your resource. Is it a destination in itsalf? If not, would visiting the greenway require people to spend more time, or the night, in your area? Would it encourage business and pleasure travellers to patronize businesses near your resource, or pay more to stay, dine, or shop near iq Estimate where expenditures are going. Your promotion will have more impact If you can state who benefits from tourism expenditures. This may include tax revenues, jobs, and payroll expenditures. Estimate corresponding expenditures attributable to your resource. The level of visitation to your project will determine the type and amount of expenditures that can be attributed it. If your greanway project is a separate destination in itself, the resource can be credited with all or most of the expenditures associated with the visit. If a greenway encourages staying another day in your area, figure the expenditures associated with spending one night and the following day, and credit the resource with that amount. If people will pay more to be near the greenway, find out how much, and credit the resource with that amount. Expenditures in yourareacan include transpor- tation, food, lodging, entrance fees, outfitter/guide fees, and taxes. · A survey of expenditures associated with recreational use of the St. Croix River (Maine and New Brunswick), found that anglers spent over six times as much per person, per day, in the local Maine economy as canoeists and over four times as much as general vacationers. In fact, anglers spent more in the local economy than all other recreationists combined (Miles, 1987). Design your visitor surveys to determine what types of activities visitors participated in; how much each visitor spent per day for food, lodging, retail products; and other visitor-related services. The survey results would then provide an estimate of total annual expenditures. Sample survey questions are listed in Appendix C. 5 -16 I I I I I I I I I I I I I I I I I I Tou~sm I I I I I I I I I I I I I I I I I If you cannot perform a site-specific survey, the expenditure information in Table 5-3, may be applicable. You should note the year the expenditureswere calculated for Table 5-3 or any other study findings you may use. Remember the actual value of money changes each year. You should always be certain you work with expenditures calculated for the same year, or corrected for inflation (see Appendix B). Tourist Expenditures, by Activity Activit~ Locetion Expenditures Year Source Sailboarding Columbia Gorge $47 - $85 1987 Povey, et al 1988 (Oregon) Long distance Elroy-Sparta Trail $25 1988 Schwecke, et al (Wisconsin) 1989 Cross-country Norlhwoods $17 1978-79 Cooper, et a1,1979 (Wisconsin) Bicycle touring United States $17- $50 1986 Moran, 1986 River recreation Upper Delaware $20 1989 Ce'dell & Bergstrom, 1989 General vacation Delaware Gap $52 ( New York Pennsylvania, Now Jersey) New Riva' Gorge $24 ONest Virginia) St. Croix River (Maine) New Brunswick $30 Canoeing St. Croix River $15 (Maine) Angling St. Croix Rivar $42 River Rafting Gauley Riva' $60 - $133 (West Virginia) 1989 Logar, et el, 1984 Note: The above table includes a column for the year these expenditures were calculated. Because the actual value of money changes each year, always bo certain to work with expendilures calculated for the same year, or corrected for inflalJon. 5-17 Table 5-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Project Impacts Item changes In visitation. If travel trends and/or potential greenway management changes are expected to alter visitation to your greenway, you may be able to quantify the economic impacts of this change. To do this, you need to estimate the increase in expenditures and use relevant multipliers if available. Estimate total impacts. If you have economic expertise on your staff or within your citizen group, you may be able to estimate total impacts. Visitor expenditures for your project can be estimated by conducting a survey. Once you have determined the expenditures, you can use appropriate multipliers to determine the total impacts. Multipliers for your city, county, or state may already be available. Commission your own study. The U.S. Travel Data Center is available to prepare estimates of the impact of travel on communities. A local university may have graduate students available to conduct such a study. There are also consultants specializing in travel impact studies. In most large cities, travel- related businesses pool their funds to commission expenditure pattern stud- ies. You may wish to coordinate with them to get your greenway on their list of visitor attractions. Input-Output Models. Nationally, the two Input-Output models most often used in recreaUan and tourism analysis are IMP[AN (U.S. Forest Service) and RIMS-II (Bureau of Economic Analysis). Both of these models allow for deter- mining multipliers down to a county level. Information on IMP[AN is available through the University of Minnesota. Contact the Department of Agricultural and Applied Economics at (612) 625-8246. Use of IMP[AN is available to representatives of public agencies. Information on the use of RIMS-II is available from BEA's Regional Economic Analysis Division, at phone number (202) 523-0594. Fees are associated with accessing either of these models. Be sure to check that these models are appropriate for the size of your study area and the level of analysis you need. It is suggested that the above systems only be used for an analysis of three or more counties. Some manipulation is necessary to generate multipliers specific to the recrea- tion/open space sectors of your economy. Someone familiar with economic modelling should be contacted to provide technical assistance. Before at- tempting to adapt a national model, we recomm end you first contact your state 5 -18 I I I I I I I I I I I I I I I I I I TouHsm I I I I I I I I I I I I I I I I Department of Commerce to determine if an Input-Output model has been developed that could be applied to your economy. Promote your resource to the tourism community. Develop a plan for marketing your greaoway. Be careful the designated name of the project and any related brochures or information, accurately reflect the nature of the project and create the image you desire. Combine efforts with tourism promoters such as the local Chamber of Commerce, hotels, event planners, travel agents, convention and visitor bureaus, tour guides, and transportation operators to include promotion of the greaoway in their literature/brochures. Assist in distributing this information to visitor centers, conference centers, and other traveller information locations. Sources of Information The U.S. Travel Bats Center. The U.S. Travel Data Center (USTDC) is a national non-profit center for travel and tourism research. The Center pub- lishes the following reports: Outlook for Travel and Tourism Economic Review of Travel in America National Travel Survey Survey of Business Travellers Annual Travel Outlook Forum According to Center publications, USTDC maintains the only national eco- nomic model for estimating annual travel expenditure and their economic impact on cities, counties, and states (USTDC, 1989). The USTDC will perform research on the economic impact of tourism at various levels. To determine costs for these services, contact the USTDC in Washington, D.C., at (202) 293-1040. Impact of Travel on State Economies. This publication from the U.S. Travel Data Center includes information concerning travel spending in each state, and the employment, payroll, income, and tax revenue generated. Reports are available for 1984, 1985, 1986, and 1987. The 1987 report, released in April 1989, is available from USTDC for $70. 5-19 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Municipal Recreation Economic Impact Model. The Canadian Ministry of Tourism and Recreation has made this impact model available in both print and electronic disk versions. The model is intended to help municipal governments assess the economic implications of municipally-supported recreation activi- ties, Contact: Recreation Division Reseamh Program Recreation Branch 77 Bloor Street West, 8th Floor Toronto, Ontario M7A 2R9 Phone: (416) 965-5665 Tourism USA. Published bythe U.S. Department of Commerce, Tourism USA - Guidelines for Tou#sm Development is a valuable resource for those interested in any of the following: appraising tourism potential, planning for tourism, assessing the product and market, marketing tourism, determining necessary visitor services, and obtaining assistance. It is targeted at local communities interested in initiating or developing tourism. Sport Fishing Institute (SFI). This group has recently completod a user-fTiendly handbook on How to Conduct an Economic Impact Analysis. This guide is intended to give state fish and wildlife agencies the ability to conduct their economic analyses of fishing, hunting, and wildlife-related recreation. It pro- vides a comprehensive explanation on collecting expenditure data and using RIMS-II multipliers. Although the focus is on the state-level impacts of recreation expenditures, the document could prove very helpful in understand- ing economic impact analysis. An appendix in the report lists sources of fishing activity data available from various state agencies. (Contact Robert South- wick of SFI regarding availability of this report at (202) 898-0770). Considerations in Using These Rationales Use existing information. Make every effort to use available, existing infor- mation. Generating original economic impact information can be time consum- ing and expensive. When adapting existing information, list the assumptions and limitations of your analysis. 5 -20 I I I I I I I I I I I I I I I I I I TouHsm I I I I I I I I I I I I I I I I Use good survey methods. Consult with someone experienced in designing and conducting surveys, and interpreting survey results. Someone on your staff may have these skills. If not, contact your local college or university. Be wary about using license plate tallies to determine visitor origin, since a high percentage of domestic and international tourists use rental cars to explore the countryside. If possible gather survey information that is comparable to locally published per person tourism expenditure data. Be careful in the policy Implications of your results. Be careful in considering the implications of your analyses and the ~'adeoffs bebveen tourism/economic development and resource protection. For example, devel- opment of vacation homes or tourist attractions in the local area may bring dollars to the economy, but could also completely alter the community and its ecological character. 5-21 Rconomic Impacts of Protect~ng Rivers, Trails, and Greenwa¥ Corridors I I References Borgstrom, John C., etal. February 1990. 'Economic Impacts of Recreation Spending on Rural Areas: A Case Study.' Economic Development Quarterly, Vol. 4 No. 1. Bonds, Joe and Dr. Thomas Buchanan. 1988. 'State Parks and Wyoming's Economy, Summary Statistics of the 1988 Visitor Survey." Laramie, WY: Wyoming Recreation Commission and University of Wyoming. Bureau of Land Management. 1987. Recreation 2000. Washington, D.C.: U.S. Department of the Interior, Bureau of Land Management. California Department of Commerce. March 1988. Regional Economic Impacts of California Travel 1985 and 1986. Prepared by Dean Runyan Associates, Sacramento, CA: California Department of Commerce, Office of Economic Research. California Department of Commerce. 1989. Number and Characteristics of Travelersto Califomiain 1988. Prepared by Shulman Research. Sacramento, CA: California Department of Commerce, Office of Economic Research. Cooper, Rollin B., P. Sue Sadowske, and Mark D. Kantor. 1979. Winter Recreation Visitor Study, Wisconsin. Madison, WI: University of Wisconsin- Extension, Recreation Resources Center. Cordell, H. Ken and John C. Borgstrom. March 15,1989. Economic Effects of Rivers on Local and State Economies: National Park Service River System. Athens, GA: USDA Forest Service, Southeastern Forest Experiment Station, Outdoor Recreation and Wilderness Assessment Group, and University of Georgia, Department of Agricultural Economics. Feasey, Barbara. December 5,1989. Executive Director, Yakima Greenway. Telephone communication. Governor's Committee on the Environment. June 14, 1988. 'Report of the committee on the Environment.' New England Governors Conference, Inc. I I I I I I I I I I I I I I I I Tou~sm Gray, Jack, Sue Hamilton, and Mike Mistele. December 1987. Wisconsin's Norlhwoods Area - A Study of Daily Visitors. Madison, WI: University of Wisconsin Extension, Recreation Resources Center. Hershel Sarbvin Associates. 1986. Proceedings of the Governor's Confer- ence on the Economic Significance of Recreation in Illinois. Springfield, IL: Office of the Governor. Logar, Cyril M. and Adam Z. Rose. August 1984. Economic Impacts of WhitewaterBoating on the Gauley River. Prepared for Corps of Engineers - Huntington District. Morgantown, WV: West Virginia University, College of Business and Economics, and College of Mineral and Energy Resources. Miles, LeannaB. December, 1987. The Economic lmpact of Recreationai Use of the St. Croix River. Masters Thesis. Orono, ME: University of Maine, Department of Agriculture and Resource Economics. Mittleider, John F., and Jay A. Leitch. October 1984. Economic Contribution of State Parks to the North Dakota Economy." North Dakota Agricultural Experiment Station, North Dakota University, Fargo, ND. Moran, Catherine, William Wilkinson, and James Fremont. 1986. Literature review paper for PCAO. Office of Planning and Research, State of California. 1978. Economic Practioner' s Manual. Povey, David, Scott Kiellor, Mike Pruett, and Scott Whyte, July 1988. Colum- bia River Gorge Sailboard Economics - The 1987 Season. Prepared for: the Columbia River Ports of Cascade Locks, Skamania, Klickitat, Hood River, The Dalles; The Columbia River Commission; and We Oregon State Tourism Division. Eugene, OR: University of Oregon, Community Planning Workshop Report. Scenic America. November/December, 1987. "Fact Sheet: Sign Control and Economic Development." Sign Control News. Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Schwecke, Tim, Dave Sprehn, Sue Hamilton, and Jack Gray. January 1989. A Look at Visitors on Wisconsin's Elroy-Sparta Bike Trail. Madison, WI: University of Wisconsin-Extension, Recreation Research Center. Stout, Donna. 1986. Testimony at Orlando PCAO hearing. Swain County Board of Commissioners. April 1982. An Economic Impact Study of Jhe Whitewater Resource of the Nantahala River Gorge on Swain County and the Region. Technical assistance provided by North Carolina Department of Natural Resources and Community Development. NC: Swain County Board of Commissioners. U.S. Department of Commerce. Revised 1986. Tourism USA. Prepared by the University of Missouri, Department of Recreation and Tourism, University Extension. Washington, D.C.: U.S. Department of Commerce, Travel and Tourism Administration and Office of Travel Development. U.S. Travel Data Center. 1989. '1988 Domestic Travel in Review.' Washington, D.C.: U.S. Travel Data Center. U.S. Travel Data Center. 1989. "The Economic Impact Model (TEIM) - A Brief Description of the Products Available from the Model Developed and Operated by the U.S. Travel Data Center.' Washington, D.C.: U.S. Travel Data Center. 5 -24 I I I I I I I I I I I I I I I I Corporate Relocation & Retention Contents Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Quality of Life Attracts Businesses Page 6-3 Gmenways Contribute to Quality of Ufe 6-4 Greenways Promote Employee Fitness 6-5 How to Use These Rationales in Your Community 6-6 Considerations in Using These Rationales 6-8 References 6-9 6-2 I I I I I I I I I I I I I I I I I I I Many communities want to attract new, expanding, or relocating businesses to their area in order to increase their employment and tax bases. Retaining existing businesses within a community is even more important for economic stability. This section discusses the importance of quality of life factors in attracting new and relocating businesses. Greenways, rivers and trails contrib- ute to quality of life, and their use is a benefit to corporate employees for exercise and relaxation. Quality of Life Attracts Businesses The importance of quality of life in an area is increasingly cited as a major factor in corporate and business location decisions. · Quality of life for employees was the third most important factor in locating a business, according to an annual survey of chief executive officers conducted by Cushman and Wakefield in 1989. The two most important factors were access to domestic markets and availability of skilled labor. The top city for business was Atlanta, which also ranked first for highest quality of life. Seattle, which ranked as the second best city for business, also received very high marks for quality of life (San Francisco Chronicle, July 28, 1989). · The Joint Economic Committee of the U.S. Congress reports that a city's quality of life is more important than purely business-related factors when it comes to attracting new businesses, particularly in the rapidly growing high-tech and service industries (Scenic America, 1987). One aspect of quality of life is a location with convenient access to natural settings, recreational and cultural opportunites, and open space. · In a recent report, the governors of five New England states officially recognized open space as a key element in the quality of life in their region. It is a characteristic responsible for bringing rapid economic growth to the region, as well as providing the foundation of a multi- billion dollar tourism industry (Governor's Committee on the Environment, 1988). ,5-3 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors · A survey of 71 economists rated factors for Arizona's attractiveness as a place to live, work, vacation, retire, and locate future plants and corporate headquarters. The strongest factors contributing to Arizona's positive image were climate, job opportunities, and open space including abundant outdoor recreation opportunities. Seventy firms relocated or expanded their businesses in Arizona, creating 27,800 jobs and $970 million in indirect salaries and wages. Chief executive officers of these firms said they chose Arizona for its "outdoor lifestyle and recreation opportunities" (Valley National Bank, 1980). Greenways Contribute to Quality of Life Greenways, rivers, and trails can play an important role in increasing a comm unity's quality of life, and are attractive to businesses and corporations. Office site locations adjacent to rivers, trails and greenways are also likely to be more attractive to prospective tenants than sites lacking such amenities. Developers and property managers recognize these amenities. · Forum Properties(developerand property manager)in Beaverton, Oregon, successfully preserved much of the wetlands in two development projects in Tigard and Beaverton. The projects were designed around the existing creeks, making them a focal point. In developing this new corporate office park, the centerpiece was a constructed wetlands. The wetlands are appreciated by tenants for wildlife viewing and other aesthetic values. Many employees keep binoculars at their desks. (Jeffrey Sackett, Forum Properties, 1990). · The San Antonio RivenNalk is always used as an example of the high quality of life and livability of San Antonio, Texas. Site location teams for prospective relocating businesses generally visit the Riverwalk itself. The Riverwalk provides a retreat for employees during lunch and offers a valuable greenspace in the central business district. A location on the riverwalk is considered very desirable. An example is the HEB Company, a regional grocer, which relocated its corporate headquarters to a historic arsenal building, oriented toward the Riverwalk (Peche, 1990). 6.-4 Corporate Relocation and Retention I I I I i I I I I I I I I I I I · Pueblo, Colorado, once known mainly as an industrial city, made an early decision in its highly successful economic revitalization effort. The decision was made to improve its appearance and amenities in order to attract new businesses. The resulting investment in trails and parks along the Arkansas River and Fountain Creek is now credited by cityfathersas one of the most importantcomponents in turning around economic decline (Denver Post, January 27, 1990). · The American River Bike Trail in Sacramento, California, is included as an important outdoor recreation amenity in the Chamber of Commerce's publication AII About Business in Sacramento. It is described as a 30 mile oasis in the heart of the city. The President of the Metropolitan Chamber of Commerce, Roy Brewer, considers the trail to be evidence of the high quality of life in Sacramento, as well as one of Sacramento's treasures. 'At many locations along the bicycle trail you can wade into the river, cast a line, and not see a single sign of civilization. The river trails provide abundant salmon fishing and natural areas for hiking, horseback riding, or biking- a chance to get away from it all without having to leave the city" (Sacramento Chamber of Commerce, 1990). Greenways Promote Employee Fitness Businesses are realizing the benefits of healthy employees, both in increased efficiency and decreased hearth insurance claims. Greenways help promote fitness by providing convenient opportunities for exercise, such as walking, jogging, or exercise courses. · A study of a group of employees in San Jose, California, showed that those who exercised regularly had 14 percent lower medical claims, 30 percent fewer hospital days, and 41 percent fewer claims greater than $5,000 (City of San Jose, 1988). · A 1984 study of the office staff of Houston's Prudential Insurance Company found that higher levels of employee fitness lower major medical and disability costs. The study estimated a savings of $1.93 for every dollar invested in the program (Wellness Councils of America, 1989). 6-5 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Greenways and trails also help reduce firms' employees' commuting costs because they provide opportunities to commute by foot or bicycle. · An analysis of 1980 census data by the Northeastern Illinois Planning Commission (NIPC) showed 7,000 commuters in the Chicago region use a bicycle to get back and forth to work every day, weather permitting. During the peak summer months, this figure climbed to 14,000 commuters. NIPC found most of the commuters using bicycles to travel to work live near one of the five linear trails found in the Chicago region. In census zones where these trails exist, an average of 15.6 percentofthe commuter trips are by bicycle. When the region is taken as a whole, however, only one percent of the working population commutes by bicycle. These trails, therefore, seem to offer an alternative to using congested roadways to get to work (Eubanks, 1986). How to Use These Rationales in Your Community Talk to your local Chamber of Commerce. Talk with staff to see how your greenway is being promoted to prospective corporations and businesses. If it is not included in the Chamber's informational materials, provide photos and descriptive information for inclusion in these packets. For a proposed green- way, present to the Chamber examples of how greenways and quality of life have contributed to attracting corporations and businesses to other communi- ties. Encourage the Chamber to be an active partner in promoting your greenway. Talk to commercial corporate location specialists. These people are in business to help businesses find the best location. Find out how these specialists analyze a community's quality of life so you can tailor your promo- tional information accordingly. Talkto new businesses inthe area. Find out from the Chamber of Commerce or the Planning Department what new businesses have located in your area in the last five years. Get employment information and payroll dollars if possible. Ask if the greenway in particular (or the area's natural resources and recreation opportunities in general) had any influence in the company's location decision. Get follow-up contacts at the companies. Document statements and try to get 6-6 I I I I i I I I I I I I I I I I ! ! Corporate Relocation and Retention quantitative information wherever possible. For a proposed greenway, collect information on a similar project that could apply to your greenway. Figure out how many businesses are located adjacent to or near a greenway. Choose an arbitrary radius from an existing greenway and map the locations of corporations and businesses within that radius. Determine the proportion of corporations and businesses which selected the location after the greenway was implemented. Talk to executives and employees about their perception of the greenway. Ask businesses which have been located in your community for a long period which factors have kept them in the community. Determine how many employees use a greenway. Plan to visit a greenway during commuting hours and count the number of people using the trail to get to work. If you have the opportunity to do quick interviews, do so. Find out how often they use the trail, for what distance, and whether the greenway was an important factor in deciding where they live or work. If you cannot conduct interviews, count the number of people in work-type clothing. You may miss a few this way, but it will give you an estimate. Visit the greenway during lunch time to get a feel for the potential level of use by nearby employees for picnicking, walking, and jogging. Again, for a proposed greenway, draw some reasonable conclusions as to how your greenway could provide similar com- muting opportunities. Survey local employees. Get permission to survey employees from busi- nesses in close proximity to a greenway, river, or trail. You may wish to focus upon businesses new to the area. Have an attractive mail-back postcard distributed to each employee, asking whether they use the greenway to get to commute to work, or for exercise during the work day. Ask whether the greenway and the area's overall quality of life influenced their decision to move there. You may also be able to get information from the companies' employee relations or human resource staff about employee commuting, exercise patterns, turnover, and recruitment. Scan the media. Review Chamber of Commerce advertisements and real estate newsletters to see whether the quality of life in your area is being advertised to potential new corporations and businesses. Look in advertise- ments, recruitment pamphlets, and annual reports to see how they refer to the com m unity in which they are located and how it is visually depicted. Scan health newsletters and magazines to gather information on employee attitudes to- ward, and use of, river, trail, and greenway resources near their workplace. 6-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Considerations in Using These Rationales Economic growth and conservation must be balanced. If growth is not carefully planned, it may undermine the quality of life which helped to attract businesses. I I I I I I I I I I I I I I I I I I ! ! Corporate Relocation and Retention References Eubanks, David M. December 1986. "From Abandoned Railways to Recrea- tion Trails: Measurement of Community Impact." A report submitted for completion of research practicum (Public Affairs 262 & 263), University of Chicago. Chicago, IL. Governors Committee on the Environment. June 14, 1988. "Report of the Committee on the Environment.' New England Governors Conference, Inc. Keiner, Suellen. 1985. "The Contribution of Outdoor Recreation to State Economic Development." Washington, D.C.: The Council of State Planning Agencies. Peche, Robert, Vice President. May 14, 1990. San Antonio Economic Development Foundation. San Antonio, Texas. Telephone communication. Scenic America. November/December 1987. "Fact Sheet: Sign Control andEconomic Development.' Sign Control News. Valley National Bank. November 1980. "Arizona's Favorable Image Spurs Economic Growth." Arizona Progress. Phoenix, AZ: Valley National Bank, Economic Research Department. 6-9 Public Cost Reduction Contents Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Page Public Se~ice Requirements 7-3 Hazard Mitigation 7-5 PollulJon Co~trol 7-6 Health Care Costs 7-8 How to Use These Ra§onales in Your Community 7-9 Sources o~ Infonnalion 7-11 Comidaratioas in Using These RalJonales 7-12 References 7-13 7-2 I I I I I I I I I I I I I I I I I I I Public Co~t Reduction I I I I I I I I I I I I I I I I I Conservation of greenways, rivers, and trails may result in reduced costs to local governments and other public agencies. By conserving a greenway corridor rather than permitting intensive development, local agencies may reduce costs for public services such as sewers, roads, and school facilities. Establishing a greenway in an area prone to h~7~rds, such as flooding, may decrease costs for potential damages. Greanways and associated vegetation can also help control water, air and noise pollution by natural means, resulting in potential decreased pollution control costs. Greanways and trails may promote physical fitness, leading to decreased public health care costs. Public Service Requirements The choices between retaining undeveloped lands as open space or allowing residential development must be considered. How this choice effects public expenditures and the tax base is often the subject of debate. Expansion of the tax base is not always beneficial in the long term. Expansion almost always resuits in increased public service requiremants. In many situations, the cost of providing these services to residential development is much higher than the revenues to local governments resulting from the expanded tax base. A list of development costs could include: Transportation and Utility costs c} Roads o Public and private utilities Q Sanitary sewage r~ Water r~ Natural Gas o Electricity r, Storm sewage Facility and Service Costs o Open space, recreation, and libraries Q Schools o Health care o Police and lira protection r-, Mail delivery ~ Solid waste collection and disposal 7-3 Economic Impacts of Protec~in8 Rivers, Trails, and Greenway Corridors I I 7-4 · According to an American Farmland Trust (1986) study of Loudoun County, VA, 'over a wide range of development densities.., the ongoing public costs of new rasidential development will exceed the (public) revenues from such development.' Of those units analyzed, annual revenues per thousand dwellings were between $2.7 million and $2.9 million, while costs averaged between $3.5 and $5.0 million. The annual net deficit per thousand units ranged from $0.6 million to $2.3 million (1986 dollars). The greatest predicted shortfallwas for the lowest-density units, termed by the Trust as "rural sprawl.' The least shortfall was for medium density development. For all densities, school expenses were the largest proportion of total costs (American Farmland Trust, 1986). · In the City of Boulder, Colorado, the 1988 public cost for maintaining non-open space, such as developed acres, was estimated to be over $2,500 per acre, and could be as high as $3,200 per acre when utilities, flood control, transportation, and subsidiary governmental entitias' costs are included. The cost for maintaining open space in the City was only $75 per acre, or less than three percent the cost of non- open space (Craln, 1988). · In Culpeper County, Virginia, the average new residential unit can be expected to preduco a deficit in the County budget of $1,242 (1988 dollars) (Larson and Vance, 1988). According to these authors, this study addresses the widespread but erroneous perception that residential growth, in expanding the tax base, somehow contributes to local fiscal health. Although residential development results in increased revenues from the real estate tax and other sources, it simultaneously increases demand for public service expenditures and generates the need for expanded public facilities. A companion study concluded that for every dollar of tax revenue collected from residential land uses in Culpeper County in 1987, $1.25 was spent on county services. For every dollar collected from industrial/commercial or farm/1orest/open space lands, only $0.19 was spent on servicos (Vance and Larson, 1988). I I I I I I I I I I I I I I I I Public Co~t Reduction I I I I I I I I I I I I I I I I Hazard Mitigation Use of geologically or environmentally sensitive areas for open space or recreation purposes can reduce potential property damage costs and loss of life. Hazards which can be mitigated through conservation of open space include flooding, slope instability, structural fire damage, and earthquake losses. Many of the available examples focus on flood control. · Potential multi-million dollar claims for landeiide damages were avoided in Richmond, California, because property originally proposed fo~ residential development was purchased for natural parkland instead. In 1980, a major development was proposed on hillside land which was prone to instability. The local community objected to the development, arguing in part that the area was prone to instability and not suitable for development. The project was denied and the land, pumhased by the Trust for Public Land, was eventually transferred to the East Bay Regional Parks District for inclusion in the Wildcat Canyon Regional Park. After major storms in 1982and 1983, landslides occured on this property, which would have destroyed development had it been allowed. The state of California subsequently passed legislation granting landslide immunity to public agencies who maintain land in a natural condition. This legislation may help encourage park districts to acquire property which may be prone to landsJides (Kent, 1990). · Leaders in Johnson County, Kansas, expected fo spend $120 million on stormwater control projects. Instead, voters passed a $600,000 levy to develop a county-wide stroamway park system. Development of a greenways ne~ork along streambeds will address some of the County's flooding problems, as well as provide a valuable recreation resource. The Federal Flood Insurance Program subsidizes the cost of procuring flood insurance. Under the Program, a structure repeatedly damaged by floods can receive damage payments each time. It is often argued that in the long run, it would be cheaper for the public to acquire repeatedly damaged structures than fo continue to provide funds to repair or rebuild structures in flood-prone locations. 7-5 Economic Impacts of Protecting Rivers, Trails, and Creenway Corridors · In 1958, Gilbert White estimated thatfor every six dollars in potential damages reduced each year by new flood protection measures, at least five dollars in additional damages resulted from development in floodplains. Steve Hanke calculated the same ratio of dollars spent in fioed control to dollars of damage in 1972. Flooding accounted for larger annual property losses than any other single geophysical hazard (Riley). · Baltimore County, Maryland, acquired 100 homes in several lO0- year floodplains and resold them to people willing to relocate the structures to higher ground. At a cost of $27 million, the County will have cleared thelOO-year flood plain in eight of its most critical watersheds, with local money saving $85 million in storm damage assistance costs over the next five years (Caputo, 1979). Pollution Control Researchers have found that natural properties of plants and trees help mitigate water, air, and noise pollution, Greenways which help conserve such plants and trees provide a valuable contribution toward pollution control. These natural abilities are described below. Pollution can also be decreased by establishing trails and greenways which encourage people to walk or bicycle rather than drive automobiles. Establishment of a greanway along a river or stream helps maintain water quality because riparian vegetation helps filter out pollutants. Riparian vege- tation serves as an effective buffer between a stream and adjacent agricultural area. The retention capabilities of this vegetation prevents many agricultural chemicals from polluting the stream. A study of an agricultural watershed and riparian forest in Maryland (Peterjohn and Correll, 1984, as cited in Risser, 1987) found that if the riparian forest were removed, there would have been twice as much nitrate nitrogen lost to the stream. Riparian habitat within a greenway may also serve to keep water temperatures cool by shading the stream and thereby improve conditions for fisheries. Restoration of Boulder Creek in Colorado illustrates how a stream restoration project can not only reduce costs for pollution control, but also provide opportunities for fisheries. 7-6 I I I I I I I I I I I I I I I I I I I I Public Cost R~eduction I I I I I I I I I I I I I I I I · Boulder, Colorado, reduced potential wastewater treatment costs significantly by deciding to restore Boulder Creek rather than construct a nitrification tower. Discharge effluent at the wastewater treatment plant met water quality standards, however, further downstream, ammonia concentrations exceeded the allowable level. Downstream the creek had been previously channelized and degraded. Through revegetation, terracing, construction of aeration structures, and other improvements, the stream was restored. The natural functions of the stream wouid then cool and reaerate the water to convert the ammonia. Restoration of Boulder Creek would also improve wildife habitat, particularly fisheries. (John Barnett, Grasnways Coordinator, City of Boulder, 1990). Greenways can also help reduce other adverse impacts of urbanization. Drastic alterations of the ground surface can reduce infiltration. A decrease in infiltration can cause serious reduction in groundwater recharge. Establish- ment of greenways can help mitigate these impacts through conservation of natural surfaces. Greenways help reduce the impacts of noise in two ways. First, greenways serve to maintain distance between the noise source and receiver. Secondly, greenways can include planting barriers, such as tree belts and grassy areas that have the natural ability to absorb, defiect, and refract sound. The effectiveness of plants in controlling noise varies, depending upon the charac- teristics of ~he sound, the type, height, density and location of the planting, and climatic factors (Robinette, 1972). Although solid sound attenuation walls may still be necessary to mitigate noise impacts, the distance buffer of greenways and the natural ability of plants should not be overlooked. Greenways as buffers may also have a visual and psychological advantage over masonry wells. · A forestry study found that sound reductions attributed to wide belts of tall, dense trees often reached 10 decibels, and soft surfaces such asgrass or plowed ground adjacent to atree belt, reduced noise levels by 8 to 12 decibels (National Park Service, 1983). Greenways also help control air pollution because plants are natural air cleaners. Plants cleanse the air through the process of photosynthesis, which 7-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors control air pollution through oxygenation and dilution. Oxygenation refers to the introduction of excess oxygen into the atmosphere. The ability of plants to introduce excess oxygen into oxygen-deficient air serves to readjust the balance. A wide greenbelt along a highway could readjust the air balance in the area. Plants also act as cleansers by absorbing pollutants directly into their leaves and assimilating them ( Robinette, 1972). Vegetation can absorb ozone, sulfur dioxide, carbon monoxide, and airborne particles of heavy metals. I I I · Reductions in pollutant concentrations downwind from parks has I been recorded. In one study, reductions in particulate concentration of 19 percent were recorded in Ohio conifer stands. (Schmid, 1975, and Dochinger, 1975, as cited in National Park Service, 1983). · Trees in greenways also provide ambient temperature mediation and help reduce heating and cooling costs. Trees reduce winter heating costs by 40 percent in some cases; and summer shading might provide even greater benefits. A single, isolated tree, generously supplied with water can transpire energy equivalent to five average room air conditioners running 20 hours per day. The species of tree, available moisture, and available soil volume affect the quantity of water evapotranspired per tree (Newsweek, 1979 and Federed, 1971). I I I I I I Health Care Costs Active use of a river, trail, or greenway by community residents can help improve their physical fitness and health. Studies have shown that exercise can reduce health care costs. These costs savings may be shared by public health services, employers, and individuals. I I · Recreation activities involving exercise reduce health care costs. People who exercise regularly have 14 percent lower claims against their medical insurance, spend 30 percent fewer days in the hospital, and have 41 percent fewer claims greater than $5,000. These figures were taken from a Corporate Wellness Study for the city of San Jose, Department of Recreation, in 1988. I I I 7-8 I I Public Cost Reduction I I I I I I I I I · In 1991, American families paid nearly 12 per cent of average family income for health care, according to a Families USA Foundation study. By the year 2000, it was predicted that families will pay over 16 per cent of their income for health care. (U.S. News and World Report, December 23, 1991) · Exemise derived from recreational activities lessens health related problems and subsequent health cam costs. Every year, premature deaths cost American companies an estimated 132 million lost work days at a price tag of $25 billion. Finding and training replacements costs industry more than $700 million each year. In addition, American businesses lose an estimated $3 billion every year because of employee health problems (National Park Service, 1983). How to Use These Rationales in Your Community Calculate itemized costs for development. Table 7-1 has been adapted from the 1986 American Farmland Trust study of Loudoun County, Virginia. In this study, major annual public costs and revenues were projected for comm unities of varied densities. Table 7-1 shows the net public finance shortfall for medium density development (2.7 units per acre) is almost $670 per unit. I I I I I I I Housing Unit Public Cost and Revenue Projections for Loudoun County, Virginia (Medium Density Housing) Public Costs Amount Public school capital costs $ 243 Public school operating/instructional 2,256 Public school transportation costs 67 Public road maintenance costs 38 Water and sower operation costs 260 Law enforcement costs 165 Fire/rescue sorvice costs 58 Health and welfare costs 295 Government administrative costs 147 Total Average Annual Costs $ 3,528 (per housing unit) Net Loss per Medium-Density ~ource: American Farmland Trust, 1986 PubliC Revenues Real property taxes Personal property taxes Other local taxes Other local revenue Revenue from state Federal payments and grants Water and sower revenues Road maintenance/repair Total Average Annual Revenues (per housing unit) Dwelling = $ 669 Amount $ Table 7-1 846 24o 276 162 260 37 2,859 7-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Loudoun County, Virginia, is a rapidly growing area, with a present population of 66,500 and an annual budget of $85 million. Although it is one of Virginia's best farming communities, Loudoun County is within the Washington D.C. metropolitan area, and development prossure is high. If your community is similar to Loudoun County, you may be able to apply these conclusions to your community. Otherwise, the table illustrates the categories of public costs and revenues that can be used in determining the public cost/revenue relationship for your community. Calculate averege costs for develolxnent. If time or staff is not available to carry out itemized calculations, you may choose the method used in the city of Boulder case. In that case, city staff estimated the 1988 average cost per acre for beth open space and non-open space acreage within the city limits. The open space operational budget was divided by the number of acres in open space and the general fund operating budget was divided by the number of acres in non-open space use. The result was a comparison of public costs between these two land uses. Apply the Fitch Formula to understand the costs of development. Accord- ing to Lyle Fitch, former chief administrator to the City of New York, there are some cases where it is financially advantageous to acquire land to preclude its residential development. This point occurs when the municipal cost of servicing a proposed development is equal or greater than the tax revenues projected to be generated by development (Caputo, 1979). His formula to calculate this point is as follows: la = ta Cs La t Lf i Fitch Formula is the point at which the municipal costs of servicing development equaled generated tax revenues rep'esents the costs of providing public sen, ices to the development is any decrease in the assessment resulling from the acquisition mlxesents the tax rate is the cost of acquisition is the interest rate o~ borrowed money 7-10 I I I I I I I I I I I I I I I I I I Public Cost Reduction I I I I I I I I I I I I I I I I Calculate local expenditures for flood mitigation. If property owners have filed claims for flood damages, total those claims, and the processing and legal fees associated with them. For each flood event, find out the magnitude of the event (e.g. 50-year flood, 75-year flood, etc.) and how many properties were damaged. Forecastthepotentiallossesandclaimsofal00-yearflood. Com- pare these costs with ~he expenditures made for flood control measures to determine whether building in the flood plain is cost-effective. Talk to the staff of your local Flood Control District to acquire background information on flood control history, policies, and compensation in your area. They may refer you to the Federal Emergency Management Agency for information on the flood insurance program in your area and for maps of the 100-ysar flood plain. Your local district office of the Army Corps of Engineers is probably involved in flood control studies and hazard analysis in your area, and can be a valuable some of information. Compare future storm damage costs to relocation costs. As was done by Baltimore County, Maryland, calculate the cost involved in purchasing flood prone structures, and reselling them to persons willing to relocate to non-flood prone lands. Compare this amount to forecasted flood damage costs and present this information to decision-makers. Sources of information Practitioner's Guide to FiscalknpactAnelysis. This 1980 text by Burchell and Listokin contains overviews of several methods for projecting direct public costs and revenues associated with new development. Though a somewhat technical volume, it provides a good introduction to fiscal impact analysis. It alse includes summary tables which provide figuros for your calculations. This text should be available through your city, county, or university litxary. The Use of Economic Analysis in Valuing Natural Resource Damages. This 1984 text from the Environmental Law Institute is aimed at illustrating economic methods to assess damages from toxic substances. It describes many economic assessment methods in generic terms. 7-11 Economic Impacts of Protecting River~, Trails, and Greenway Corridors I I Considerations In Using These Rationales Keep all aspects of a situation In perspective. Public fiscal impacts are only one consideration in land use planning. Other considerations include ade- quate and affordable housing stock, ability to attract commercial investment, and local economic conditions. Dete~ine developer contributions to public service requirements. Many developers, as part of their proposals, or as conditions for development, construct public service facilities (sewer, stormwater system s, etc.), or contrib- ute to service funds. Often, however, these contributions will not cover the entire public costs of development. Make certain to incorporate developer contributions into your figures. Be sure to calculate long-term service costs, not just facility costs. Update dollar values. If you use dollar values from studies completed in different years, make sure you convert those values to a common year (preferably the current year) before using them in calculations. See Appendi- ces A and B. 7-12 I I I I I I I I I I I I I I I I I I Public Cost Reduction I I I I I I I I I I I I I I I I References American Farmland Trust. 1986. Density. Related Public Costs. American Farmland Trust, Washington, D.C. Caputo, DarrylF. 1979. Open Space Pays: The Socioenvironornics of Open Space Preservation. Prepared in cooperation with the Green Acres Program, New Jersey Department of Environmental Protection. Morristown, NJ: New Jersey Conservation Foundation. Cohee, Melville, Richard Garda, and John Hunt. June 30, 1976. Impacts of Kentucky State Parks on Local, Regional and State Economies. KY: Office of the Secretary, Kentucky Development Cabinet. Crain, James. November 3, 1988. Director, Real Estate/Open Space, City of Boulder, Colorado, letter to Dr. Albert Bartlett. Environmental Protection Agency. 1977. Tho Public Benefits of Cleaned Watec Emerging GreenwayOpportunities. Washington, D.C.: Environmental Protection Agency, Office of Land Use Coordination. Fodered, C.A. 1971. "Effects of Trees in Modifying Urban Micro Climates,' in Trees and Forests in an Urbanizing Environment. Amherst, MA: University of Massachusetts, Extension Service. Kent, Jerry. June 6, 1990. East Bay Regional Parks District, California. Personal communication. Larson, Arthur B. and Tamara A. Vance. February 1988. "Fiscal Impacts of Residential Development in Culpeper County, Virginia." Piedmont Environ- mental Council, VA. National Park Service. 1983. Winning Support for Parks and Recreation. State College, PA: Venture Publishing, Inc. Newsweek. October 8, 1979. 'The Greening of Cities.' 7-13 Economic Impacts o~ Protecfin~ Rivers, Trails, and Greenway Corridors Peterjohn, W. T. and D. L. Correll. 1984. 'Nutrient Dynamics in an Agricultural Watershed: Observations ofthe Role of a Riparian Forest. Ecology65:1466- 1475. Riley, A. L. 1985. 'Riparian Restoration, A Timely New Mission For Federal Water Development Agencies.' Sacramento, CA: Department of Water Resources, Urban Streams Restoration Program. Robinatte, G.O. 1972. Plants, People and Environmental Quality. National Park Service. Risser, Paul. 1987. "Landscape Ecology; The State of the Art." Ecological Studies, Volume 64. Vance, Tamara and Arthur B. Larson. February 1988. "Fiscal Impact of Major Land Uses in Culpeper County, Virginia.' Piedmont Environmental Council, VA. Yang, Edward J., Roger C. Dower, and Mark Menefee. June 1964. The Use of Economic Analysis in Valuing Natural Resource Damages. Washington, D.C.: Environmental Law Institute. 7-14 Benefit Estimation :Rivers, Trails, and Greenway Corridors Contents Page Introduction to Benefit Estimalion 8-3 Assessment Methods 8-5 Preservation Values 8-10 Benafit-Cost Analysis 8-11 Public Expression of Value 8-12 How to Use These Rationales in Your Community 8-12 Sources o~ Info~rnalion 8-13 Considerations in Using These Rationales 8-14 Re~nces 8-2 8-15 I I I I I I I I I I I I I I I I I I I Benefit Es~nafion I I I I I I I I I I I I I I I I Greanways, rivers, and trails provide many benefits which do not have established market values and are difficult to price and express in monetary terms. This section introduces techniques of economic analysis which attempt to quantify these non-market values to ensure a more complete measure of total benefits associated with rivers, trails, and greenways. The first subsections present methods used to estimate the benefits of recreation. Also included, is a discussion of how people may value river, trail, and greanway resources, even when they may not visitthese areas. Benefit- cost analysis is also introduced as an economic technique which may be helpful for some river and grsenway projects. Introduction to Benefit Estimation Total recreation benefits are defined as the sum of the maximum amount individuals are willing to pay to engage in a recreation activity, rather than forego it (Walsh, 1986). This concept is referred to as willingness-to-pay and is the method recommended by the Water Resources Council, a U.S. govern- ment interagency advisory committee, as an appropriate economic measure of the benefits of outdoor rscreation. The standard method of illustrating this concept is shown in Figure 8-1. The downward-sloping line represents the market demand curve (for total visits to a park, outings on a trail, canoe trips, etc.). The curve illustrates that, theoretically, the lower the cost of an activity, the m ore likely it is that people will engage in that activity. At a $2 fee, the greenway will receive 1000 visits. In this simplified example, the market value of the greanway is the annual number of visitors times the fee, or $2000, shown by the shaded rectangle APCB. For some people, the $2 fee is the maximum they would be willing to pay tu visit the greenway. They would choose other activities if the fee were raised. Many people, however, would be willing to pay more than the $2 fee. Therefore, these consumers would be receiving extra benefits for which they don't pay. This concept is referred to as consumer surplus, as shown by the triangle DPC in Figure 8-1. The total benefits associated with the greanway is illustrated by the entire shaded area. If no fee were chargad, visitation would be expected to increase to E and total benefit would be the entire area under the curve. 8-3 Figure 8-1 Table 8-1 Economic Impacts of Proteclin~ Rivers, Trails, and Greenway Corridors Demand Curve and Total Benefit C A B lOOO Source:spid~cl, l~8 E Quantity (N. u .n~e.. r oT v~sits) Many studies have been conducted which attempt to measure the willingness- to-pay for recreation activities. A composite table of various study results is provided below. These values are listed in 1987 dollars and are given to illustrate the range of willingness-to-pay, depending upon the activity. Willing- ness-to-pay may also vary depending upon the quality of the resource, or where the activity takes place. Average Willingness To Pay by Activity (in 1987 dollars) Activity Average Value, Number of per activity day studies evaluated Camping $19.05 14 Picnicking 18.26 6 Swimming 24.02 9 Hiking 26.49 6 Non-motorized boating 48.68 11 Cross-courdry skiing 16.76 2 Coldwater fishing 30.72 33 Anadromous fishing 51.52 8 Warm water fishing 29.25 13 Non-consumpbve wildlife 20.06 3 I I I I I I I I I I I I I I I I I I I I Benefit Estima~on I I I I I I I I I I I I I I I I Assessment Methods Several methods can be used to estimate willingness-to-pay, or the benefits to users. Three methods are generally considered acceptable for measuring the benefits of recreation activities: the unit day value, the travel cost method, and contingent valuation. These methods are somewhat complex and will likely require the assistance of a specialist in recreation economics. This Resource Book provides an introduction to these methods. For further explanations, we suggest you review the texts listed under 'Sources of Information' in this section. The unit day value approach is considered appropriate for estimating the benefits from recreation activities at small sites. This approach relies on expert judgement to determine benefits to users, or the average user willingness-to- pay for the opportunity to recreate at a given site. Planners, managers, and economists have developed a wide variety of unit day value estimation methods. Methods have been established for unit day values by federal agencies. Three examples are described in this section: Bureau of Land Man- agement (BLM), US Forest Service (USFS), and Water Resources Council. The BLM example is the simplest method to understand (Table 8-2); the USFS method shows how unit day values vary by location (Table 8-3); and the Water Resources Council method shows how the unit day values vary depending upon the quality of the recreation experience (Table 8-4). Bureau of Land Management Unit Day Values, 1986 Acavity Camping and Picnicking $14.20 Motorized Travel 6.70 Hiking and Horseback Riding 20,76 Water-Relatnd Acti~ies 20.27 Winter Spods 13.98 ~xJrce: Bureau of Land Management, 1987 Table 8-2 8-5 Economic Impacts of Protectin~ Rive~s, Trails, and Greenway Corridors Using lhe BLM unit day values, and assuming an area received 25,000 user days of cro~-country skier~ and ~§,000 user days of I:~nicker~ during the year, the ~onomic benefit~ of recreation would be (~5,000 x $1420) + (~$,000 x $13.98) = $704,500 annually. Tabte 8-3 shown below, lists unit day values according to USFS adminisb'ative regions. USFS day values vary by activity and fluctuate region to region. To determine which Forest Service region your project is in, contact your local U. S. Forest Service office. Table 8-3 I I I I I I I U. S. Forest Service Recreation Values U. S, Forest Se~Z~=e Regions Camping, picnicking and swimming 4.97 Hiking, horseback~ling, &wa~travel 5.28 W~nter Sm Nm-censumpl~ve wildlife use 1 2 3 4 $ 6 8 9 10 8.61 8.81 5.60 7.68 7.16 8.06 12.36 423 5.59 5.52 5.20 6.00 5.68 6.99 8.23 5.01 31.09 31.09 31.09 31.09 31.09 31.09 31.09 31.09 31.09 13.05 14.47 12.83 11.43 12.03 9.59 13.12 13.12 13.05 31.96 34.78 40.42 31.96 38.54 46.06 40.42 42.30 31.00 23.00 25.14 19.99 29.61 32.79 24.05 20.95 18.13 9.83 Source: U. S. De~rtment of Ag~ulture, Forest Service, June 1989 I I I I I I Using the USFS recreation values, or unit day values for camping, 10,000 visitor days of camping recreation in Region 2 would be 10,000 x $8.61 = $86,100 per year, whereas in Region 10,10,000 visitor days of camping would be 10,000 x $4.23 = $42,300. The Other method of computing unit day values has been developed by the Water Resources Council, a U. S. government agency. In this method, the quality of the recreation opportunity is rated according to a specific set of criteria. Table 8-4, Guidelines for Rating Quality of Experience on a 100-Point scale, shows the ratings for various criteria. The individual scores for each 8-6 I I I I I I I Benefit Estimation Table 8-4 I I I I I I I I I I I I I I I Crlteda Recreation Tofal Points: Point Value: Availability of Substitutes Total Points: Point Value: Tofal POints: Point Value: Accessebility Total POints: Point Value: Envlronnmntal Quelll~ Total Points: Point Value: Guidelines for Rating Quality of Recreation Experience Quality of Experfance, lO0-polnt Scale and likely to interfere with use some evidance of other users and occasional intefEx- encewith use due to crowding Usually little Very Iow evidence evidence of other of other users, users, raraly if ever never crowded 3O 0-4 5-10 11-16 17-23 24-30 Several within 1 hour travel time; a few within 30 minute travel time Several within 1 hour travel Ume; none within 30 minute travel time One or two within 1 hour travel Ume; none within 45 minute traval time None within 1 hour travel time None within 2 hour travel time 18 0-3 4-6 7-10 11-14 15-18 Minimum facility development Ex public health and safety Basic facilities to conduct ac~vity Adequate facilities to conduct without deterioration of the resource ~* act~ty expufienna Optimum facilities to conduct activities at site pote~al Ultimate facilities to achieve intent of selected alternative 14 0-2 3-5 6.8 9-11 12-14 Limited access by any means to site or within site .q~.,.ality roads to site; Umi~ed access within site Fair access, fak road to site, fak access, good roads within site Goodaccese, goed Goodaccess, high roadstosite;fair standard roadto accesswithinsite sito;goodaccess within site 18 0-3 4-6 7-10 11-14 15-18 Low aesthetic factors exist that signirr, antly lower quality Average aesthetic quality; factors exist that lower ~to a minx Above average aesthelic quality; any limiting lactors can be reasonably rectir~ High aesthetic quality; factors exist that lower quality Outstanding aestheac quality; no factors exist that lower quality 3-6 7-10 11-15 16-20 8-7 Teble 8-5 Economic Impacts of Prot~cfinff Rivers, Trails, and Greenway Corridors I I I Water Resources Unit Day Values by Quality of Experience Quality of Ex~nce, lO0-Point Scale Recreation Activities General recrealion General fishing and hunting S .pe;ialized Specialized fishing and hur~ng 0 10 20 30 40 50 60 70 80 90 100 $1.80$2.16$2.40$2.76$3.16$3.84$4.20 $4.44 $4.80 $5.16$5.40 2.64 2.88 3.12 3.48 3.84 4.20 4.86 4.80 5.16 5.28 5.40 7.32 7.80 8.40 9.00 9.60 10.8012.00 14.40 16.80 19.2021.50 12.6012.9513.2012.5513.9015.2516.55 17.65 18.95 20.3021.50 Source: Walsh, 1986, (Updated to October 1987) m m m m criteria are totalled. The maximum score is 100. Tabte 8-5, allows you to estimate the unit day value based upon the quality of experience score. For example, a greenway with these characteristics: moderate use and occa- sional crowding, no similar areas within 50 miles, good access and roads, and high aesthetic quality, would get a score of 70. Ratings from Table 8-4 which total 70 are: recreation experience (20); availability of substitutes (13); carrying capacity (11); accessibility (13); and environmental quality (13). Ifthe most applicable category for this greenway is general recreation, the daily value of gresnway use, from Table 8-5, would be $4.44 per visitor day. If you receive 25,000 visitors per year, the total annual recreation benefits using this approach would be $111,000, based on 1987 dollar values used in the table. We now turn our discussion from the unit day value method to the travel cost method. The travel cost method is based upon assessing travel expenditures to and from a recreational resoume as a measure of recreational benefit. The underlying assumption of this approach is the number of trips to a recreation site will decrease as the monetary and time costs of travel increase. This is an appropriate approach when ~ing to estimate the demand by the current population of users. This method involves creation of demand curves to estimate how many thps would be taken as one-way travel distance to the recreation destination increases. Walsh's text listed in the"Sources of Informa- tion' subsection of this section, includes a detailed discussion of how to establish the demand curves and use this method. I I I I I I I I I I I I I Benefit Estimation I I I I I I I I I I I I I I I I As opposed to the travel coot method, the contingent valuation me~hoduses a bidding approach to determine values of recreation resources via hypothetical market transactions. It can be used to evaluate the benefits of resources to the general population (users and non-users) and can also be used to evaluate the impacts from potential changes in resource availability, or quality. · Daubert and Young (1981) performed one of the first evaluations of recreational values of instream flow in 1978 to 1979 on the Cache ia Poudre River in Colorado. Respondents were asked to provide willingness-to-pay information corresponding to flow levels presented in a series of photographs. Photographs were supplemented by hydrologic and fish catch information for each of the flow levels pictured. Bid curves were then estimated corresponding to flow levels and socioeconomic characteristics. Results showed that average willing ness-to-pay for fishing peaked at $30.35 per angler day at a flow level of 500 cfs. Lower or higher flows were significanfiy less valuable. · Loomis, et al. (1986) used a combination of the travel cost method and contingent valuation method to evaluate the economic losses to recreational fisheries resulting from hydro development on Henry's Fork of the Snake River in Idaho. The estimate of net willingness-to- pay for current conditions on Henry's Forkwas $2.86 million annually, which would be loot if a dam were to eliminate this river segment. A 50 percent reduction in fish catch would result in a loss of $920,000 in annual benefits and a50 percent reduction in fish size would result in a loss in benefits of $1.07 million annually. The unit day value, travel cost, and contingent valuation methods continue to be tested and refined. They provide alternatives to assess values of recreation resources via hypothetical market transactions. One study undertaken by the University of Wisconsin sought to validate these measures by including actual cash payment, in addition to the travel cost and contingent valuation methods. The focus of the case study was the value of goooe hunting permits. In Wisconsin, goose hunting permits are issued by a lottery system. For this study, travel cost and contigent valuation surveys were conducted to estimate permit winners' willingness-to-pay for hunting permits. In addition to asking 8-9 Economic Impacts of Protectin8 Rivers, Trails, and Greenway Corridors people what they might pay, checks in varied amounts were sent to lottery winners which could be cashed if the winner's permit were returned. These checks were sent as a pragmatic test of what actual value the winners placed on the permit. The results were as follows: Method Permit Value Actual cash value $63 Contingent valuation method$21 Travel cost method $11-15 This study shows that people actually ranked the value of the permit higher than the estimation method revealed. This underscores the limitations and possible underestimation of hypothetical valuation methods. Preservation Values Analysis of economic benefits can also be used to determine the values which people place on resoumes, even if they do not use them. These non-users may value the resource for several reasons. The different types of preserva- tion values and their definitions are as follows: option value Knowing there is guaranteed opportunity for future access to the resoume existence value Knowing that a resource has been preserved in perpetuity, even if no recreational use is contemplated bequest value Knowing that future generations will have the opportunity to enjoy the resource Some studies have attempted to quantify these values. · Walsh, Sanders, and Loomis (1984) used contingent valuation to evaluate the optimal number of rivers in Colorado that should be protected under Federal Wild and Scenic designation. This study was unique in that it incorporated both use and non-use values of rivers. The authors concluded that optimum benefits of river protection 8-10 I I I I I I I I I I I I I I I I I I ! I Benefit Esfima~on occurred at a level of protection for fourteen Colorado rivers. Use values were found to only account for approximately 20 percent of the total willingness-to-pay for river preservation, with the remaining 80 percent attributed to non-use (preservation) values. · Six percent of the American public uses wilderness areas, yet 60 to 95 percent are willing to be taxed to support preservation of wilderness areas (Driver, Nash, and Haas, 1986). Benefit-Cost Analysis Benefit-cost analysis is a systematic method of identifying and measuring the economic benefits and costs of a project (Hufschmidt, et al., 1983). The total benefits are then divided by total costs. If this ratio exceeds one, it may be assumed that the project will provide a good return, meaning the benefits are greater than the costs. · A study of four parks in Worcester, Massachusetts, found that if park visitors were willing to pay one dollar per visit, the value of this use would be almost $425,000 annually. This amount is substantially above the annual $125,000 it costs the city to maintain the parks' 219 acres and results in a benefit to cost ratio of 3.4 to 1 (More, Stevens, and Allen, 1982). In the past few decades, there has been increasing interest by researchers to expand the application of benefit-cost analysis to include valuation of natural systems and environmental quality. Valuing the benefits of environmental quality and natural resources in economic terms may be helpful to your justi- fication for conservation of a river, or establishment of a greenway. Performing a benefit-cost analysis for your project is likely to require assistance from either an economist, or staff and volunteers with an economics background. There are also aspects of environmental quality and natural resources which are important but still cannot be readily quantified. This may result in Iow benefit- cost ratios and underestimate the full benefits of your greenway. 8-11 Economic Impacts of Protecting Rivers, Trai]s, and Greenway Corridors Public Expression of Value In these times of fiscal resl]'aint, Various non-profit funding initiatives, public interest oq]anizations, and special interest legislation have emerged. This has resulted in fundraising drives and ballot initiatives which offer people the opportunity to con~'ibute to special government funds for causes they value. Many of these involve resource conservation. The vehicles for these expen- ditures include donations, special licenses, fees, and tax rebate earmarked to support these causes. · Proof of support for conservation programs has been evidenced in taxpayer donations. In Colorado, state income tax voluntary contributions to non-game wildlife programs generated revenues of $350,000, $500,000, and $650,000 during 1978, 1979, and 1980, respectively. However, in later years these amounts decreased considerably, perticulariy as taxpayers were given more competing choices for donations from tax refunds. Nonetheless, several states, including Oregon, Utah, Minnesota, and Kentucky, have adopted similar programs. (National Park Service, 1983). · Surveys of California households reflected a willingness-to-pay between $42 and $94 annually (per household) to preserve water in Mono Lake. The cost to preserve the lake by providing replacement water and hydropower is only $2.64 per year, thus its value as a natural resource far outweighs the use value of the water (Loomis, 1987). How to Uss These Rationales in Your Community Express the value of the resource. Total the willingness-to-pay for your resource and express this total as benefits gained through establishment of the greenway. You may wish to contact your local university to see if any students familiar with recreation economics can assist you in estimating willingness-to- pay. If assistance is unavailable, you may wish to use estimates for other rec- reation rasources which are similar toyour project. If your program is threat- ened by cutbacks, express existing benefits as net losses to the community. 8-12 I I I I I I I I I I I I I I I I I I I I l~nefit Rsfima~on I I I I I I I I I I I I I I I I Document public support for conservation. Cite examples of bond issues and tax measures passed by voters, funds, and contributions raised by local conservation groups, etc. Sources of Information Recreation Economic Decisions. This book by Dr. Richard G. Walsh is an excellent source text on recreation economics, it is available from Venture Publishing, 1640 Oxford Circle, State College, PA, 16801. Chapter 8 is especially applicable to benefit estimation. The Review of Outdoor Recreation Economic Demand Studies with Non. BarketBenefits, 1968-1988. This will allow you to determine whether specific demand studies are applicable to your region and resource. It is available from the Department of Agricultural and Resource Economics, CSU, R. Collins, CO, 80523. The Water Resources Council's Economic end Environmental Principles end Guidelines for Water end Related Lend Resources Implementation Studies is the third version (1983) of the WRC's 'Principles and Standards.' It is the most current version of this agency's recommendations for methods to assess the economic benefits of recreation. This publication is currently out of print, but may be available at your local university library. A RevlewofFisherles EconomicEvaluation Methods. This report from the Sport Fishing institute is a good review of economic valuation concepts and methods. It also contains an annotated bibliography of available fishery values calculated via travel cost, contingent valuation, and other methods. Contact the Sport Fishing Institute at 1010 Massachusetts Ave, N.W., Washington, D.C., 20001. If you are specifically interested in literature related to how economics is used in promoting retention of instream flow, An Annotated Bibliography of Eco. nomic Literature on Instream Flow (Douglas, 1988) is available from the U.S. Fish and Wildlife Service, National Ecology Research Center, 2627 Redwing Road, Ft. Collins, CO, 80526-2899. Ask for Biological Report 88(39). 8-13 Economic Impacts of Protecting Rive~s, Trails, and Greenway Corridors I I Amenity Resource Valuation. This 260-page collection of essays is a good source of indepth discussions of the philosophical and methodological issues associated with integrating economics and natural resources. The text is available from Venture Publishing, 1640 Oxford Circle, State College, PA, 16801. Considerations In Using These Rationales Numbers are not everything. Remember that estimates of economic im- pacts and benefits are only one tool available to conservation advocates. As mentioned earlier, many of the benefits of greenways may still not be quantified and numbers would underestimate the total value. Rivers, trails, and green- ways should be promoted using the tools which are most effective. Focusing on the intrinsic values is most likely to be the most effective tool to begin building your constituency. 8-14 I I I I I I I I I I I I I I I I I I Benefit Estimation References Brookshire, David S. and V. Kerry Smith. May 1987. 'Measuring Recreation Benefits: Conceptual and Empirical Issues.' Water Resources Research 23(5) :931-935. Bureau of Land Management. 1987. Recreation 2000. Washington, D.C.: U.S. Department of Interior, Bureau of Land Management. Daubert, John T. and Robert A. Young. 1981. 'Recreational Demands for Maintaining Instream Flows: A Contingent Valuation Approach.' American Journal of Agricultural Economics 63:666-676. Douglas, Aaron J. September 1988. Annotated Bibliography of Economic Literature on Instream Flows. Washington, D.C.: U.S. Department of the Interior, Fish and Wildlife Service, Research and Development. Biological Report 88(39). Jones and Stokes, Alaska Department of Fish and Game. March 1988. 1986 Juneau Area Sport Fishing Economic Study - Executive Summary. Juneau, AK: Alaska Department of Fish and Game, Division of Sport Fisheries. Loomis, John. 1987. 'The Economic Value of Instream Flow: Methodology and Benefit Estimates for Optimum Flows.' Journal of Environmental Manage- ment 24(2):169-179. Loomis, John, Cindy Sorg, and Dennis Donnelly. 1986. 'Economic Losses to Recreational Fisheries Due to Small-Head Hydro-Power Development: A Case Study of the Henry's Fork in Idaho.' Journal of Environmental Manage- ment (22):85-94. National Park Service. 1983. Winning Support for Parks and Recreation. State College, PA: Venture Publishing. Peterson, George L., B.L. Driver, and Robin Gregory. 1988. Amenity Re- source Valuation: Integrating Economics with Other Disciplines. State Col- lege, PA: Venture Publishing. 8-15 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Ward, FrankA. March 1987. 'Economics of Water Allocation to Instream Uses in a Fully Appropriated River Basin: Evidence for a New Mexico River.' Water Resources Research 23(3):381-392. 8-16 I I I I I I I I I I I I I I I I I I Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Appendix A Correcting for Inflation in Housing Prices Using the Consumer Price Index Brief Explanation of the Consumer Price Index The Consumer Price Index (CPI) is a measure of the average change in prices over time in a fixed market basket of goods and services. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) a CPi for All Urban Consumers (CPI-U) which covers approximately 80 percent of the total population and (2), a CPI for Urban Wage Earners and Clerical Workers (CPI- W) which covers 32 percent of the total population. The CPI-U includes, in addition to wage earners and clerical workers, groups such as professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, and retirees and others not in the labor force. The CPI is based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors' and dentists' services, drugs, and other goods that people buy for day-to-day living. Prices are collected in 85 urban areas across the country from about 57,000 housing units and approximately 19,000 retail es- tablishments-department stores, supermarkets, hospitals, filling stations, and other types of stores and establishments. All taxes directly associated with the purchase and use of items are included in the index. Prices of food, fuel, and a few other items are obtained every month in all 85 locations. Prices of most other commodities and services are collected every month in the five largest geographic areas and every other month in other areas. Prices of most goods and services are obtained by personal visits of the Bureau's Pained represen- tatives. Some data, such as used car prices, are obtained from secondary sources. In calculating the index, price changes for the various items in each location are averaged together with weights which represent their importance in the spending of the appropriate population group. Local data are then combined to obtain a U.S. city average. Seperate indexes are also published by size of city, by region of country, for cress-classifications of regions and population- size classes, and for 29 local areas. Area indexes do not measure differences in the level of prices among cities, they only measure the average change in prices for each area since the base period. The indexes measure price change from a designated reference date, 1982- 1984, which equals 100.0. An increase of 7 percent, for example, is shown as 107.0. This change can also bo expressed in dollars as follows: The price of A-2 I I I I I I I I I I I I I I I I ! ! Appendices a base period 'market basket' of goods and services in the CPI has risen from $100 in 1982-84 to $107. For further details, see BLS Handbook of Me~hods, BLS Bulletin 2285, April 1988, and The Consumer Price Index: 1987 Revision, BLS Report 736, January 1987. Calculating Index Changes Movements of the indexes from one month to another are usually expressed as pement changes rather than changes in index points, because index point changes are effected by the level of the index in relation to its base period while percent changes are not. The example below illustrates the computation of index point and percent changes. Index Point Change CPI 112.5 Less Previous Index 108.5 Equals index p~nt change 4.0 Percent Change Index point difference 4.0 Divided bylhe previous index 108.5 Equals 0.037 Results multiplied by one hundred 0,037 x 100 Equals pa-cent change 3.7 Source: Bureau of Labor Statistics, U.S. D~parlmeat of Labor, 1990s A-3 Economic Impacts of Protecting Rivers, Trails, and G~enway Corridors I I Consumer Price Index All Urban Consumers (CPI.U) U.S. City Average Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg 1967 30.5 30.5 30.5 30.6 30.7 30.7 30.8 30.9 30.9 31.0 31.1 31.2 30.8 1968 31.3 31.5 31.5 31.6 31.7 31.9 32.1 32.3 32.4 32.5 32.7 32.9 32.0 1969 32.9 33.1 33.4 33.6 33.8 33.9 34.1 34.3 34.5 34.6 34.8 35.0 34.0 1970 35.1 35.4 35.8 36.0 36.2 36.3 36.5 36.7 36.9 37.1 37.3 37.5 36.4 1971 37.5 37.5 37.4 37.4 37.7 37.9 38.1 38.2 38.3 38.5 38.6 38.7 38.0 1972 38.9 39.0 39.1 39.2 39.3 39.4 39.5 39.7 39.8 39.8 39.9 40.1 39.4 1973 40.1 40.3 40.4 40.5 40.7 40.8 40.9 41.2 41.6 42.1 42.5 42.8 41.2 1975 43.3 43.7 44.1 44.5 44.9 45.4 45.9 46.5 47.1 47.6 48.1 48.6 45.8 1975 49.0 49.5 49.7 50.0 50.2 50.5 50.7 50.9 51.3 51.5 52.0 52.3 50.7 1976 52.6 52.7 53.0 53.1 53.3 53.5 53.9 54.1 54.4 54.6 54.8 55.1 53.8 1977 55.5 55.9 56.2 53.6 56.8 57.3 57.7 58.0 58.4 58.6 58.9 59.2 57.4 1978 59.7 50.0 50.6 61.1 61.6 62.2 62.8 63.2 63.9 64.5 64.9 65.1 62.4 1979 63.6 66.4 67.0 67.7 68.5 69.4 70.3 71.3 72.2 73.2 74.1 75.0 70.1 1980 76.2 77.1 78.4 79.4 80.6 82.1 81.6 81.8 82.4 33.5 84.3 85.3 81.1 1981 85.9 86.5 87.0 87.7 88.8 98.0 91.5 92.3 93.5 93.5 93.7 94.0 90.4 1982 94.3 94.6 94.4 95.3 ~.6 97.8 98.3 68.6 98.4 98.8 98.2 97.4 98.9 1983 97.9 98.1 98.1 98.6 98.1 99.5 98.9 100.0 100.5 100.6 100.7 100.8 99.5 1984 101.4 101.9 102..1 102.6 103.0 103.5 104.1 104.5 105.1 105.1 105.0 105.1 103.6 1985 105.3 105.8 106.1 106.5 107.3 107.9 108.3 198.7 108.9 109.1 109.3 109.6 107.7 1986 109.9 109.8 108.9 110.2 110.4 111.2 111.3 111.6 112.0 111.8 111.4 111.5 110.9 1987 112.0 112.4 112.8 113.2 113.6 114.3 114.7 115.4 115.6 115.5 115.5 115.6 114.2 1988 116.2 116.6 117.0 117.3 117.7 118.6 119.1 119.5 119.9 119.9 119.9 120.2 118.5 1989 120.7 121.1 121.5 121.6 122.1 122.9 123.9 124.2 124.3 124.4 124.5 124.9 123.0 1990 125.9 126.1 126.8 126.8 127.1 126.3 I I I I I I I I I I I I I I I I Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Appendix B Updating Consumer Good Values Using Consumer Price Index City Average Brief Explanation of the Consumer Price index The Consumer Price Index (CPI) is a measure of the average change in prices over time in a fixed market basket of goods and services. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) a CPI for All Urban Consumers (CPI-U) which covers approximately 80 percent of the total population and (2), a CPI for Urban Wage Earners and Clerical Workers (CPI- W) which covers 32 percent of the total population. The CPI-U includes, in addition to wage earners and clerical workers, groups such as professional, managerial, and technical workers, the self-employed, short-tarm workers, the unemployed, and retirees and others not in the labor force. The CPI is based on prices of food, clothing, shelter, fuels, transportation fares, charges for doctors' and dentists' services, drugs, and other goods that people buy for day-to-day living. Prices are collected in 85 urban areas across the country from about 57,000 housing units and approximately 19,000 retail es- tablishments-department stores, supermarkets, hospitals, filling stations, and other types of stores and establishments. All taxes directly associated with the purchase and use of items ara included in the index. Prices of food, fuel, and a few other items are obtai,,gd every month in all 85 locations. Prices of most other commodities and services are collecb~d every month in the five largest geographic areas and every other month in othe,' areas. Prices of most goods and services are obtained by personal visits of the ~ureau's a'alned represen- tatives. Some data, such as used car prices, are obtained from secondary sources. In calculating the index, price changes for the various items in each location ara averaged together with weights which represent their importance in the spending of the appropriate population group. Local data are then combined to obtain a U.S. city average. Seperate indexes are also published by size of city, by region of country, for cross-classifications of regions and population- size classes, and for 29 local areas. Area indexes do not measure differences in the level of prices among cities, they only measure the average change in prices for each area since the base period. The indexes measure price change from a designated reference date, 1982- 1984, which equals 100.0. An increase of 7 percent, for example, is shown as 107.0. This change can also be expressed in dollars as follows: The price of I I I I I I I I I I I I I I I I I I Appendices I I I I I I I a base period 'market basket' of goods and services in the CPI has risen from $100 in 1982-84 to $107. For further details, see BLS Handbook of Methods, BLS Bulletin 2285, April 1988, and The Consumer Pr~e Index: 1987 Revision, BLS Report 736, January 1987. Calculating Index Changes Movements of the indexes from one month to another are usually expressed as percent changes rather than changes in index points, because index point changes are effected by the level of the index in ralatJon to its base period while percent changes are not. The example below illustrates the computation of index point and percent changes. Index Point Change CPi 112.5 Less Previous Index 108.5 Equals index point change 4.0 Percent Change Index point dilference 4.0 Divided by lhe Ixev'~s index 108.5 Equals 0.037 Results multiplied by one hundred 0.037 x 100 Equals percent change 3.7 Source: Bureau d Labor Statislics, U.S. Depar~ent d [aba-, 1990s A-7 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors I I Consumer Price Index, All Items U.S. City Average 1982-84=100 NI Urban Consumers Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg 1970 37.8 38.0 38.2 38.5 38.6 38.8 39.0 39.0 39.2 39.4 39.6 39.8 38.8 197.1 39.8 39.9 40.0 40.1 40.3 40~6 40.7 40.8 40.8 40.9 40.9 41.1 40.5 1972 41.1 41.3 41.4 41.5 41.6 41.7 41.9 42.0 42.1 42.3 42.4 42.5 41.8 1973 42.6 42.9 43.3 43.6 43.9 44.2 44,3 46.1 45.2 45.6 45.9 46.2 44.4 1974 46.6 47.2 47.8 48.0 48.6 49.0 49,4 50.0 50.6 51,1 51.5 51,9 40.3 1976 52.1 52.5 52.7 52.9 53.2 53.6 54.2 54.3 54.6 54,9 66.3 55.5 53.8 1976 55.6 55.8 55.9 56.1 55.5 56.8 57.1 57.4 57.6 57.9 58.0 56.2 56.9 1677 58.5 59.1 59.5 60.0 60.3 60.7 61.0 61.2 61.4 61.6 61,9 62.1 60.6 1978 62.5 62.9 53.4 63.9 64.5 65.2 65.7 66.0 66.6 67.1 67.4 67.7 65.2 1979 68.3 69.1 69.8 70.6 71.5 72.3 73.1 73.8 74.6 75.2 75.9 76.7 72.6 1980 77.8 78.9 80.1 81.0 81.8 82.7 82.7 83.3 84.0 84.8 85.5 86.3 82.4 1981 87.0 87.9 88.5 89.1 89.8 90.6 91.6 92.3 93.2 93.4 93.7 04.0 90.9 1982 94.3 94.6 94.5 94.9 95.8 97.0 97.5 97.7 97.9 98.2 98.0 97.6 98.5 1983 97.8 97.9 97.9 98.6 99.2 99.5 98.9 100.2 100.7 101.0 101.2 101.3 99.6 1994 101.9 102.4 102.6 103.1 103.4 103.7 104.1 104.5 105.0 105.3 105.3 105.3 103.9 1986 105.5 106.0 106.4 106.9 107.3 107.6 107.8 108.0 108.3 108.7 109.0 109.3 107.6 1986 109.6 109.3 108.8 168.6 108.9 109.5 109.5 109.7 110.2 110.3 110.4 110.5 109.6 1987 111.2 111.6 112.1 112.7 113.1 113.5 113.8 114.4 115.0 115.3 115.4 115.4 113.8 1988 115.7 116.0 116.5 117.1 117.5 118.0 118.5 119.0 119.8 120.2 120.3 120.5 118.3 1989 121.1 121.6 122.3 123.1 123,8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 124.0 1990 127.4 128.0 128.7 128.9 129.2 129.9 130.4 Source: U.S. Deparlment of Labor, Bureau of Labo~ Statistics I I I I I I I I I I I I I I A-8 I I I I I Appendices Table of Over-the-Year % Increases (An Entry for Feb 1982 indicates the percentage increases from Feb 1981 to Feb 1982) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg 1971 5.3 5.0 4.7 4.2 4.4 4.6 4.4 4.6 4.1 3.8 3.3 3.3 4.4 1972 3.3 3.5 3.5 3.5 3.2 2.7 2.9 2.9 3.2 3.4 3.7 3.4 3.2 1973 3.6 3.9 4.6 5.1 5.5 6.0 5.7 7.4 7.4 7.8 8.3 8.7 6.2 1974 9.4 10.0 10.4 10.1 10.7 10.9 11.5 10.9 11.9 12.1 12.2 12.3 11.0 1975 11.8 11.2 10.3 10.2 9.5 9.4 9.7 8.6 7.9 7.4 7.4 6.9 9.1 1976 6.7 6.3 6.1 6.0 6.2 6.0 5.4 5.7 5.5 5.5 4.9 4.9 5.8 1977 5.2 5.9 6.4 7.0 6.7 6.9 6.8 6.6 6.6 6.4 6.7 6.7 6.5 1978 6.8 6.4 6.6 6.5 7.0 7.4 7.7 7.8 8.3 8.9 8.9 9.0 7.6 1979 9.3 9.9 10.1 10.5 10.9 10.9 11.3 11.8 12.2 12.1 12.6 13.3 11.3 1980 13.9 14.2 14.8 14.7 14.4 14.4 13.1 12.9 12.6 12.8 12.6 12.5 13.5 1~1 11.8 114 10.5 10.0 9.8 9.8 10.8 10.8 11.0 10.1 9.6 8.9 10.3 1982 8.4 7.6 6.8 6.5 6.7 7.1 6.4 5.9 5.0 5.1 4.6 3.8 6.2 1983 3.7 3.5 3.6 3.9 3.5 2.6 2.5 2.6 2.9 2.9 3.3 3.8 3.2 1984 4.2 4.6 4.8 4.6 4.2 4.2 4.2 4.3 4.3 4.3 4.1 3.9 ~3 1985 3.5 3.5 3.7 3.7 3.8 3.8 3.6 3.3 3.1 3.2 3.5 3.8 3.6 1986 3.9 3.1 2.3 1.6 1.5 1.8 1.6 1.6 1.8 1.5 1.3 1.1 1.9 1~7 1.5 2.1 3.0 3.8 3.9 3.7 3.9 4.3 44 4.5 4.5 4.4 3.6 1988 4.0 3.9 3.9 3.9 3.9 4.0 4.1 4.0 4.2 4.2 4.2 4.4 ~1 1989 4.7 4.8 5.0 5.1 5.4 5.2 5.0 4.7 4.3 4.5 4.7 4.6 4.8 1990 5.2 5.3 5.2 4.7 4.4 4.7 4.8 Source: U.S. Department of Labor, Bureau of Labor Statistics A-9 Economic Impacts of Protecting Rivers, Trails, and Greenway Corridors Survey Questions All of the survey questions included in this Appendix were designed for a study on the economic impact of rail-trails, to be completed by the National Park Service and Pennsylvania State University in August 1991. The questions were designed by Dr. Alan Graefe, Dr. Richard Gitelson, and Roger Moore at Pennsylvania State University. For further information on these questions or the study, contact Roger Moore at (814) 865-1851 or Beth Dillon, National Pa~k Service Rails-to-Trail Program Manager, at (202) 343-3766. (Representatives of federal agencies planning on conducting a survey of the general public must receive survey approval by the Office of Management and Budget.) Questions regarding Property Values The questions listed below are suggested types of questions. The exact wording will depend upon the type of project and whether you are interviewing landowners or real estate specialists. A scale of one to seven is suggested for some of the questions to get a better understanding of the respondents pemeptions. Before conducting your own survey, we recommend you get assistance from someone who has experience devising and conducting surveys. These questions addressing property values have not yet been tested. 1. Where is the (trail, greenway) in relation to your property? (Check one) ._~e trail runs through my property ._The trail runs along the edge of my property ._~e trail is near my property but not touching it _Don't know 2. About how far is the house from the nearest part of the (trail, greenway)? __F~et or_Miles A-12 I I I I I I I I I I I I I I I I I I ! ! Appendices 3. Which part of the house faces the (trail or greenway)? _Front _Back ~Side 4. Did you buy this property beforethe (a'ail, greenway) was opened? _Yes _No If no, how did the presence of the trail affect your decision to buy the property? Added to property's appeal Detracted from property's appeal __1 __2 __3 __4 __5 __6 7 5. If you were to try to sell this property, do you think being near the trail would make it harderor easierto sell? Much easier to sell Harder to sell 1 2 3 4 5 6 7 6. How do you think being located near the (a'ail, greenway) has affected the resale value of this property? (Check one) ~e trail has Ioweredthe value of my property. ._The trail has increasedthe value of my property. ._The trail has no effecton the resale value of my property. 7. How much do you think that being near the trail has raised or lowered the value of this property? % 8. What experience or evidence makes you feel the property value has been affected in this way? A-13 Economic Impacts of Protecfin8 Rivers, Trails, and Greenway Corridors Questions regarding Tourism end Local Resident Expenditures Surveys may be conducted to estimate user spending during typical use, or, a survey could be conducted during a special event held at your river, trail or greenway. The questions listed below are designed to estimate the spending by the group of users rather than individuals within the group. Group expen- ditures can then be divided by the total number of people to estimate average expenditures. We recommend you get assistance from someone who has experience devising and conducting surveys. 1. How many people from each of the following age categories are in your group on the (trail, river, greenway) today? (Please include yourself and write the numbers in the spaces provided) 15 and under 46 to 55 16 to 25 56 to 65 26 to 35 66 and over 36 to 45 2. Is your visit to this trail part of an overnight trip away from home? Yes No (If no, go to question 5) a. How many days will you be away from home during this trip? b. During your stay, how many nights will you be using each of the following accomodations in this area? (Please write number in space provided) Hotel/motel State campground Private campground Rented home or cottage With friends or relative, s Other (Please specify) A-14 I I I I I I I I I I I I I I I I I I ! ! Appendices c. Was visiting (river, trail or graenway) one of the reasons for your trip to this area? Yes No (If yes, was it the primary reason? Yes No) (If no, whatwas the primary reason for this visit? 3. In the spaces below, please list the estimated expenditures mede as a result of your entire trip to the (river, trail or graenway). If you paid all of your own expenses and no one elses', report only the amounts you actually spent in each category. If your group sharedsome or all expenses (group members made some purchases for one another), please report your estimates of the amounts spent by the entire group in each category. Please include all the expenses associated Nth that particular trip from your preparations before leaving home until your return home. Please indicate where the expenditures took place by recording the amounts in the appropriaie columns. Refer to the map on the facing page to help determine what is included in the local county. Amount spent in: (NOTE: You may wish to estimate spending for your local economy only) Local In state Outside economy economy economy Estimated amount spent for: a. Restaurants (including fast food, sit down, etc.) b. Food and beverage (retail) c. Lodging expenses: hotel motel camping other d. Retail purchases (personal items, souvenirs purchased during trip)excluding durable purchases for equipment. ^-15 Economic Impacts of Protecting Rivers, Trails, and Creenway Corridors I I e. Auto expenses: gas and oil repairs and service parking and tolls f. Other transportation costs: airfare and busfare public transit, taxis, etc g. Film and developing h. Fees for other attractions/entertainment i. All other expenses for this Irip (program fees, licenses, rental fees for bikes, skis, etc) please specify 4. During tho last twelve months, what percentage of the total days you par- ticipated in each of the following activities took place on the (trail, river, or grsenway? (If you did not participate in a particular activity, please mark an (NOTE: For your greenway or river project you should list appropriate activities. The activiites listed below are appropriate for trails.) % Walking % Running % Bicycling % Cross Country Skiing % Snowmobiling % Other activity (please specify 5. Please list any expenditures you made related to this activity during the last twelve months if the decision to buy the item was influancedby the existence of the(river, trail or greenway). Only include expenditures for durable items that ars used for more than one trip and do notinclude items you already accounted for related to your specific trip. A-16 I I I I I I I I I I I I I I I I ! ! Appendices (NOTE: You may want to estimate spending for local economy only.) Amount you spent in: Local In state Outside economy economy economy Estimated amountspentfor: a. Clothing (clothing, shoes boots, hats, etc.) b. Equipment (bicycles, skis, snowmobiles, trailers, etc) c. Accessories (bike racks, water bottles, helmets, radios, spare parts, cameras, etc) d. Books, guides, maps, etc. e. Memberships/subscriptions, program fees, etc. f. Other expenditures for durables (Please specify): g. (NOTE: For your greenway or river project you should list appropriate durables. The durables listed below are appropriate for trails.) A-17 .-% NORTH ATLANllC BID-ATLANTIC ~fASHINGTON OFFICE National Park Service Regional Offices Alaska Region Planning Division 2525 Gambel Street, Room 107 Anchorage, Alaska 99503 (907) 257-2655 Pacific Northwest Region Recreation Programs Division 83 South King Street, Suite 212 Seattle, Washington 98104 (206)442-5366 Southwest Region Planning & Design Division P.O. Box 728 Sante Fe, New Mexico 87504 (505) 988-6881 Mid-Atlantic Region Division of Park & Resource Planning U.S. Customs House, Room 260 Second and Chestnut Streets (215) 597-1581 Midwest Region Planning & Environmental Quality Division 1709 Jackson Street Omaha, Nebraska 68102 (402) 221-3481 North Atlantic Region Planning & Design Division 15 State Street Boston, Massachusetts (617) 223-5132 Rocky Mountain Region Recreation Grants & Assistance Division (PL) P.O. Box 25287 Lakewood, Colorado 80225 (303) 969-2850 Southeast Region Planning & Federal Programs Division 75 Spring Street, S.W. Atlanta, Georgia 30303 (404) 331-5838 Western Region Planning, Grants & Environmental Quality Division 600 Harrison Street, Suite 600 San Francisco, California 94107-1372 (415) 744-3975 Washington, D.C. Office Recreation Resources Assistance Division Rivers, Trails and Conservation Assistance Program P.O. Box 37127 Washington D.C. 20013 (202) 343-3780