Economic Impact of the 2017 Mountain Mushroom Festival
Economic Impact of the 2017 Mountain Mushroom Festival
Meet Your Research Team
Dr. James N. Maples is an Assistant Professor of sociology at Eastern Kentucky
University, where he examines the political economy of renewable tourism. His
research interests include economic impact in eastern Kentucky, economic
development and social change in rural areas, cemetery preservation in rural
communities, and applied survey design. His email is james.maples@eku.edu.
Dr. Michael J. Bradley is an Associate Professor in The
Department of Recreation and Park Administration at Eastern Kentucky
University. His professional and academic interests include human dimensions of
natural resource and wildlife management as well as sustainable recreation
practices as it relates to outdoor recreation. His email is
michael.bradley@eku.edu.
Methodological Notes
Purpose
Working alongside the
Mountain Mushroom Festival organizer, Francine Bonny, the research team
conducted an economic impact study of the recent event on April 29 and April
30, 2017.
Data Collection
The researchers
collected data from attendees using an in-person survey. The final survey
language is available upon request. The survey included questions examining
economic impact across nine sectors. It also included questions on demographics
and place attachment for analysis in other reports. In all, 180 attendees
responded to the survey. Researchers excluded ten attendees as they skipped the
economic impact questions. Although residential economic contributions are
often excluded from economic impact studies, we kept persons living in the
Irvine zip code as they still represent activity created solely by the annual
event.
Analysis
The researchers
downloaded the raw data from print surveys into Excel to prepare the data for
analysis. The project team leaders utilized IMPLAN, an industry-standard
economic impact calculation platform, to generate economic impact estimates and
study region descriptive statistics. Further, SPSS 24, an industry-standard
statistical analysis platform, was used to generate additional reports.
Study Region
The study region
consists of the City of Irvine, Kentucky. Table One includes
summary economic indicators for the study region. The study region’s Gross
Regional Product (or GRP, which accounts for the total economic
activity in that area) is over $200 million dollars. When disaggregated, over
half of the GRP in the study region is employee compensation ($112 million) and
$8 million is proprietor income. Around $65 million comes from other sources,
such as rents and interest. Taxes on production and imports ($14 million)
account for the remainder of GRP. Returning to Table One, total
personal income (the total resident wages across all sources) is $376 million
dollars. There are approximately 3,736 jobs across 1123 industries.
Per 2015 Census
estimates, the population of Irvine, Kentucky is approximately
12,883. The Shannon-Weaver Diversity Index Score (which numerically
describes the division of jobs across industries in the study area, with scores
moving towards one indicating more diversity) is .635. Irvine is situated in
the greater Red River Gorge area (Estill, Lee, Menifee, Owsley, Powell, and
Wolfe counties), which has a diversity score of .684. In comparison,
Harlan County has a diversity score of .634.
Table | |
Indicator | Value |
Gross Regional Product | $201,335,857 |
Total | $356,572,864 |
Total Employment | 3,3736 |
Number | 123 |
Land Area (Square Miles) | 203 |
Population | 12,883 |
Households | 5,121 |
Diversity | 0.635 |
Table | |||
Sector | Jobs | Job Income | Output |
Local gov’t, education | 351 | 18,615,229 | 21,778,706 |
Hospitals | 217 | 12,225,168 | 27,463,606 |
Apparel manufacture | 189 | 9,042,113 | 24,113,089 |
Restaurants | 177 | 2,804,874 | 12,135,235 |
Local gov’t, non-education | 167 | 6,426,274 | 7,529,066 |
All | 143 | 1,979 | 2,236,174 |
Personal services | 113 | 1,255,404 | 3,038,012 |
Nursing/care | 89 | 2,818,086 | 5,504,737 |
Table Two lists the study region’s largest employers by
sectors along with the, number of jobs, job income (in $), and economic output
(total revenues and sales generated in the sector in $). The largest employers
include local government (education), hospitals, manufacturing, restaurants,
local government (non-education), farming, personal services, and nursing
home/community care facilities.
Economic Impact Categories
Table Three lists the ten economic impact categories
included in this economic impact study and the estimated economic expenditures
by category per participant. Attendees stayed an average of 1.34 nights with an
average group size of 2.27 persons. The largest expenditure is gasoline at
$6.97 per participant. Other high expenditure categories include food purchases
at restaurants ($5.68), food purchases at the event ($5.34), retail non-food
purchases ($4.99), food purchased at grocery stores ($4.25), and local art
($4.12).
Table 3: Economic Activity Among Participants | |
Sector | Average Spent Per Attendee |
Lodging | $.57 |
Food | $5.68 |
Food and drink purchased at grocery stores | $4.25 |
Food | $5.34 |
Food and drink purchased at a gas station | $1.17 |
Gasoline | $6.97 |
Retail purchases other than food and drink | $4.99 |
Local | $4.12 |
Souvenirs | $1.58 |
Festival | $1.75 |
Economic Impact Terminology
In the following
paragraphs, we use three terms to describe economic impact: direct
effect, indirect effect, and induced effect. Direct effect is
the economic impact created by the presence of the economic activity. For
example, if a local restaurant sells $1K in food, its direct effect would be
$1K. This direct effect can generate further change in the local economy via
indirect and induced effects. Indirect effect is economic
activity created when local businesses purchase goods and services from other
local industries as a result of the direct effect. For example, indirect effect
could include a local restaurant buying vegetables to create future meals for
sale. Finally, induced effect is the estimated expenditures by
local households and employees as a result of the initial direct impact. For
example, a local restaurant employee may choose to spend his wages at another
local business, creating additional rounds of local economic activity.
These three terms can
also be further divided by their employment impact in the
region, value added to the local economy, and output. Labor
income impact is measured by the estimated labor income created by the
economic activity in the region. In certain studies, we will also explore the
potential number of jobs created by economic activity. Value added indicates
the true economic wealth added to the local economy after subtracting the cost
of inputs needed to conduct everyday business. Value added includes
expenditures in profit, employment compensation, and
taxes. Finally, output is the total revenues and
sales from economic activity.
Table *based on expenditure estimate of $728,400 | |||
Impact | Labor Income | Value Added | Output |
Direct | $73,938 | $138,992 | $265,095 |
Indirect | $6,877 | $12,096 | $25,663 |
Induced | $6,976 | $14,734 | $28,203 |
Total | $87,791 | $165,821 | $318,960 |
Economic Impact Modeling
Based on estimates of
approximately 20,000 attendees provided by Francine Bonny, we estimate
that Mountain Mushroom Festival participants spent
approximately $728,400 [MB1] inside Irvine as a direct result of the event. This is activity that would not have occurred if
the Mountain Mushroom Festival did not exist. In Table Four,
we summarize the economic impact of the 2017 Mountain Mushroom Festival.
Direct Effect
Recall that direct
effects examine participants’ direct economic inputs, as in the funds they
spend in the study area. Breaking down this economic impact, the estimates
indicate that participants’ expenditures generated almost $74K dollars in labor
income, added $138K in value, and $265K in output in the study
region. Note that the difference between the estimated expenditures
of $728K and the output of $265K is likely explained by dollars that circulate
but are leaving the local economy through non-local ownerships, non-local
Festival vendors, and purchases at chain businesses.
Indirect and Induced
Effect
Recall that indirect and
induced effects occur as a result of direct impacts. Indirect effects occur
when businesses restock their shelves from a sale, for example. Induced effects
occur when employees spend funds in the study region. The estimates indicate
that participants indirectly generated almost $7K in labor income, $12K in
value added, and over $25K in output. When employees in the study region spent
their paychecks in the study region, this generated almost $7K in job income,
almost $15K in value added, and $28K in output.
Federal, State, and
Local Taxes
Table Five lists estimated tax
impact of the conference. At the state and local level, the conference
generated $22K in estimated taxes. Most comes from taxes on production and
imports in the form of sales taxes. At the federal level, participants
generated $23K in estimated taxes distributed across employee compensation,
production, households, and corporations.
Table 5: Taxation | ||
Impact | Local & State Taxes | Federal Taxes |
Employee Compensation | $344 | $12,018 |
Proprietor | $0 | $310 |
Tax on Production and Imports | $19,832 | $2,073 |
Households | $1,874 | $4,558 |
Corporations | $740 | $4,509 |
Totals | $22,790 | $23,468 |
Discussion for Maximizing Economic Impact
The research team has
two suggestions for increasing the economic impact of the event. First,
consider looking at increasing lodging expenditures. Lodging is key to economic
impact. Visitors who stay overnight are more likely to purchase things like
groceries and goods locally. They are also more likely to visit local
restaurants and shops while staying. It is expected that many visitors to the
Mountain Mushroom Festival come from within a few hours’ drive, which explains
the relatively few number of respondents who indicated spending money on
lodging. However, as this is a long established event and one that clearly
addresses several interest groups (e.g. rock and mushroom enthusiasts), the
potential for non-local visitors is clearly there. The Festival may want to
consider working with local campgrounds, rental cabins, and motel/hotels to
advertise overnight lodging options. This could also include special rates for
vendors and race participants.
Second, encouraging as
many local vendors as possible will keep dollars circulating local. Although it
is certainly desirable to continue including non-local vendors in the event,
local vendors are far more likely to spend dollars earned at the event in local
Irvine businesses and on wages for local Irvine residents. This, in turn,
creates additional economic impact in Irvine.
Omissions and Considerations
During the research
process, the research team identified minor issues that should be noted. First,
as is always the case with economic impact studies, the findings in this report
must be treated as estimations. This economic impact study utilizes mean
figures to estimate expenditures that may vary from year to year, visit to
visit, event to event, and person to person.
Second, the estimates in
this report do not delineate between lodging options. In this case, lodging is
distributed among campgrounds, cabin rentals, and motels. The question only
addressed lodging in general, which may slightly alter the mean scores.
Similarly, restaurants include sit-down and pay at the end restaurants
(considered full service restaurants) and take-out, fast food styled
restaurants (limited service restaurants). Although economic impact scholars
generally see little difference in how economic impact is calculated using the
two categories, it may, nonetheless, be useful for future research to be more
specific in the questions.
Contact Information for Future Studies
Our research team
regularly conducts economic impact studies, community resource inventories,
customer surveys, customer and community member need assessments,
cultural/historical/natural resource interpretation studies, and other kinds of
community-driven studies throughout Eastern Kentucky and beyond. If you or your
organization is interested in conducting a study, please contact lead
researchers Dr. James Maples at james.maples@eku.edu or Dr. Michael Bradley at michael.bradley@eku.edu for further information.
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