Driving the Economy with Outdoor Recreation

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The Outdoor Industry Association (OIA) has been highlighting the importance of outdoor recreation in state and national economies.  The OIA reports that outdoor recreation in the United States generates:

  • $646 billion in consumer spending
  • 6.1 million direct jobs
  • $49.9 billion in federal tax revenue
  • $39.7 billion in state and local tax revenue.

To put this in context, outdoor recreation is a far larger part of the economy that industries like pharmaceuticals ($348 billion), motor vehicles ($374 billion) and even gasoline and other fuels ($428 billion) that we often think of as huge economic drivers.  States and even local communities are taking this information to heart and are looking for ways to enhance their economies in this arena.  There are two approaches that I’ll discuss here.

Get a Bigger Piece of the Pie

Taking a Slice of the PieSome communities pursue the idea of attracting outdoor recreation related businesses from other areas.  Thus they offer the same tax breaks and other traditional incentives to outdoor recreation businesses as they would to any other business.

Last year, for example,  the State of Colorado created an Outdoor Recreation Industry Office in the state’s Office of Economic Development and Trade.  The idea is to focus on attracting and supporting the manufacturers and other industry components that directly offer jobs to local residents.  This leads to competition with other states.

When Quality Bicycle Products was determining how to better serve their dealers, they were persuaded to relocate a major distribution center from Ogden, Utah, to Denver.  Another firm was offered $145,ooo to create 29 jobs plus $300,000 to help with marketing.  The idea behind offers like this is that the new business and the wages it pays will lead to tax revenues that more than pay for these incentives in short order.

Utah, has a similar Office of Outdoor Recreation intended to attract these kinds of businesses. It has been very successful in pulling outdoor recreation firms in from other locations, including several ski manufacturers.

With this approach, governments are not so much into providing recreation opportunities for residents and visitors as they are in serving these businesses.  Thus,  if they can get a novel service to town, like a wind tunnel, it can help attract manufacturers that need the service.

This approach has major benefits to local citizens in the form of jobs and enhanced access to the products of these companies.  There are also some benefits nationwide to the extent that moving these businesses around can improve their efficiency and keep their prices in check while enhancing their innovation.  Obviously, the economic situation is not so good in the community the company left.

Making the Pie Bigger

 A Bigger PieWith this approach, communities look to enhance their recreational opportunities and become more attractive to people that are into outdoor recreation and spend their money on it.  To the extent that these efforts are successful, local people, visitors and new residents will be recreating more in or near the community.  From an economic development perspective,  this offers an enlarged market for purveyors of everything from sporting goods to motel rooms.  Given a market, entrepreneurs will arise to service it.

In addition,  companies that manufacture and distribute goods for outdoor recreation often prefer employees that participate in their segment of the industry.  Thus, for example,  the concentration of skiers and skiing opportunities around Ogden, Utah,  had something to do with attracting the above mentioned ski makers.

In many places,  the pie is bigger than people think.  Thus, the first, and least expensive,  effort is to identify recreation opportunities that already exist in an area and publicize that information as this northern-California/southern-Oregon website does.  That’s why you’ll see tourism agencies in most communities that focus on publicizing recreation opportunities to draw in tourists.   Hopefully,  some of these tourists will find something they like and decide to stay, bringing their business or business idea with them.  From an economic development perspective,  it doesn’t really matter whether their business is related to outdoor recreation.

The more expensive approach is to create an outstanding recreation opportunity that is available to the public and also attractive to businesses.  One example is the whitewater parks that are popping up in many communities.  There are a huge number of options ranging from something as simple as a disc golf course to something as complex as a skate park or constructed rock climbing park.  Regular golf courses also draw a lot of visitors, however most communities already have one, or several.  The key to this is creating an outstanding opportunity.  It’s got to be the biggest or best to allow your community to differentiate from all other communities.

With this approach a community is creating a recreation hub then letting the market serve that hub and create more jobs in the process.  Adding some incentives from the “bigger piece of the pie” camp doesn’t hurt either.

Conclusion

Outdoor Recreation is clearly a major driver in national and state economies.  Communities have many opportunities to enhance their economies if they think of outdoor recreation properly.  By enhancing local recreation and encouraging businesses that serve their niche, communities can better participate in this  economic opportunity.

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