HomeMy Public PortalAbout20071131BeachEconomicImpact.pdfThe Economic Impact of
Tybee Island Beach Renourishment
on Georgia’s Economy
Michael Toma, Ph.D.
Alexis Brewer
Armstrong Atlantic State University
Center for Regional Analysis
and Public Service Center
November 2007
Foreword
This study was produced by Michael Toma and Alexis Brewer of Armstrong Atlantic State
University. The report was produced on behalf of the City of Tybee Island, GA and is intended
for its use. The report could not have been completed without key support provided by
employees of the City of Tybee Island, the Tybee Island Tourism Council and its members, and
the Georgia Department of Revenue. We would like to especially thank State Representative Ron
Stephens and Tybee Island City Manager, Diane Schleicher, for particularly helpful assistance
with obtaining data. Cover photos from Savannah Morning News.
We would like to acknowledge support from Dr. Thomas Jones, Dr. Ellen Whitford, Dr. Ed
Wheeler, and Dr. Yassaman Saadatmand of Armstrong Atlantic State University. The
Armstrong Atlantic State University Public Service Center and its director, Dr. Michael
Donahue, provided helpful administrative support that allowed the authors to focus on analytical
rather than administrative details. The authors alone are responsible for content and any errors in
methodology, execution, or reporting.
Dr. Michael Toma
Director, Center for Regional Analysis
Associate Professor of Economics
Armstrong Atlantic State University
912-921-2122
Ms. Alexis Brewer
Research Assistant
Center for Regional Analysis
Armstrong Atlantic State University
912-921-2122
November 2007
Copyright 2007 by the:
Center for Regional Analysis
Department of Economics
Armstrong Atlantic State University
Savannah, Georgia 31419-1997
michael.toma@armstrong.edu
______________________________________________________________________________
EXECUTIVE SUMMARY
This study documents the numerous and substantial state-level economic and fiscal impacts
associated with beach renourishment on Tybee Island, Georgia. Note that this study is not an
economic impact assessment of the entire tourism economy on Tybee Island. This analysis
focuses on the net impact on Georgia’s economy of beach renourishment. Thus, substantial effort
has been expended to estimate the proportion of Tybee Island tourism activity that is attributable
to 1) out-of-state residents who vacation at Tybee Island, and 2) the amount of tourism activity
that would be “recaptured” for Georgia, provided that beach renourishment diverts some Georgia
residents from vacationing in alternate out-of-state destinations, and thereby maintains the flow
of in-state residents to Tybee Island.
The analysis is conducted within a general framework that assumes that the beach is not
renourished with sand, that Tybee tourism erodes with the sand, and that the dissipation of
tourism has impacts on the state economy that may be measured in terms of lost jobs, lost labor
income, lost business revenue, and lost state sales tax and income tax revenue. Key findings are
provided in the table below:
Annual and Cumulative Economic and Fiscal Impact
of Beach Renourishment on Georgia’s Economy
Employment
Business
Revenue*
Labor
Income*
State
Tax Revenue*
Annual Impact
678 $54,738,000 $18,354,000 $2,661,000
Cumulative Ten-Year
Impact
678 $218,952,000 $73,416,000 $10,644,000
Note: *Business Revenue, Labor Income, and Tax Revenue data are reported in 2007 dollars.
On an annual basis, the state-level net economic impacts can be summarized as follows: A total
of 678 jobs, $18.4 million in labor income and benefits, and $54.7 million in business revenue
are estimated to be supported by beach renourishment. Also on an annual basis, a total of $2.7
million in state sales tax and income tax revenue would be generated for state government
provided that the beach is renourished.
An alternate assumption for the time-frame of the economic and fiscal impacts holds that
tourism-related economic activity linearly declines at the same rate as the beach erodes over the
seven-year renourishment cycle. After the seventh year, the annual cumulative impact is added to
each subsequent year through the tenth year. Under this assumption, the ten-year state-level net
economic impacts are as follows: 678 jobs, $73.4 million in labor income and benefits, $219
million in business revenue, and $10.6 million in state sales tax and income tax revenue.
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The Economic Impact of
Tybee Island Beach Renourishment
on Georgia’s Economy
Table of Contents
Section Page
1 Introduction 1
2 Measures of Economic Impact 1
3 Key Assumptions 2
4 Overview of the Economic Impacts 4
5 Detailed Economic Impacts 6
5-1 Employment Impact 7
5-2 Labor Income Impact 8
5-3 Business Revenue Impact 9
6 Fiscal Impact 10
7 Conclusion 11
List of Tables
Page
Table 1: Economic Impact of Beach Renourishment on Georgia’s Economy, 2007 5
Table 2: Annual and Cumulative Economic Impact of Beach Renourishment on
Georgia’s Economy
6
Table 3: Total Employment Impact 7
Table 4: Direct Employment Impact 7
Table 5: Secondary Employment Impact 7
Table 6: Total Labor Income Impact 8
Table 7: Direct Labor Income Impact 8
Table 8: Secondary Labor Income Impact 8
Table 9: Total Business Revenue Impact 9
Table 10: Direct Business Revenue Impact 9
Table 11: Secondary Business Revenue Impact 9
Table 12: Annual and Cumulative Fiscal Impact of Beach Renourishment on
Georgia’s Economy
10
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1
1. Introduction
This study documents the economic impact of Tybee Island beach renourishment on the
economy of the state of Georgia. The economic and fiscal impact estimates are based on a
comprehensive economic model of the state economy secured from MIG, Incorporated. The
vendor provided state-of-the-art software (Implan) that estimates economic impacts. Implan is an
input-output model that tracks the flow of expenditures through the economy and provides a
conventionally accepted method of assessing the economic effects of an event, business, or
industry. The vendor’s baseline data in the model were augmented with data made available to
Armstrong Atlantic State University from the Georgia Department of Revenue by special
arrangement, the U.S. Census Bureau, the City of Tybee Island, and the Tybee Island Tourism
Council and its members.
The analysis is conducted within a general framework that assumes that the beach is not
renourished with sand, that Tybee tourism erodes with the sand, and that the dissipation of
tourism has impacts on the state economy that may be measured in terms of lost jobs, lost labor
income, and lost business revenue. Of equally important consideration is the potential impact of
lost state sales tax revenue and income tax revenue for the state of Georgia provided that beach
renourishment does not take place.
This study documents the numerous and substantial state level economic and fiscal impacts
associated with beach renourishment on Tybee Island, Georgia. Note that this study is not an
economic impact assessment of the entire tourism economy on Tybee Island. This analysis
focuses on the net impact on Georgia’s economy of beach renourishment. Thus, substantial effort
has been expended to estimate the proportion of Tybee Island tourism activity that is attributable
to 1) out-of-state residents who vacation at Tybee Island, and 2) the amount of tourism activity
that would be “recaptured” for Georgia, provided that beach renourishment diverts some Georgia
residents from vacationing in alternate out-of-state destinations, and thereby maintains the flow
of in-state residents to Tybee Island.
The following quotation (with added emphasis) from the Savannah Morning News highlights the
basic premise underlying the analysis:
“[Kristy Rahn] and her entourage drove from Springfield to enjoy Mother’s Day in the
sun. Like others around them, they began the day on the sand, but by midafternoon they
were being squeezed between the tide and the boulders. ‘We’re going home,’ Rahn said.
“Without a beach, what’s the point?”1
2. Measures of Economic Impact
The economic impact of beach renourishment on Georgia’s economy was estimated using an
input-output model that tracks the flow of dollars and economic activity in an area. In this case,
dollars are initially injected into the state’s economy through the expenditures of tourists in
Tybee Island business establishments. These businesses employ workers and purchase some
1Savannah Morning News, created 5/13/07. http://savannahnow.com/node/284193.
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2
portion of the required inputs through their supply chain from other businesses located on Tybee
Island and elsewhere in Georgia. This induces a cycle of subsequent rounds of economic activity.
Firms in the supply chain of the toursim-related Tybee firms (and their workers) spend a portion
of their income purchasing goods and services from other Georgia businesses, triggering further
rounds of economic activity. Each subsequent round of spending results in a smaller impact
compared to the previous round because a portion of the spending “leaks out” of the state
economy through the purchase of goods and services from businesses located outside of
Georgia.2 An input-output model tracks each of these waves of spending and yields an economic
multiplier that can be applied to the initial dollar infusion to estimate the total impact of tourism
affected by beach renourishment, or the potential lack thereof.
Economic activity associated with Tybee Island tourism produces both direct and secondary
impacts on Georgia’s economy. Direct impacts are the results of tourism expenditures directly in
the businesses that cater to the tourist trade on Tybee Island and include hotels, vacation rental
properties, restaurants, recreational equipment rentals, gift shops, and other typical tourism
enterprises. Secondary impacts are commonly referred to as ‘ripple effects,’ and can be both
indirect and induced. Indirect impacts arise from supply chain links to tourism-related
enterprises. The indirect impact arises as Georgia companies supply inputs to tourism-related
Tybee Island business establishments, and as these suppliers buy their own inputs from other
Georgia businesses.
Induced impacts result from the expenditures of individuals who are employed by Tybee Island
tourist establishments and firms in their supply chain. These companies hire workers who spend
a portion of their income in non-tourism businesses and thereby induce additional economic
activity. This increased spending flows through the state economy, further stimulating business
activity and increasing employment, labor income, and revenue. The total economic impact of
beach renourishment on the state of Georgia is the sum of its direct and secondary (indirect and
induced) impacts on the state economy.
3. Key Assumptions
A number of assumptions serve as the foundation for the estimated economic and fiscal impact.
A key assumption is that tourism, and thereby, the economic and fiscal impact, is proportionally
related to the usable area of beach on Tybee Island. As the area of usable beach erodes as a
result of wave and storm activity, beach-goers find themselves crowded more tightly in the
remaining area of usable beach. It is assumed that there is an optimal amount of space a beach-
going party desires and that as the space compresses around the beach blanket, the overall tourist
experience begins to lose its appeal. Eventually, tourist activity is driven off by crowded beach
conditions that are no longer tolerable to tourists. One assumed intent of beach renourishment is
to prevent over-crowding that otherwise would reduce tourist activity on Tybee Island. In other
words, one important aspect of beach renourishment is to maintain a pleasant and desirable
tourist experience and keep the tourists coming to Tybee Island.
2This is one reason why ‘buy local’ business advertising campaigns are an important facet of local and regional
economic development initiatives. The purchase of inputs from other local businesses prevents the leakage of
business revenue and income out of the regional economy.
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3
Another important facet of the impact analysis has to do with the point of origin of Tybee Island
tourists. In order for tourist activity to inject dollars into the state economy, the expenditures
must be attributed to travelers who reside outside of Georgia. For example, the vacationer from
Atlanta injects no dollars into the state economy from a vacation on Tybee Island, Georgia. That
type of expenditure simply moves the leisure and travel-related spending from one end of the
state to the other, with no net impact on the Georgian economy. However, travelers from South
Carolina, Ohio, and Virginia, for example, clearly inject dollars into the Georgia’s economy
when they rent hotel rooms, purchase meals, and buy gifts and souvenirs on Tybee Island.
Thus, the point of origin for Tybee Island vacationers is clearly an important aspect of the net
impact of beach renourishment on the state’s economy. In the absence of survey data collected
directly from tourists on Tybee Island, a variety of data provided by the Georgia Department of
Revenue, the City of Tybee Island, tourist related enterprises on the island, and the 2002
Economic Census were reviewed. Tax receipt data from the Georgia Department of Revenue
(DOR) were used to estimate the volume of taxable sales activity on Tybee Island. The implied
figure from the DOR data is approximately $62 million, based on 2006 and year-to-date 2007 tax
remittance data. The DOR data for taxable sales activity on Tybee Island was benchmarked
against data from the 2002 Economic Census conducted by the U.S. Census Bureau to assess the
share of overall sales activity that may be attributed to Tybee Island’s population of
approximately 3,700 persons. Fifty percent of the remaining portion (87 percent of $62 million,
or $54 million) of non-local taxable sales activity is assumed to be generated by out-of-state
visitors.3 To the extent that some out-of-state vacationers might select a different beach or non-
beach destination in Georgia as an alternate to Tybee Island, this assumption creates a downward
bias in the overall estimation of the economic and fiscal impact of beach renourishment on
Georgia’s economy.
Another issue related to the point of origin of Tybee tourists has to do with the “recapture” of
Georgian point-of-origin tourist dollars that would otherwise leave the state if Tybee Island no
longer provided a desirable oceanfront experience as a result of beach erosion. For example,
Georgia residents seeking a beach vacation may instead choose to visit a beach in South
Carolina, Florida, or elsewhere. Beach renourishment on Tybee Island is assumed to divert the
tourist activity from non-Georgia alternate destinations and “recapture” the tourist expenditure
and economic activity for Georgia.
There was a limited amount of point-of-origin Tybee Island tourist expenditure and activity data
available on a zip code basis. For the data that was available, Georgia zip codes were assigned a
recapture rate based on highway infrastructure and proximity of competing beaches outside of
Georgia. The recapture rate was weighted by the volume of Tybee tourist activity originating in
the Georgia zip code, and an overall recapture rate of thirty percent was obtained. This does not
mean that seventy percent of Tybee’s tourists from Georgia will go out of state if Tybee no
longer provided a desirable beach experience, but that seventy percent of Tybee’s visitors from
within the state probably would have selected another destination in Georgia, and thus, the
tourist expenditures would not have been lost to the state. The thirty percent “recapture” rate
3The data used to categorize taxable sales activity as either emanating from in-state or out-of-state was the point or
origin for guests in Tybee hotel and rental property sales, visitor center sign-in data, group visitation to the Marine
Science Center, and Tybee Island Police traffic citation and arrest data.
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4
assumes that thirty percent of Tybee’s visitors from other locations in Georgia might have
vacationed outside of Georgia, and that beach renourishment prevents the “leakage” of this
tourism activity from Georgia.
Another very important assumption affecting the estimated economic and fiscal impact is the rate
at which beach erosion takes place. Given that tourist activity on Tybee Island is assumed to be
proportional to the amount of usable beach area, the assumed rate of beach decay (or erosion)
affects the estimated economic and fiscal impact. A recently released Army Corps of Engineers
study estimated that between seventy and eighty percent of the erosion can be attributed to the
Port of Savannah shipping channel that captures sand that would normally migrate south to
Tybee Island from beaches in South Carolina. Because the natural process of renourishment is
inhibited by the shipping channel, Tybee Island has been on a man-made seven-year
renourishment cycle to counter the effects of the erosion of approximately 200,000 cubic yards
of sand per year. The last major renourishment of the beach occurred in 2000. In that year,
approximately 1.3 million cubic yards were pumped onto the beach in a process, that by its end,
added approximately 124 feet to the beach on Tybee Island.
The economic and fiscal impacts are presented in consideration of two time frames. The first of
which assumes that a proportional erosion cycle lasting seven years takes place. This implies that
fourteen percent (100% divided by 7 years) of the beach erodes each year, and accordingly, that
tourism activity on Tybee Island diminishes annually in the same manner – a loss of fourteen
percent per year. However, because the seven year erosion cycle can be substantially accelerated
by the passage of a strong hurricane or tropical storm, an annual impact is provided as well. This
figure can be used to characterized the immediate annual effect on the state’s economy if a
powerful storm stripped away nearly all the sand in a very short period of time.
4. Overview of the Economic Impacts
This section provides an overview of the net economic impact of beach renourishment on the
Georgia economy. Using data from 2006 and 2007, the economic impacts are estimated for
employment, business revenue and labor income and reported in terms of 2007 dollars. In the
following sections, additional detail is provided about each of these three impacts and the nature
of the impact itself (direct or secondary). Also, the potential loss of state retail sales and income
tax revenue is estimated based on the projected decrease in beach related tourism on Tybee
Island in the absence of renourishment.
The estimated economic and fiscal impacts are predicated on several key assumptions, with two
of the more important assumptions recalled next. First, approximately one-half of the tourist
trade on Tybee Island is assumed to be attributable to out-of-state residents who travel to
Georgia for their vacation. Second, the impacts include the “recapture” of the expenditures of
Georgia’s residents who might otherwise vacation out of state in the absence of beach
renourishment. These assumptions allow the estimation of the net impact on Georgia’s economy
that may be attributed to beach renourishment on Tybee Island. The erosion of the beach would
set a process in motion that would undermine and reduce the volume of tourist trade on Tybee
Island, and thereby, have an impact on the state’s economy.
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5
In Table 1, summary data regarding the net annual economic impact of beach renourishment on
the state’s economy are presented. The net impact on Georgia’s employment is 678 workers. The
direct employment impact is 495 jobs, while the secondary employment impact, or the economic
ripple effect is 183 jobs. These arise from supply chain linkages and from the re-spending of
tourism related payroll in the state’s economy. The employment multiplier is 1.4 which indicates
that every ten jobs in establishments catering to the tourist trade support fourteen other jobs in
the state.
The total amount of labor income, including benefits, potentially affected by the absence of
beach renourishment in the state is $18.3 million on an annual basis. Earnings (and benefits) in
firms not directly catering to the tourist trade, yet supported by it through supply chain links, and
the re-spending of worker earnings are $7.4 million. The labor income multiplier is 1.7 which
means that for every $1 earned by workers in sectors dependent on tourism trade, an additional
70 cents was earned by other workers in the state.
The total net impact on state business revenue that is associated with each renourishment is $54.7
million. The direct effect is $31 million while the effect associated with supply chain links and
re-spending of worker income is $23.7 million. The multiplier for business revenue is 1.8. This
implies that for every $1 in sales related to beach renourishment, an additional 80 cents in
revenue was generated for other businesses in Georgia.
Table 1
Economic Impact of Beach Renourishment on Georgia’s Economy, 2007
Direct
Impact
Secondary
Impact
Total
Impact
Multiplier
Employment 495 183 678 1.4
Business Revenue* $31,045,000 $23,693,000 $54,738,000 1.8
Labor Income* $10,947,000 $ 7,407,000 $18,354,000 1.7
Notes: *Business Revenue and Labor Income are reported in 2007 dollars.
Labor Income includes salaries, wages, benefits, and proprietor’s income.
Secondary impact includes indirect and induced impacts.
An additional key assumption regarding the economic impacts has to do with the timing of the
impacts. The summary data in Table 1 provides the estimated annual economic impact.
However, an alternate assumption about the timing implies that tourist activity related to beach
renourishment declines at a linear rate of fourteen percent per year. This assumption was made
based on the seven-year cycle that currently governs Tybee Island beach renourishment. Table 2
on the following page provides the annual net economic impact in the top row of the table.
Cumulative annual estimates over a ten year period are provided in the rows of Table 2 below
the annual impact. In each year after the seventh year, the cumulative total increases by the
annual impact provided in the top row of the table. For example, in Year 8 for business revenue,
$54.7 million is added to the figure from Year 7 ($54.7 million) to obtain the Year 8 figure of
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6
$109.5 million, and so on through Year 10. This applies to labor income as well. The same
technique is not applied to employment because the probability of data mis-interpretation is
fairly high. The employment data should be viewed as the number of jobs (678) supported for a
single ‘worker-year.’ There would not be an additional 678 workers hired in subsequent years,
but rather the same 678 positions would continue to be supported in subsequent years.
Table 2
Annual and Cumulative Economic Impact of
Beach Renourishment on Georgia’s Economy
Employment
Business
Revenue*
Labor Income*
Annual Impact
678 $54,738,000 $18,354,000
Cumulative Impact
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
95
190
285
380
475
570
678
678
678
678
7,663,000
15,327,000
22,990,000
30,653,000
38,317,000
45,980,000
54,738,000
109,476,000
164,214,000
218,952,000
2,570,000
5,139,000
7,709,000
10,278,000
12,848,000
15,417,000
18,354,000
36,708,000
55,062,000
73,416,000
Notes: *Business Revenue and Labor Income are reported in 2007 dollars.
Labor Income includes salaries, wages, benefits, and proprietor’s income.
5. Detailed Economic Impacts
This section provides a detailed analysis of the annual state-level economic impacts associated
with beach renourishment on Tybee Island. Recall that these are estimates of the potential loss of
economic activity in Georgia as tourism activity on Tybee Island declines with the erosion of the
beach. Note these data are not estimates of the size of the tourism economy on Tybee Island.
The data do reflect economic activity associated with out-of-state visitors vacationing at the
island and the “recapture” of resident Georgian vacationers who are diverted from going to a
destination outside of Georgia by beach renourishment on Tybee Island.
The relationship between total, direct and secondary economic impacts is reviewed next. The
total impact is the sum of direct and secondary impacts. Given that the direct impact is the
largest component of the total impact, it is not surprising to see a high degree of correlation
across these two types of impacts.
The direct impacts are those impacts that are readily visible to the casual observer; a meal
purchased in a restaurant, a hotel room rented, a boat rental, or a gift or souvenir purchased, to
name a few. These activities generate business revenue, support employment, and yield income
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and benefits to employees in the firms that cater directly to the tourist clientele. There are two
components of secondary impacts. First, there are impacts associated with the supply chain
linkages of the firms “on the front line” directly servicing the needs of tourists. Supplier firms
buy their own inputs while meeting the needs of the “front line” tourist firms on Tybee Island.
Second, workers holding jobs supported by the tourism activity spend a portion of their income
and thereby support jobs in other sectors not necessarily directly related to tourism.
5-1. Employment Impact
The employment impacts associated with
beach renourishment are reported in detail
in this section. As can be observed in
Table 3, a total of 677 jobs in the Georgia
economy are potentially affected by beach
renourishment. Not surprisingly, the two
sectors most affected are Restaurants and
Bars with 251 jobs, and Hotels and Motels
with 150 jobs. These two sectors alone
account for 60 percent of total
employment impact. Another 10 percent
of the impact is accounted for by Food
and Beverage Stores and Miscellaneous
Retail Trade. These sectors are consistent
with what one normally associates with
firms on the “front line” of the tourism
economy.
The direct and secondary employment
impacts are reported in Tables 4 and 5.
While a total of 677 workers have jobs
that could be affected by beach
renourishment, only 495 are considered to
be a ‘direct’ impact. The direct and total
effects are similar, an unsurprising result,
given that the direct effect is an element
of the total effect. Seventy-seven percent
of the direct effect is in Restaurants and
Bars and Hotels and Motels.
Table 5 reports the secondary
employment impact associated with beach
renourishment. This employment is
supported as a result of supplier linkages
to tourist trade (indirect effect) and as
tourism related labor income recycles through the state economy (induced effect). Secondary
employment totals 183, primarily in Restaurants and Bars and among Real Estate Professionals.
Table 3
Total Employment Impact
Employment
Percent
of Total
Restaurants and Bars 251 38%
Hotels and Motels 150 22%
Food and Beverage Stores 43 6%
Miscellaneous Retail Trade 30 4%
Other 203 30%
Total 677 100%
Table 4
Direct Employment Impact
Employment
Percent
of Total
Restaurants and Bars 236 47%
Hotels and Motels 147 30%
Food and Beverage Stores 39 8%
Miscellaneous Retail Trade 28 6%
Other 45 9%
Total Direct 495 100%
Table 5
Secondary* Employment Impact
Secondary
Employment
Percent
of Total
Restaurants and Bars 14 9%
Real Estate Professionals 11 6%
Wholesale Trade 8 4%
Employment Services 7 3%
Other 143 78%
Total Secondary 183 100%
*Note: Supported as a result of supplier linkages to tourism
and the recycling of labor income through the state economy.
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8
5-2. Labor Income Impact
Table 6 provides data regarding the
labor income impacts. A total of $18.4
million in labor income (and benefits)
for Georgian workers is associated with
beach renourishment. Not surprisingly,
the two sectors most affected are Hotels
and Motels, with $4.5 million in labor
income and Restaurants and Bars with
$4.2 million in labor income. These two
sectors represent 48 percent of the total
labor income impact. Another 9 percent
of the impact is accounted for by Food
and Beverage Stores and Wholesale
Trade
Differences in employment versus labor
income rankings are attributable to
differences in relative compensation
rates across the sectors. For example,
while Miscellaneous Retail Trade ranks
fourth in terms of total and direct
employment impact, it is surpassed by
Wholesale Trade in terms of total labor
income because of relatively lower rates
of compensation in Miscellaneous Retail
Trade establishments.
The secondary labor income impacts are
widely dispersed among many sectors as
indicated in Table 8. Given the huge
volume of tourism-related retail trade on
Tybee Island, it is not surprising that
Wholesale Trade ranks highly in terms
of secondary labor income impact. The
other sectors present in the table
primarily reflect the expenditure of
worker income, real estate activity, and
the management of tourism related
businesses. The dispersion of secondary
income is highlighted by the fact that the
top four sectors account for only 20
percent of total secondary labor income.
The remaining 80 percent is widely scattered among various sectors and reflects the diversity of
consumer expenditures.
Table 6
Total Labor Income Impact
Labor
Income
Percent
of Total
Hotels and Motels $4,511,000 25%
Restaurants and Bars 4,249,000 23%
Food and Beverage Stores 1,041,000 6%
Wholesale Trade 604,000 3%
Other 7,948,000 43%
Total 18,353,000 100%
Note: Impact computed in 2007 dollars.
Table 7
Direct Labor Income Impact
Labor
Income
Percent
of Total
Hotels and Motels $4,428,000 40%
Restaurants and Bars 4,006,000 36%
Food and Beverage Stores 936,000 9%
Miscellaneous Retail Trade 537,000 5%
Other 1,040,000 10%
Total Direct 10,947,000 100%
Table 8
Secondary Labor Income Impact
Labor
Income
Percent
of Total
Wholesale Trade $604,000 9%
Offices of Physicians & Dentists 378,000 5%
Real Estate Professionals 320,000 4%
Management Consulting 306,000 4%
Other 5,799,000 78%
Total Secondary 7,407,000 100%
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5-3. Business Revenue Impact
The business revenue impacts associated
with beach renourishment are reported in
detail next. As indicated in Table 9,
approximately $54.7 million in total
business revenue in Georgia is
potentially affected by beach
renourishment. The two sectors most
affected are Restaurants and Bars with
$12.6 million in revenue, and Hotels and
Motels with $12.4 million in revenue.
These two sectors account for 45 percent
of total business revenue impact.
Another 7 percent of the impact was
accounted for by Food and Beverage
Stores and Wholesale Trade.
Differences in total versus direct
business revenue impacts can be
explained in a fairly straightforward
manner. While business revenue is
greater for Hotels as compared to
Restaurants, the re-spending of worker
income (the secondary impact) accounts
for the switch in the position of these
two sectors in the ranking by total
impact. Also, Other Accomodations
outpaces Wholesale trade in terms of
direct impact but is surpassed by it in
terms of total impact.
Hotels and Motels along with
Restaurants and Bars account for 78
percent of the direct expenditures likely
to be affected by beach renourishment,
while they account for 45 percent of the
total impact. This highlights the
powerful role of these two sectors in the
tourism economy, but also highlights the
importance of secondary economic
impacts that may be overlooked by
focusing solely on more easily observed
direct tourism business activity. Table 11 provides detail about commercial enterprises that
indirectly benefit from the tourist related economic activity related to beach renourishment. In
general, the secondary impacts are widely dispersed, as expected.
Table 9
Business Revenue: Total Impact
Business
Revenue
Percent
Of Total
Restaurants and Bars $12,643,000 23%
Hotels and Motels 12,414,000 22%
Food and Beverage Stores 2,414,000 4%
Wholesale Trade 1,595,000 3%
Other 25,672,000 48%
Total 54,738,000 100%
Note: Impact computed in 2007 dollars.
Table 10
Direct Business Revenue Impact
Business
Revenue
Percent
of Total
Hotels and Motels $12,187,000 40%
Restaurants and Bars 11,920,000 38%
Food and Beverage Stores 2,171,000 7%
Other Accommodations 1,332,000 4%
Other 3,435,000 11%
Total Direct 31,045,000 100%
Table 11
Secondary Business Revenue Impact
Business
Revenue
Percent
of Total
Real Estate Professionals $1,925,000 9%
Wholesale Trade 1,595,000 7%
Power Generation and Supply 824,000 3%
Restaurants and Bars 723,000 3%
Other 18,626,000 78%
Total Secondary 23,693,000 100%
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10
6. Fiscal Impact
This section considers the fiscal impact of beach renourishment on state government finances. In
general, when businesses and individuals go about their economic lives, they generate taxable
transactions. Two readily identifiable state taxes are sales taxes and income taxes. When an
economic activity generates approximately $54.7 in business revenue and supports nearly 680
jobs on a statewide basis, the effect on state government tax revenue will be substantial.
Estimates of state
government tax revenue
generated by beach
renourishment on Tybee
Island are presented in Table
12. Note these net tax
revenue estimates reflect the
decline in state tax revenue
associated with a failure to
renourish the beach. As
tourist activity erodes with
the beach, so would state tax
revenue generated by that
tourist activity.
The annual estimate of
foregone state tax revenue is
approximately $2.7 million.
This is a scenario in which
visitation to the beach by
out-of-state residents and
other non-local Georgia
residents effectively ends
with a substantial loss of sand that eliminates desirable and usable beach area.
Cumulative annual estimates over a ten year period are provided in the rows of Table 12 below
the annual impact in the section denoted “Cumulative Impact.” These estimates assume that there
is a linear reduction in the amount of desirable and usable beach area that proportionally
undermines the attractiveness of the beach as a tourist destination. Given a seven-year beach
renourishment cycle, the annual erosion rate (of both sand and tourist activity) is assumed to be
fourteen percent (100% divided by 7 years). In each year after the seventh year, the cumulative
total increases by the annual impact provided in the top row of the table. For example, in Year 8
for state sales tax revenue, $2.19 million is added to the figure from Year 7 ($2.19 million) to
obtain the Year 8 figure of $4.8 million, and so on through Year 10. The cumulative ten-year
fiscal impact equals $10.6 million.
Even though tourism activity on Tybee Island has trended up for the previous several years, these
fiscal impacts may still be considered estimates of foregone state tax revenue had the beach not
Table 12
Annual and Cumulative Fiscal Impact of
Beach Renourishment on Georgia’s Economy
State Sales
Tax Revenue
State
Income Tax
Revenue
Total State
Tax
Revenue
Annual Impact
$2,190,000 $471,000 $2,661,000
Cumulative Impact
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
$307,000
614,000
921,000
1,228,000
1,535,000
1,842,000
2,190,000
4,380,000
6,570,000
8,760,000
$66,000
132,000
198,000
264,000
330,000
396,000
471,000
942,000
1,413,000
1,884,000
$373,000
746,000
1,119,000
1,492,000
1,865,000
2,238,000
2,661,000
5,322,000
7,983,000
10,644,000
Note: Fiscal impacts reported in 2007 dollars.
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11
eroded during this time. Additional beach area is an attractive attribute and plausibly would
attract additional vacationers who would be more satisfied with the amount of ‘personal space’
and lack of crowding around their beach blankets and towels.
7. Conclusion
This study documents the numerous and substantial state-level economic and fiscal impacts
associated with beach renourishment on Tybee Island, Georgia. These impact assessments may
be considered state-level estimates of lost jobs, lost worker income, lost business revenue, and
lost state tax revenue resulting from a failure to renourish the beach at Tybee Island. Note that
this study is not an economic impact assessment of the entire tourism economy on Tybee Island.
This analysis focuses on the net impact on Georgia’s economy of beach renourishment. Thus,
substantial effort has been expended to estimate the proportion of Tybee Island tourism activity
that is attributable to 1) out-of-state residents who vacation at Tybee Island, and 2) the amount of
tourism activity that would be “recaptured” for Georgia provided that beach renourishment
diverts some Georgia residents from vacationing in alternate out-of-state destinations and
maintains the flow of in-state residents to Tybee Island.
On an annual basis, the state-level net economic impacts can be summarized as follows: A total
of 678 jobs, $18.4 million in labor income and benefits, and $54.7 million in business revenue
are estimated to be supported by beach renourishment. Also on an annual basis, a total of $2.7
million in state sales tax and income tax revenue would be generated for state government
provided that the beach is renourished.
An alternate assumption for the time-frame of the economic and fiscal impacts holds that
tourism-related economic activity linearly declines at the same rate as the beach erodes over the
seven-year renourishment cycle. Under this assumption, the annual economic and fiscal impacts
are fourteen percent of the figures cited in the previous paragraph, with the cumulative impact
over the seven-year cycle exactly equal to the data cited in the previous paragraph. The
cumulative ten-year economic impact under this assumption is summarized as follows: 678 jobs,
$73 million in labor income and benefits, and $219 million in business revenue are estimated to
be supported by beach renourishment. The ten-year cumulative fiscal impact is $10.6 million in
sales tax revenue and income tax revenue for state government.