The real economic and environmental impact of tourism in Wales

New research helps us understand the true value of tourism in the country.

Prior to their abolition in 2012, regional development agencies in the UK acknowledged that the tourism and leisure sectors were an increasingly important feature in their strategic plans. But in many cases, there was little evidence to support the role of tourism as a major economic driver.

Although there was an increase in demand by agencies for the measurement and monitoring of economic and environmental impact of tourism, the then current models weren't considering all the necessary factors. Existing forms of measurement typically centre upon gross expenditure by tourists, while additional important factors of regional economic performance such as employment or gross value added, were often ignored.

This meant that agencies were seriously undervaluing the economic and environmental importance of tourism at both local and regional levels.

In particular, WERU contributed to the development of an assessment framework and criteria which enables government to assess the value of events in an objective and equitable way. This framework has been welcomed by the events industry in Wales, the UK and internationally.

Acting Director of Marketing, Visit Wales

The bigger picture

For nearly 20 years, researchers from our Welsh Economy Research Unit (WERU) have examined the economic contribution that tourism has made in Wales. The team developed a Tourism Satellite Account (TSA) for the region.

A TSA is the only internationally accepted way of measuring the economic impact of tourism on an economy at a national level. Developed by the UN World Tourism Organisation (WTO), a TSA consists of a series of data tables which allow tourism-related activity to be separated out.

WERU's approach enabled researchers to estimate the economic importance of tourism in Wales in terms of output and employment. This data could then be subdivided by type, for example, the split of domestic and international tourism in the region. Crucially, this was something that had not previously been possible, and was of considerable benefit to the then existing regional development agencies.

An important extension of this work, was to examine the environmental impact of tourism in Wales. By combining data from their new model with existing WERU environmental research, the team were able to apply the methodology to an alternative problem – assessing the economic and environmental impact of individual sporting events. The team also worked closely with Dr Andrea Collins and colleagues from the School of Geography and Planning to link their tourism analysis with Cardiff University research seeking to examine the ecological footprint of different types of events.

Despite event sponsors often flagging the importance of environmental as well as socio-economic legacy components, the environmental impacts of events were difficult to assess, being complex and often occurring over long periods of time. WERU's methods produced some interesting results, not least demonstrating that the potential economic effects were often exaggerated by event organisers.

Although useful, the new TSA had limitations being somewhat static and historical in nature. A Tourism Impact Model (TIM) tool was developed by WERU to answer the future-orientated 'what-if' questions and to consider the indirect effects of tourism.

Input-output tables

These provide a financial picture of an economy, showing domestic and international trade flows between different industries, consumers and government sectors during a particular year. This accounting framework allows for the complex interrelationships between different parts of the economy to be understood.

Changing tourism in Wales

WERU's development of the first TSA for the UK led to their continued involvement with the production of TSAs for Wales. Their research has provided an essential foundation on which national and regional governments have built more established infrastructures for monitoring the effects of tourism that go beyond simple expenditure. Much of this research has been presented and incorporated into the UN World Tourism Organisation.

WERU was also critical in the formation of the Tourism Intelligence Unit within the Office for National Statistics. This led to a more consistent approach in how tourism is measured allowing the UK Government to use TSA results to inform them about the performance of tourism in the country.

WERU were involved in consultation and stakeholder engagement exercises that led to the creation of a dedicated Major Events Unit in the Welsh Government. Impact cases conducted by WERU were used as an evidence base for funding and policy advice to ministers. For example, WERU's research into the economic impact of the Heineken Cup Final was key for funding the event at the Principality Stadium in Cardiff.

The TIM tool developed by WERU was successfully used when planning and justifying expenditure on a range of projects including:

the Wales Coast Path
an impact analysis of Swansea City Football Clubs Premier League Status
understanding the impact of the Environment for Growth initiative – projects aimed at increasing the outdoor visitor economy in Wales
various studies for the Environment Agency Wales.