Broadband and Vacation PropertiesWisconsin

An Economic Impact StudyJune,2014

University of Wisconsin WhitewaterRuss Kashian, PhD

ProfessorDepartment of Economics

Northwoods Broadband and Economic Development Coalition

About Us

• The Fiscal and Economics Research Center (FERC) at the UW - Whitewater along with UW- Extension analyzed the economic impact of broadband connectivity at vacationing homes

• The Center for Community Technology Solutions is working to help Wisconsin communities develop the internet capacity they need

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Areas of Focus

• Economic Benefits: Increase broadband availability and its effective use to spur the state’s economic development

• Community Piloting: Increase broadband connectivity in rural communities

• General Outreach and Engagement: Increase and foster broadband adoption

• Tech/Broadband Training and Coaching: Expand the capacity of staff and faculty to assist communities’ broadband connectivity

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Economic Impact

• The FERC at the UW-Whitewater analyzed the economic impact of broadband internet connectivity in vacationing homes

-Local residents with broadband connectivity will spend more time in their vacationing homes; consequently, they inject extra money into the local economy

-An increase in spending generates extra revenue for business and supports job creation

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The Value of Vacation Homes

• The FERC has done research on Tainter Lake, Delavan Lake and Dover Lake in order to determine the economic impact and additional spending generated in the economy by vacationing home residents

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The Survey

• Surveys were conducted by the FERC to determine the daily expenses of local part-time residents living in their vacationing homes. – Construction/ Home improvements– Bait and tackle/ Launch fees– Dining out/ Groceries– Entertainment– Shopping– Gas for vehicles or boats/ Rental of watercraft/ Licenses– Medical Care Northwoods Broadband and Economic Development Coalition

Results: Part Time Residents on Tainter Lake

Category Daily ExpensesConstruction 34.15Fishing/Boating Exp. 1.55Launch Fees 0.04Dining Out 6.69Entertainment 1.68Groceries/Liquor 18.16Gas 10.53Shopping (Personal) 5.84Shopping (All other) 3.14Licenses 1.10Medical Care 2.52Total 85.40 Northwoods Broadband and Economic Develo

pment Coalition

Results: All Residents (Full and Part-time) on Delavan Lake

Category Daily ExpensesConstruction $41.25 Bait/Tackle $0.24 Launch Fees $0.19 Dining Out $4.23 Entertainment $1.68 Groceries/Liquor $6.78 Gas $2.76 Shopping (Personal) $3.72 Shopping (All other) $1.07 Licenses $0.44 Other $2.70 Total $65.06

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Results: Part Time Residents on Eagle Lake

Category Daily ExpensesConstruction 135.19Bait/Tackle 0.61Launch Fees 0.21Dining Out 12.31Entertainment 5.73Groceries/Liquor 24.02Gas 13.13Shopping (Personal) 11.28Shopping (All other) 2.85Licenses 1.53Medical Care 2.82Other 3.88Total 213.56

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Results: Part-time residents – New North-Eastern Broadband Survey

Category Daily ExpensesConstruction 12.48Fishing/Boating Exp. 4.56Launch Fees 0.01Dining Out 8.33Entertainment 2.89Groceries/Liquor 13.25Gas 6.15Shopping (Personal) 3.89Shopping (All other) 1.31Licenses 1.02Medical Care 4.24Other (cleaning, communication, maintenance cost) 16.06Total 74.18

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Research Question

• The FERC was tasked with determining how many more days part-time residents would stay at their vacationing homes if they had broadband internet connectivity

• Goal: To determine the extra amount of money spent in the local economy as a consequence of second-home owners spending extra time in their residence if they had broadband internetNorthwoods Broadband and Economic Development Coalition

Results: “Northwoods Wisconsin” Survey

How much longer would you stay in the Northwoods of Wisconsin each year if you had access to broadband internet?

Answer Options Response Percent Response CountI would not stay any longer than I currently do 47.1% 112

Up to 2 weeks 8.4% 202-4 weeks 13.4% 321-2 months 16.8% 403-4 months 5.9% 145-6 months 2.9% 76-12 months 5.5% 13

Answered Question 238

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Calculation Results

• Using a weighted average calculation from the previous table the “Northwoods Wisconsin Survey” concluded that on average, part-time residents would stay in their vacationing homes 37 more days if they had broadband internet connectivity

• Note that the recent FERC North-Eastern Wisconsin Survey found that part-time residents would stay in their vacationing homes 50 more days if they had better internet/broadband connectivity

• In order to obtain a conservative estimate of economic impact, we decided to use the results of the earlier survey (37 days).

• 52.9 % of respondents in the “Northwoods Wisconsin Survey” indicated that Internet access issues/staying connected is a barrier that prevents them from staying longer in their second-home

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Conservative Estimates

• Once again, in order to obtain a conservative estimate, the expenditure data was based on the four expenditure surveys conducted by the FERC (Tainter Lake, Eagle Lake, Lake Delavan, and the recent Broadband Survey). Expenditures were based on the average of the expenditures in the four studies.

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Relevant Numbers

• Part-time residents would stay 37 days more per year if they had broadband Internet connectivity

• Construction spending was omitted from the spending estimates due to its volatility

• As a result, we found that part-time residents spend $67.26 dollars a day per household in their vacationing homes

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Economic Impact

• Multiplying $67.26 (average daily expenditure) times 37 (average number of extra days residents would spend in their vacationing homes) gives us a total of $2,488.62 additional dollars per seasonal home spent a year in the local economy if owners had broadband internet connectivity Northwoods Broadband and Economic Development Coalition

“Northwoods” Counties

• The FERC determined that in Forest, Langlade, Lincoln, Oneida, and Vilas Counties there are currently 31,180 seasonal houses

• Of these 31,180 seasonal houses, the survey concluded that 52.9% did not have Internet Access or had issues staying connected

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Direct Economic Impact

• As a result, using our numbers from the previous slides, we conclude that in Forest, Langlade, Lincoln, Oneida, and Vilas part-time residents would directly contribute with $41,047,845.77 (31,180 x 52.9 % x $2,488.62 ) dollars in the local economy if they had better access to internet

• 31,180 (seasonal houses)• 52.9% (percentage of households with internet access

issues)• $2,488.62 (additional spending a year per seasonal home)

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Types of Effects

Direct effect refers to production change associated with a change in demand for the good itself. It is the initial impact to the economy, which is exogenous to the model. Direct effects include respective portions of the amount initially injected into the regional economy (non-local spending in the region)

Indirect effect refers to the secondary impact caused by changing input needs of directly affected industries (e.g., additional input purchases to produce additional output). It concerns inter-industry transactions: The Grocery Stores has a demand for locally produced materials needed to produce their product (often foodstuff)

Induced effect is caused by changes in household spending due to the additional employment generated by direct and indirect effects. The Induced Effect measure the effects of the changes in household income and the spending of this increased household income on consumption items

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IMPLAN Results(These numbers need to be updated)

Impact Type Employment Labor Income Output

Direct Effect 1,454 $23,528,923 $55,778,505

Indirect Effect 109 $4,294,936 $12,867,676

Induced Effect 188 $7,281,161 $22,466,186

Total Effect 1,751 $35,105,021 $91,112,368

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Conclusions

• Broadband internet connectivity in vacationing homes would generate additional spending in the local economy, causing economic prosperity to the region

• The yearly impact in Forest, Langlade, Lincoln, Oneida, and Vilas Counties in Wisconsin would be between $41,047,845.77 and $55,778,505

• Benefits: job creation, higher tax revenues, and better infrastructure in the county

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