Review of Dougherty’s “2010 Maryland State Parks Economic Impact and Visitor Study”, by Matthew Rousu and Kyle DeShong.

This study attempts to find the economic impact of the Maryland State Park system on the state of Maryland for the fiscal year 2010.  The study finds an impact of approximately $650 million on the entire state.  This study has a major flaw that causes the estimates to be inflated by a significant amount.  The economic impact estimated by the author implicitly assumes that all dollars spent in Maryland by those visiting state parks would not have been spent elsewhere in the state without those parks.  This is a massive error. 

The author should have estimated what percentage of the spending would not have occurred in the state of Maryland without the parks.  I.e., in the absence of the parks, how much of that money would have been spent out-of-state instead of in-state.  A common estimate used is the number of out-of-state visitors.  That estimate isn’t perfectly precise, but it is defendable and was used by Mowen et al. in their study of Pennsylvania state parks (link here).   Dougherty mentions that 49% of overnight visitors and 29% of day visitors were from out-of-state and also that 88% of their estimated economic impact is attributable to day-visitors. 

Given the author’s statements, if you assume all the visitation figures are correct, the true economic impact would be closer to .29*.88+.71*.12=34% of the stated value.  This means, assuming all other numbers the authors used were correct, the true economic impact on Maryland would be only about 1/3 of the value the author stated, or about $222 million.  There is a legitimate reason to be skeptical of the other values, however, given they were provided by entities that have an incentive to make those estimates as high as possible. That being said, the estimate of $222 million does seem reasonable compared to the estimate of $271 million for the state of Pennsylvania parks study (link here).

When graded on our “best practices,” how does this study do?

Things that this study does well:

2.) The geographic region is clearly defined as the state of Maryland.

5.) This study was reviewed by outside individuals review the report.

7.) This study extensively compares its findings to that of similar studies.

8.) This study discloses the source of funding as the Maryland Department of Natural Resources.  There could be bias to produce a higher estimate.

Things that this study does not do well:

1.) This study does not avoid stating both the monetary impact and the jobs impact.

3.) The counterfactual is poorly defined. 

6.) This study talks about its methods for determining the economic impact, but it does so very briefly, and leaves us with plenty of questions. We have to trust their methods, which is tough to do given the errors we can determine based on the information provided.

 

Overall Thoughts

·       This study contains a section on Leveraged Investment, which attempts to compare the amount of money that the state government puts in to the state park system to the direct, indirect, and induced economic benefits produced by the system.  This study finds that “For every $1 the state invests in state park (funding), $29.97 is generated in economic activity.”   This type of statement is quite misleading, as it implies that if the state spent an extra million dollars, for example, that there would be an additional $30 million in economic impact.  This isn’t the case. 

·       This study has one serious flaw that we could find which caused the estimate of the economic impact to be triple what should have been reported.  The economic impact should have been closer to $220 million.  Even this, could be overstated, but seems in line with economic impact estimates that we found reasonable from another state.