Predicting the aggregate economic impact of rural tourism events
Rural tourism is a rapidly expanding industry in Europe and America, experiencing an annual growth rate of six percent in recent past. The steady increase in rural tourism can help minimize the large gap between average rural income and average urban income. An issue Texas Department of Agriculture (TDA) faces in funding rural community events is whether these events will generate sufficient aggregate economic impact (AEI) to justify this public investment. The GO TEXAN Rural Community Program is a comprehensive program initiated by the TDA to enhance the growth and prosperity of rural Texas towns, cities and counties. Using panel data this study develops a predictive model that explains variables that affect aggregate economic impact of rural events, where visitors spend their money based on the events' attractiveness. AEI is an important measure of the effectiveness of TDA funding of rural communities. It is calculated based on event and community characteristics and it is the total expenditures for a particular event multiplied by economic multiplier. We evaluated the total returns from 39 community events and seek to determine to what extent outcomes could have been predicted based upon available information. Event surveys from three consecutive years 2008, 2009 and 2010 are used as primary data. The results reveal that the Ordinary Least Square (OLS) is a good fit for the model. Parameters coefficients of the explanatory variables such as event days, number of years, community investment, weather, folk/music, nature tourism, estimated miles, distance from major city, visitor rating, community population and median family income were statistically significant.