Okaloosa County BOCC — March 17, 2015 — 76127 economic evaluation of florida s investment in beaches

OFFICE OF ECONOMIC & DEMOGRAPHIC RESEARCH Economic Evaluation of Florida’s Investment in Beaches Identifying the State’s Brand, Calculating the Return on Investment of Beach Restoration and Assessing the Risk of Disasters 1/15/2015  Table of Contents EXECUTIVE SUMMARY .................................................................................................................................. 1 OVERVIEW OF BEACH RESTORATION AND ROI............................................................................................. 3 FLORIDA BEACHES AND THE STATE BRAND .................................................................................................. 8 RETURN ON THE STATE’S INVESTMENT IN BEACH RESTORATION.............................................................. 10 ASSESSING THE ECONOMIC RISK OF DISASTERS ......................................................................................... 14 RETURN ON INVESTMENT AS A PROJECT SELECTION CRITERION ............................................................... 16 APPENDIX A: DIRECTIVE LETTER ................................................................................................................. 17 APPENDIX B: VISITOR SPENDING METHODOLOGY ..................................................................................... 19 APPENDIX C: INTERPRETING ROI INDICATORS ............................................................................................ 21 APPENDIX D: ADDITIONAL STORM DAMAGE RESOURCES .......................................................................... 22  EXECUTIVE SUMMARY Introduction… At the request of Speaker Will Weatherford, the Office of Economic and Demographic Research (EDR) undertook an economic evaluation of the state’s investment in beach management and restoration projects. The evaluation:  identifies the strength of the relationship between Florida’s beaches and the state’s attractiveness as a tourism destination, including the impact on the state’s brand;  calculates the state’s overall return on investment from its current expenditures on beach management and restoration projects; and  assesses the impact of the potential shocks such as major storm damage or other disasters, including a discussion of the state’s economic risk. See APPENDIX A for a copy of the letter from the Speaker. This analysis develops a return on investment for the Beach Management and Restoration Program and evaluates the key factors that affect this return. The state’s return on investment includes all direct, indirect and induced effects of the state’s investment in the Beach Management and Restoration program. This measure does not address issues of overall effectiveness or societal and ecological benefit; instead, it focuses on tangible financial gains or losses to state revenues. The review period covers Fiscal Years 2010-11, 2011-12, and 2012-13. In this report, EDR assumes that the Beach Management and Restoration program is one of two direct investments made by the state to support Florida’s brand related to beaches, and that the two (advertising the brand and program investment) generate tourists. Overall Results and Conclusion… EDR determined that the state’s brand is made up of nine features that attract visitors. Beaches are the most important feature of Florida’s brand, accounting for 25.5% of the state’s attractiveness to visitors. The state appropriates funds yearly to repair storm damage and ensure the high quality of the beaches. The state’s investment in the Beach Management and Restoration Program generated a positive return on investment of 5.4. The ROI was estimated using tax revenues resulting from visitor spending induced by the state’s investment in beaches. A return of greater than 1 means that the t