University Wisconsin-Extension Broadband & E-Commerce Education Center High Speed Bits 6.26.14 program: Economic Impact of Broadband & Second Homes.

1. Broadband and Vacation Properties
Wisconsin
An Economic Impact Study
June,2014
University of Wisconsin Whitewater
Russ Kashian, PhD
Professor
Department of Economics
Northwoods Broadband and Economic Development Coalition

2. 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
Northwoods Broadband and Economic Development Coalition

3. 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
Northwoods Broadband and Economic Development Coalition

4. 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
Northwoods Broadband and Economic Development Coalition

5. 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
Northwoods Broadband and Economic Development Coalition

6. 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

7. Results: Part Time Residents on
Tainter Lake
Category Daily Expenses
Construction 34.15
Fishing/Boating Exp. 1.55
Launch Fees 0.04
Dining Out 6.69
Entertainment 1.68
Groceries/Liquor 18.16
Gas 10.53
Shopping (Personal) 5.84
Shopping (All other) 3.14
Licenses 1.10
Medical Care 2.52
Total 85.40
Northwoods Broadband and Economic
Development Coalition

8. Results: All Residents (Full and Part-
time) on Delavan Lake
Category Daily Expenses
Construction $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
Northwoods Broadband and Economic
Development Coalition

9. Results: Part Time Residents on
Eagle Lake
Category Daily Expenses
Construction 135.19
Bait/Tackle 0.61
Launch Fees 0.21
Dining Out 12.31
Entertainment 5.73
Groceries/Liquor 24.02
Gas 13.13
Shopping (Personal) 11.28
Shopping (All other) 2.85
Licenses 1.53
Medical Care 2.82
Other 3.88
Total 213.56
Northwoods Broadband and Economic
Development Coalition

10. Results: Part-time residents – New
North-Eastern Broadband Survey
Category Daily Expenses
Construction 12.48
Fishing/Boating Exp. 4.56
Launch Fees 0.01
Dining Out 8.33
Entertainment 2.89
Groceries/Liquor 13.25
Gas 6.15
Shopping (Personal) 3.89
Shopping (All other) 1.31
Licenses 1.02
Medical Care 4.24
Other (cleaning,
communication,
maintenance cost) 16.06
Total 74.18
Northwoods Broadband and Economic
Development Coalition

11. 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 internet
Northwoods Broadband and Economic Development Coalition

12. 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 Count
I would not stay any longer
than I currently do
47.1% 112
Up to 2 weeks 8.4% 20
2-4 weeks 13.4% 32
1-2 months 16.8% 40
3-4 months 5.9% 14
5-6 months 2.9% 7
6-12 months 5.5% 13
Answered Question 238
Northwoods Broadband and Economic Development Coalition

13. 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
Northwoods Broadband and Economic Development Coalition

14. 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.
Northwoods Broadband and Economic Development Coalition

15. 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 Northwoods Broadband and Economic Development Coalition

16. 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

17. “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
Northwoods Broadband and Economic Development Coalition

18. 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)
Northwoods Broadband and Economic Development Coalition

19. 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
Northwoods Broadband and Economic Development Coalition

20. 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
Northwoods Broadband and Economic Development Coalition

21. 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
Northwoods Broadband and Economic Development Coalition