The golden rock Statia: Measuring the economic impact of tourism on St. Eustatius
The tourism industry is a worldwide growing sector with a significant economic importance. It is responsible for 253 million jobs worldwide and 3.1% of the world’s GDP. This is because the tourism industry creates several impacts in a region. Direct effects arise due to tourist expenditures in the closely related sectors. Indirect effects take place when money earned from the tourism industry is re-spent by the receiving industries to buy supplying goods and services that are necessary for their production. (Stynes, 1997). Induced effects show up when income is re-spent which is earned by the expenditures of tourists (Duffield, 1982). Employees who work in the tourism branch will use their salary to buy products and services for everyday use.
The island economy of St. Eustatius depends on a small number of economic resources: the public sector, the American oil company NuStar and in a smaller degree the tourism sector (Hoogenboezem-Lanselots et al, 2010 and Van de Kerkhof 2014). Therefore, there is a necessity to diversify economic activities in order to obtain economic growth and development. For this reason, the Tourism Foundation and Alterra started in 2014 with the development of a tourism master plan in which the different effects of tourism will be examined (Recreation and Space, 2015). This thesis forms a part of the masterplan and estimates the economic impacts of tourism on Statia.
The estimation of the economic impacts on Statia is done by applying the Input-Output model. This model is derived from the I-O table the which shows the relationships between different economic sectors within a region. Because a national I-O table of St. Eustatius is not available, a regional I-O table needs to be constructed. The most reliable to construct a regional I-O table is to derive it from an I-O table on a higher national level. The ones of Aruba (1999 and 2011) and Malta (2011) are therefore used instead. Several methods exist to perform this procedure, in this study this is done with the Flegg Location Quotient method.
To estimate the impacts, the Leontief Inverse, which shows how much output per sector is needed to meet the final demand in a specific sector. is multiplied with the final demand in a specific sector. The final demand is obtained by means of a questionnaire. Because there is ambiguity in the number of tourists, three scenarios are applied. 1500 tourists in the low case scenario, 2000 for the medium case scenario and 2500 for the high case scenario. The results are that for the situation of 1500 tourists per year, the number of jobs created varies between 38.42 jobs and 45.65 jobs. In the situation of 2000 tourists, this is between 53.45 and 80.85 jobs and for 2500 tourists this varies between 66.80 and 101.03 jobs. According to the latest data, the total number of jobs on the island is around 1100 meaning that the tourism sector has a share between 3.49% and 9.18% of the total jobs. Most of these jobs are created in the hotel and restaurant sectors which are mostly affected by the tourist expenditures. The total value added created by the tourism expenditures is around the 1 million dollars for the low case scenario, 1.6 million dollar for the medium case scenario and 2 million dollar for the high case scenario.