Economic sustainability can be viewed from the angle of the event’s financial health or from the viewpoint of the financial benefit the event has to its stakeholders, support community and supply chain. Both are relevant and intertwined and should be considered in partnership.
Economic impact can be direct or indirect, positive or negative.
Direct economic impact can include the return on investment and financial success of the event from a profit perspective. It can also include the financial benefit to the community and supply chain as a direct result of event activities. For example hotel nights booked in partnership with event tickets, contracting of local service provider, employment of local workforce, procurement of locally produced products.
Indirect economic impacts can include residual tourism income from event attendees due to entertainment, spending and additional accommodation bookings. Indirect economic impacts can also include enduring tourism, visitation or business dealings in the local community or supply chain as a result of event activities and exposure.
‘Market presence’ is also an indicator of positive economic impacts of the event. This is where the event’s activities support the ongoing viability of the event industry in a region or supply chain health (through its purchasing or sourcing). An example would be a mega event landing into a city or region and the establishment of infrastructure and services leads to that region becoming an ongoing event destination because of the existence of event specific infrastructure, supply chain and service providers.
Measuring Direct and Indirect Economic Impacts
Measuring economic impact allows evaluation of economic return on investment and indirect financial benefit to the host community, supply chain and other stakeholders. Measures can include:
- Percentage of expenditure on local suppliers, contractors and service providers
- Percentage of event workforce sourced locally
- Total additional expenditure as a direct consequence of staging the event.
- Enduring increased visitation to the region
- Increased enduring commerce to the region
- Increase awareness and exposure to the region
- Provision of infrastructure resources
- Supply chain innovation and enduring business opportunities for those suppliers
- Cost savings due to resource conservation and sustainability initiatives
The Global Reporting Initiative includes several economic sustainability performance indicators which may be relevant for your event:
- EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
- EO2. Direct economic impacts as a result of sustainability initiatives
- EC6 Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation
- EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation.
- EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in- kind, or pro bono engagement.
- EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.