Impacts – 12 Appendix A: Definition of Terms in the MGM2 Model

Impacts of Visitor Spending on Local Economy:
Crater Lake National Park, 2001
 Appendix A: Definition of Terms in the MGM2 Model


Sales – Sales of firms within the region to park visitors.

Jobs  The number of jobs in their region supported by the visitor spending. Job estimates are not full time equivalents, but include part time and seasonal positions.

Personal income – Wage and salary income, proprietor’s income and employee benefits.

Value added – Personal income plus rents and profits and indirect business taxes. As the name implies, it is the value added by the region to the final good or service being produced. It can also be defined as the final price of the good or service minus the costs of all of the non- labor inputs to production.

Direct effects – Direct effects are the changes in sales, income and jobs in those business or agencies that directly receive the visitor spending.

Secondary effects – These are the changes in the economic activity in the region that result from the re-circulation of the money spent by visitors. Secondary effects capture the sum of indirect and induced effects.

Indirect effects – Changes in sales, income and jobs from industries that supply goods and services to the business that sell directly to the visitors. For example, linen suppliers benefit from visitor spending at lodging establishments.

Induced effects – Changes in economic activity in the region resulting from household spending of income earned through a direct or indirect effect of the visitor spending. For example, motel and linen supply employees live in the region and spend the income earned on housing, groceries, education, clothing and other goods and services.

Total effects – Sum of direct, indirect and induced effects.

  • Direct effects accrue largely to tourism-related business in the area

  • Indirect effects accrue to a broader set of economic sectors that serve these tourism firms.

  • Induced effects are distributed widely across a variety of economic sectors.

Marginal impacts – Economic impacts created per additional visitors or dollars spent.

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