Economic Impact Assessment Overview

The primary goal for many film commissions is to bring jobs and economic benefits to their communities through the production of film, video, television and media projects. One of the challenges film commissions face is how to demonstrate the specific impact – or value – that the industry has to a community. This is a complicated job for everyone involved. The primary challenge is the transitory nature of the business; a production comes and goes from a region in a relatively short period of time, and it’s often impossible to capture all of the information needed for an economic impact report. However, there are ways to make a reasonably accurate assessment of the impact of the industry in your area. This section of the course will focus on the inner workings of the economic impact assessment

An economic impact assessment defines the level of economic activity in a city or region generated by an activity or action – either positive or negative. For example, a major car manufacturer might be leaving the area – this has a negative impact on the community that can be measured and the loss tangibly demonstrated. Film and video production have a positive economic impact on the community that can be defined and measured as well.

Economic impact assessments trace the spending of the activity and attempt to measure and quantify it. Keep in mind that economic impacts present other impacts including social and environmental consequences. A new casino in an area, for example, offers a large tax base, but may also have a negative social impact such as attracting crime and addiction. Or a television series lands in a city that is relatively new to film. The positive economic and social consequences may include new businesses popping up to service the unique needs of production, schools working to train students to work in this field, or new build-outs and infrastructure may be developed as alternative stage space involving private sector investment in a tangible, permanent fashion.

There are a number of reasons why economic impact assessments (EIA) should be performed. One reason is to justify your job, your commission office, and the funding needed to keep the whole organization afloat.

Film commissioners, like economic development practitioners, work for organizations that are funded, traditionally from public sources. As a result, there is increasing pressure today for these organizations to demonstrate value to taxpayers, elected officials, business partners and government at the regional and federal level. Unlike traditional economic development which is sometimes quite limited in the dollar impact it can identify the film commissioner can effectively demonstrate where dollars have been spent and what return on investment (ROI) is being received.

This hypothetical example illustrates what a return on investment would look like if, in the course of a year; a region enjoyed the following level of filming and was able to quantify the economic impact:

2  Major Feature Productions     $12.0 million
7  TV Productions                          $2.0 million
8  Commercials                              $0.8 million
2  Music Videos                             $0.2 million

TOTAL EXPENDITURES:         $15.0 million
BUDGET OF COMMISSION:    $ .5 million

In other words, for every dollar spent to fund the office, the film commission in this region generated an additional $30 in revenue. However, this simple method of showing value is only possible if the economic impact assessment has been completed.

A good impact assessment is also helpful in making decisions about whether to pursue new projects and the kind of resources you want to put into those projects. It is also useful in developing marketing strategies and determining where you want to focus your efforts (i.e. if you have a great deal of commercial production in your area, you can determine where to focus resources and your marketing budget). The most important outcome is accountability. The economic impact assessment is a tool for film commissions to show directly what jobs and economic value they bring directly to their communities.

The concept of credibility is an important tool for film commissions. The ability to market your community to potential production companies will only increase if you can provide a detailed overview of the type and dollar level of filming that has taken place in your region. Communicating this success will be easier if an economic impact assessment (hereafter occasionally referred to as an EIA) has been completed.

A second but related reason for performing an economic impact assessment might be to increase your budget. Demonstrating your current ROI serves as ammunition for pitching the value of your office and what you could accomplish with more funding