April 16th, 2013 by

By Josh DeLacey

The outdoors makes money — even more money than we thought it did two years ago.

Commissioned by the National Fish and Wildlife Foundation, Southwick Associates, Inc., recently released a study of The Combined Value of Outdoor Recreation, Natural Resource Conservation and Historic Preservation, which found that those three areas annually generate at least $1.7 trillion in economic activity, support 12.8 million jobs and bring in $211 billion in tax revenue. As the report notes, “this sector of the U.S. economy is larger than the U.S. auto and pharmaceutical industries combined.”

Tree plantings create jobs and effects throughout the economy.

Tree plantings create jobs and effects throughout the economy. Credit: Tim Redpath

Southwick Associates, a group devoted to exploring the monetary issues related to environment, natural resources and outdoor recreation, conducted a similar study back in 2011. However, due to limited data, it could only present a “minimum estimate,” and it put the annual economic activity that resulted from outdoor recreation, conservation and historic preservation at $1.06 trillion, jobs at 9.4 million and tax revenue at $107 billion —very impressive numbers already. Government agencies, nonprofits and advocates cited the report as a clear reason why conservation spending is important and beneficial.

But the National Fish and Wildlife Foundation wanted more accurate information. So Southwick Associates did a deeper investigation and prepared another report. The difference between the 2011 and 2013 findings is huge: a 70 percent increase in economic activity, a 26 percent increase in jobs and a 97 percent increase in tax revenue.

Part of the study also focused on the impacts of conservation alone. Annual U.S. conservation spending totals $38.8 billion, but it produces $93.2 billion of economic output throughout the economy — 2.4 times more than what is put in. This output takes the form of more than 660,500 jobs, $41.6 billion in income and a $59.7 billion contribution to national GDP.

You can read the full version of the conservation report, but here is an explanation of some of its most interesting findings:

  • Of the $38.8 billion spent annually on conservation, 60 percent comes from the federal government. State governments account for 25 percent, the private sector makes up 11 percent and local governments contribute the remaining 4 percent. Most of the private sector spending passes through nonprofits such as American Forests.
  • The report calculates the direct economic contributions of conservation spending, as well as its indirect contributions. The direct effects of conservation spending only look at the immediate results: the jobs, income and tax revenues that happen right away, without accounting for any multiplier effects. Even so, conservation spending directly provides $23.1 billion in income, 277,000 jobs and $5.6 billion in taxes. Not nearly as impressive as $93.2 trillion, but as any economist will tell you, spending is not limited to its direct contributions.
  • The study also measures indirect contributions of conservation spending. Indirect contributions are defined as “how sales in one industry impact other industries.” For example, when American Forests funds a tree planting, we also impact the transportation industry (the planters have to drive to the planting site), real estate industry (we have to rent our office space), household spending (everyone who gets paid spends part of that money, putting it to further use in the economy) and other industries. Southwick uses the IMPLAN model to calculate these indirect benefits, which is how they get the total value of $93.2 billion.
  • The report breaks up data by state, showing a wide range of conservation spending. California leads the pack with $4.3 billion, and Rhode Island picks up the rear with $108 million. In all but three states (South Dakota, Texas and Wyoming), the money spent produces more money in resulting economic activity.

The Southwick Report shows that nature is valuable — for more than just its ecological benefits. With conservation prompting $93.2 billion in economic activity and outdoor recreation and historic preservation generating more than $1.6 trillion more, there is a clear financial motive for protecting the environment.