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Evaluating the Economic Impacts of Calgary’s Olympic Bid

Nov 29, 2017
Pedro Antunes Pedro Antunes
Deputy Chief Economist and Executive Director
Forecasting and Analysis

In May 2017, The Conference Board of Canada produced a report entitled Evaluating the Economic Impacts of Calgary’s Olympic Bid. This report was made possible through funding provided by the Calgary Bid Exploration Committee. The findings and conclusions are entirely those of The Conference Board of Canada.

The report was reviewed and critiqued by both Trevor Tombe, economics professor at the University of Calgary, and Brad Humphreys, economics professor at West Virginia University. A summary of those critiques was printed in The Globe and Mail on Monday, November 20. We would like to offer our perspective on some of the points highlighted in the review.

Both professors stated that an economic impact analysis was not the most appropriate tool for evaluating the benefits associated with hosting the Olympic Games, but instead suggested that policy-makers should use a cost-benefit analysis to identify whether hosting the Olympics is the best use of public funds. However, our study was not meant to address the more subjective social dimensions of where government should spend. Rather, we chose to conduct an economic impact analysis because this would objectively identify both the level of expenditures necessary to undertake the games, as well as the associated geographic distribution of potential benefits. The results allow for a more wholistic discussion of how costs could be shared. This includes not only various levels of government within Canada but also the International Olympic Committee.

We should note that many of professors Tombe’s and Humphrey’s critiques were discussed in the literature review section of our study. We included critiques about how to best define costs versus benefits, and that economic impacts could vary depending on whether the economy is at full capacity. Moreover, our literature review discussed the “crowding out” effects that can occur when the heightened security, large crowds, and higher prices that come with the Olympics dissuade other non-Olympic tourists from visiting.

To ensure that double-counting and crowding out effects were netted out of our analysis of the potential pre-Games, hosting of the Games, and post-Games period, we relied on factual observations from previous Olympics when we compiled the inputs that drove the economic impact analysis. We specifically addressed potential double-counting in the areas of tourism, security, and other spending, and thus fully accounted for the crowding out effect that some earlier studies had overlooked.

Moreover, our report specifically dealt with the issue of whether Calgary’s economy might be operating at full capacity in 2026 when the Winter Games would occur. Some analysts argue that a full-growth economy would reduce the Games’ economic impact. We acknowledged that it is impossible to accurately predict business cycles far into the future. Because our economy is diversified, Canada has rarely been in a position of national full employment. We assumed for the economic impact analysis that there will be spare capacity to accommodate the economic boost associated with the Winter Games—if not within the city, at least within Alberta or other provinces. We acknowledged in the report that the economic impacts, as we’ve portioned them by region, could be affected by local economic conditions. However, there is a strong likelihood that the total economic impacts we have forecast nationally would not be affected by supply pressures, given the fact that all provincial economies are rarely operating at full capacity at the same time.

The goal of our study was not to consider non-economic political and social factors. Our study focused simply on how large the economic impacts would be, and where they are likely to occur. We stand by our research in estimating what we feel are the most probable outcomes for Calgary, the province of Alberta, and Canada.