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Approach to take when assessing impact of tourism the right way

The tourism industry faces challenges linked to changing economic pressures, evolving business models, and growing environmental and social awareness. Success hinges on destination conditions, including social, human, and natural capital affected by tourism. Destinations are the tourism sector’s product, and balancing economic development with environmental and social impacts is crucial for sustainable growth.

Current impact measurement practices, often focusing on GDP or visitor numbers, provide only a partial understanding of the sector’s true effects. Leading organizations advocate for a holistic approach to measuring tourism impacts across economic, community, and environmental aspects. Despite challenges posed by diverse destinations and stakeholders, progress is evident through initiatives like the United Nations Environment Programme’s sustainable consumption program and the Global Sustainable Tourism Council’s indicators for sustainable management.

Hereby I want to recomend TIMM6, an impact measurement and valuation framework developed by PwC, that is offering a comprehensive evaluation of a business’s societal, economic, and environmental impacts. This holistic approach to impact measurement is total, considering social, environmental, tax, and economic dimensions to provide a comprehensive view. What I like about this method is that It goes beyond inputs and outputs, delving into outcomes and impacts, quantifying and monetizing them in a common language. Additionally, TIMM facilitates management by evaluating options and optimizing trade-offs for informed decision-making.

Extending the scope of impact measurement and reporting
Source: PWC

TIMM assesses impacts in four key categories:

  1. Economic impact measures the effect on a given area’s economy, considering output, value added, and changes in employment.
  2. Tax impact covers the associated tax contribution.
  3. Environmental impact evaluates the value of emissions to air, land, and water, as well as the use of natural resources.
  4. Social impact values the consequences on societal outcomes, such as livelihoods, skills, and cultural heritage.

The framework estimates the value of each impact, enabling comparisons and assessments of alternative strategies, investment choices, and operating plans. This empowers decision-makers with a more complete understanding of the overall impact and insight into which stakeholders will be affected by specific decisions. TIMM utilizes input-output models along with other primary and secondary data sources.

Although nicely structured, Governments througout the world rarely develop tourism with a wholistic aproach. I truly hope I am helping them and developping agencies (also donors) that are willing to understand and decide upon sectors and their impacts in the overall economy of a country.

Author: Elena Ivanova

Elena Ivanova

Management consultant with strong business empathy and empirical knowledge in sustainable development. Creates business models that strengthen inclusive markets and deliver a positive impact. . Dynamic and analytical opportunity seeker, driven by the customer's needs and the company's growth potential. Consider me to collaborate as a certified professional with a focus on resource planning, organizational restructuring, and change management.