The Economic Significance of Hunting Tourism in East Lapland, Finland

ABSTRACT

Uses of game resources are under constant debate. One such debate focuses on hunting tourism and its contributions to rural economics. To prioritize future investment and inform policy decisions, it is necessary to identify the full economic consequences of the operation of hunting tourism companies in rural areas. However, the true economic significance of these typically small-scale companies is not apparent when examined on an industrial scale. These companies may nevertheless serve as a sustainable solution to local-scale rural challenges. In this article, the regional economic significance of hunting tourism is estimated for the East Lapland sub-region of northern Finland through the use of Computable General Equilibrium simulation models. Although these models are known to effectively evaluate short- and long-term regional economic effects of industries such as tourism, they have not previously been applied to evaluate hunting tourism.

KEYWORDS:

• Computable General Equilibrium models
• economics
• hunting tourism
• rural entrepreneurship
• small game

Notes

1. Consumer preferences are represented via a homothetic Cobb-Douglas utility function. The representative consumer uses local goods and imported goods from domestic and foreign sources. Readers can find mathematical details on functional forms in Törmä (2008). Note, however, that in this research, the utility function is of a simpler Cobb-Douglas form.

2. The technology of a firm is represented via a nested production function under constant returns to scale. This means that the decisions on the demand for inputs (capital, labor, intermediates, domestic imports, foreign imports) are made stepwise. The first choice concerns the optimal amount of capital and labor, given the production volume and relative input prices. Constant returns to scale means it is assumed that doubling the capital and labor inputs will result in double output. For mathematical details, see the reference in Footnote 1.

3. The AFLQ (Augmented Flegg’s Location Quotient) regionalizing technique is a modification of the Cross-Industry Location Quotient (CILQ) and emphasizes the importance of the relative size of the region and its specialization. In particular, the smaller the region, the greater the underestimation of regional imports. The relative performance of AFLQ has been tested (e.g., Flegg and Tohmo (2008) for 20 Finnish [NUTS 3] regions and 37 sectors). Their results suggest that compared with other LQs, the AFLQ method was able to produce adequate estimates of output multipliers for all of these regions.

Additional information

Funding

This article was developed as part of the North Hunt project (Sustainable hunting tourism—business opportunities in northern Europe) funded by the Northern Periphery Programme 2007–2013.