Summing Up the G-20 Summit

Shortly after the conclusion of the September G-20 Summit, the head of VisitPittsburgh claimed the event’s economic benefits to the City and region reached $35 million.  As we pointed out in an earlier Policy Brief, that was a very dubious claim. Two months later data are available that call into serious question the notion the region enjoyed a $35 million boost in economic benefits.  We now have a reading on the RAD (regional asset district) tax revenue for September, which is a gauge of retail sales in Allegheny County, as well as figures for hotel occupancy tax revenue for September, which allow us to calculate the dollars spent on hotel rooms during the month.  By comparing the September 2009 data to September 2008 numbers and examining the pattern of year over year changes for 2009, it is possible to come to a reasonable conclusion about the G-20 meeting’s direct impact on spending. 

 

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The Uncertainty of the G-20

In an opinion piece in the Pittsburgh Business Times, the head of corporate communications for the Allegheny Conference made the argument that the benefits (press coverage, possibility of relocation/expansion from countries) of hosting the G-20 Summit next month will likely outweigh the costs (protests and related damage, traffic restrictions, security spending) and "it is up to all of us to make the most of it" since no one here lobbied or asked for the Summit.

Already several educational and government agencies have decided to err on the side of caution and avoid possible inconvenience by shutting down altogether for the days of the Summit. We’ve chronicled some of them in previous blogs, but we know that the Pittsburgh Public Schools, the Diocese Schools, the Federal Courthouse, and City Council will be closed for business. Are they overreacting? It is hard to say until after the Summit leaves town.

Plus, how do we know that there will be a net benefit from the Summit? We can’t look at previous G-20 gatherings since this is only the third one since last fall. According to the G-20 Study group at the University of Toronto, the first one, in D.C. came together so quickly and without much fanfare that there were no protests (and one has to account for the heavy security presence already in D.C.) and to their knowledge no economic impact study of the meeting.

The indirect costs of possible logistical problems for businesses, possible traffic and travel inconveniences, and others have to added to the direct outlay of $20 million in security costs. Then there will have to be a quantifiable measurement of media coverage and tangible job growth or relocations arising from the Summit. Knowing how hard this is to track in the field of economic development (even the grantors and grantees of subsidies in Pennsylvania often cannot accurately measure the impact of economic development programs) it will be a Herculean task.

The bottom line is that we are taking a leap of faith that there will be a payoff without any evidence that a payoff will come.