Challenges in assessing the potential impacts of shale gas production on tourism in the Karoo

Shale-Gas-SA-cover-A4_FINAL-722x1024Tourism is not a clearly defined industry in the International Standard Industrial Classification of all Economic Activities (ISIC). The key factor in the Tourism Satellite Account for South Africa is to relate purchases by tourists to the total supply of these goods and services. Quantification of tourism enterprise numbers does not form part of the national assessments; yet it was necessary to know how many tourism-related enterprises could be impacted by shale gas production in the study area of the Karoo.

So how did we endeavour to solve this problem?

Our approach (see detailed presentation) was based on regularities (in the form of linear regression equations) that have been observed in the enterprise development and dynamics of South African towns. Earlier studies have revealed statistically significant correlations (and linear regression equations) between economic (i.e. gross value added [GVA] and total personal income), demographic (i.e. population numbers), employment (i.e. total as well as sector employment numbers) and entrepreneurial (i.e. number of total as well as sector enterprises) characteristics of many South African towns.

Largest enterprise sector

By using techniques based on telephone directories and the internet, we counted all enterprises, also those of the tourism and hospitality sector, in the towns of the study area.  With this data, we confirmed the presence of enterprise regularities, also for the tourism and hospitality sector, in the towns of the study area. We established that the tourism and hospitality sector is now the largest enterprise sector in the study area and that it had grown the fastest between 2006 and 2016. Impacts on this sector could have serious consequences.

R2.3bn to R2.7bnquote-opening

The value added annually to the local economies by  828 tourism enterprises in the study area, employing between 10 100 and 16 400 workers

The ratios of tourism enterprises to total enterprise numbers for each town was then used in a series of different calculations to estimate the tourism sector’s contribution to the GVA (Gross Value Added) and employment in the study area. We concluded that there are 828 tourism enterprises in the study area employing between 10 100 and 16 400 workers and annually adding between R2.3 billion to R2.7 billion to the local economies of the towns of the study area.

Download the book

The report, entitled  “Shale Gas Development in the Central Karoo: A Scientific Assessment of the Opportunities and Risks” and of which our research formed part, was published towards the end of 2016.

Our chapter on the potential impacts on the tourism industry in the Karoo completed this project and can be downloaded separately.

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