Master’s Thesis Hunting Reindeer in East Iceland The Economic Impact Stefán Sigurðsson Supervisors: Vífill Karlsson Kjartan Ólafsson University of Akureyri School of Business and Science February 2012 Acknowledgements The parties listed below are thanked for their contribution to this thesis. Vífill Karlsson, consultant and assistant professor, department of business administration, University of Akureyri, for his patience and outstanding work as supervisor. Kjartan Ólafsson, lecturer, faculty of humanities and social sciences, University of Akureyri, for his work and comments as supervisor. Guðmundur Kristján Óskarsson, lecturer, department of business administration, University of Akureyri, for his assistance when processing statistics. Jón Þorvaldur Heiðarsson, lecturer, department of business administration, University of Akureyri, and researcher, Research Center University of Akureyri, for his comments. Ögmundur Knútsson, lecturer, department of business administration, University of Akureyri, for his comments. Steinar Rafn Beck, advisor, department of natural resource sciences, for valuable information when working on this master thesis. Bjarni Pálsson, divisional manager, Department for natural resource sciences, for valuable information when working on this master thesis. Rafn Kjartansson, translator and language reviewer of this work. Astrid Margrét Magnúsdóttir, director of Information Services, University of Akureyri, for her comments on documentation and references. ---------------------------------------------------------- Stefán Sigurðsson ii Abstract Tourism in Iceland is of great importance and ever-growing. During the period 2000- 2008 the share of tourism in GDP was 4.3% to 5.7%. One aspect of the tourist industry is hunting tourism, upon which limited research has been done and only fragmented information exists on the subject. The aim of this thesis is to estimate the economic impact of reindeer hunting on the hunting area. The hunting area is in East Iceland, the only region of the country where those animals can be found. To the author’s best knowledge this is the first time an attempt has been made to investigate this topic. In 2010 a survey was performed amongst Icelandic hunters. The survey was done online and pertained to the year 2009. The emphasis was on monetary expenditure. The Keynesian multiplier and input-output model were used to estimate the economic impacts. The main findings are: using gross output on the one hand and disposable income on the other, that 162 mISK and 62 mISK respectively constitutes the economic impact in the hunting area. Hunters spent on average about 217,000 ISK in total on the hunt which yields about 290 mISK. Out of that amount about 93 mISK was for hunting licences and 72% of the amount was paid to landowners resident in the hunting area, or about 67 mISK. Total spending on other items relating to the hunt was about 197 mISK. It is estimated that reindeer hunting constituted the basis for about 26 jobs in East Iceland in 2009. Key words: reindeer hunting, hunting tourism, economic impact, Keynesian multiplier, input-output model. iii Table of Contents 1 Introduction ................................................................................................................ 1 1.1 The purpose of the research ................................................................................. 2 1.2 The research questions ........................................................................................ 7 2 The Subject ................................................................................................................ 9 2.1 The beginning ...................................................................................................... 9 2.2 Freshwater resources and species ........................................................................ 9 2.3 Hunting in olden times ...................................................................................... 10 2.4 Hunting licence.................................................................................................. 15 2.5 The Reindeer ..................................................................................................... 16 2.6 Reindeer hunting ............................................................................................... 18 2.7 Types of hunters ................................................................................................ 21 2.8 Egilsstaðir .......................................................................................................... 21 2.9 Travel method.................................................................................................... 22 3 Theories about multiply effects................................................................................ 25 3.1 The multipliers .................................................................................................. 25 3.2 Weaknesses of regional multiplier analysis ...................................................... 34 4 Literature review ...................................................................................................... 37 4.1 Researches on the economic effects of sport fishing in Iceland........................ 37 4.2 Foreign economic researches of fishing and hunting ........................................ 38 5 Questinaries .............................................................................................................. 53 5.1 Regional multiply effects: Overview of theories and researches ...................... 53 5.2 The input-output model ..................................................................................... 61 5.3 The Survey ........................................................................................................ 68 6 Data .......................................................................................................................... 75 iv 6.1 The population ................................................................................................... 76 6.2 Results of the survey ......................................................................................... 82 7 Economic impacts .................................................................................................... 97 7.1 The multiply effects on the hunting area ........................................................... 97 7.2 The flow of money and creation of jobs.......................................................... 102 7.3 The efficiency of reindeer hunting .................................................................. 112 8 Discussion .............................................................................................................. 119 9 Conclusions ............................................................................................................ 123 8.2 The answers ..................................................................................................... 124 8.3 Implications for the tourist industry ................................................................ 125 8.4 Further research ............................................................................................... 126 9 References .............................................................................................................. 127 10 Appendixes ............................................................................................................ 136 v Table of Figures Figure 1.1 Value added and Tourism industry’s share in GDP. Ref. Statistics Iceland ... 4 Figure 2.1. Division of Iceland into hunting areas. Source: DNR, 2010. Modifications made by the author of the thesis. .................................................................................... 16 Figure 2.2. The hunting areas of reindeer. Reference: Einar Guðmann, 2010. .............. 19 Figure 2.3. Iceland. Reference: www.lmi.is ............................................................... 22 Figure 3.1 Direct, indirect and induced impacts. Ref. http://www.reddi.gov.on.ca/guide_ecimpactassessment.htm ......................................... 30 Figure 6.1. Did you go hunting for reindeer in 2009? N = 478 ................................... 82 Figure 6.2. Total expenditure and classification of hunting trips according to number of days. ................................................................................................................................ 85 Figure 6.3. How long did you stay with the guide? n = 178........................................ 85 Figure 6.4 . Was your guide resident in the hunting area? n = 179 ............................ 86 Figure 6.5. How much did you pay the guide in total? n = 181 ........................... 87 Figure 6.6. Residence of hunters. N = 163 .................................................................. 90 Figure 6.7. Hunters’ income before taxes. N = 348.................................................... 92 Figure 6.8. Income before taxes according to residency. N = 348 ............................ 93 Figure 6.9. Hunters’ accommodation. N = 184 .......................................................... 93 Figure 6.10 Total number of bed nights in 2010 in East Iceland by periods.................. 94 Figure 6.11. Length of stay in East Iceland in connection with the reindeer hunt. N = 168 .................................................................................................................................. 94 Figure 6.12. Other