At Odds with the Outdoor Industry

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If Colorado is to shift away from oil and gas production, we will need to fill that economic hole with an industry equally or almost equally productive. Colorado is well known for its excellent skiing, mountain climbing, biking, fishing, rafting, and camping. We beg the question: just how big is the Outdoor Recreation industry? 

Colorado’s Outdoor Recreation industry accounted for 125,244 jobs in 2021.  That’s 4.3% of total employment, putting Colorado 8th in the country for Outdoor Recreation jobs as a portion of total employment.

Colorado is above average with 2.7 percent of GDP coming from the Outdoor Recreation industry. The Outdoor Recreation industry generates $11.6 billion of the state’s GDP.  In 2021, wages and salaries paid to outdoor recreation workers in Colorado totaled $6.1 billion.

The outdoor recreation industry accounts for more than 6 times as many jobs as the oil and gas industry in Colorado.  In 2021, 125,244 people worked in the outdoor sector compared to 19,871 jobs in the oil and gas sector.

Boating/Fishing is the nation’s largest conventional activity in Outdoor Recreation. In Colorado, however, “snow activities” is by far the largest. In the entire country, GPD related to snow activities is $5.2 billion.  Colorado generates $1.27 billion. Ultimately, one quarter of the nation’s snow activities economy comes from Colorado.

Small towns in Colorado depend upon Outdoor Recreation Tourism. 

To scientifically investigate the impact that the outdoor industry has on the economic vitality of towns in Colorado, we would need an experiment group — in which outdoor tourism was present — and a control group — in which it wasn’t.  Three unique scenarios have provided us with such a case: the COVID pandemic, extreme wildfires, and liability issues that temporarily closed a popular hiking destination.  

We focus on three natural experiments: the COVID pandemic and the accompanying locks downs; the town of Alma, which lost tourists because a popular hiking spot in the area was closed in 2021; and the 2018 forest fires (specifically the Spring Creek Fire and the 416 Fire), which drove away tourism from the towns of La Veta and Silverton.    

Using these three natural experiments, we look at the sales tax data in towns to see what happens when they suddenly lose their outdoor tourism industry. 

What happened to Alma’s sales tax revenue when popular Fourteeners were closed for liability purposes? Using the hiker count data from Colorado Fourteeners Initiative, hikers dropped from 25,000 in 2020 to 10,000 hikers in 2021.  With the drop in hikers came a 19% drop in sales tax revenue during peak hiking season in 2021.

What happens when outdoor recreation isn’t possible because of a wildfire?  In southern Colorado near La Veta Pass, the Spring Creek Fire started in late June 2018 and would eventually burn more than 100,000 acres before it was 100 percent contained in early September. La Veta saw an 18 percent drop in retail sales during the fire compared to the year prior. During the 416 Fire The Durango & Silverton Narrow Gauge Railroad alone canceled 31,000 reservations for that June. The town of Silverton saw a 16 percent drop in retail sales during the fire. 

In many ways, the oil and gas industry and the outdoor recreation industry are similar in Colorado. In both industries, Colorado is in the top ten ranking — 8th in the employment share from outdoor recreation and 9th in share of the economy dependent upon oil and gas. Towns across Colorado are particularly dependent upon each industry.  

The difference between these two industries is outdoor recreation industry doesn’t require the cleanup and plugging of abandoned wells, nor does it create negative externalities like air pollution or lower property values, which occurs to property near oil and gas drilling sites. In addition, the outdoor recreation industry doesn’t contribute to climate change and the increasing severity of forest fires like the fossil fuel industry does. A 2023 study found that 37% of the area burned by forest fires in the western U.S. and southwest Canada since 1986 can be attributed to heat-trapping emissions from the world’s largest fossil fuel producers. Colorado has seen a huge increase in the size and damage of wildfires in recent years. The top 20 largest forest fires in Colorado’s history have all occurred since 2000.  With Colorado comprising 25% of the country’s snow activity economy, issues of climate change and reduced snowpack disproportionately impact the state.

Recent climate goals set by Congress and our own General Assembly addressing the harmful impacts the oil and gas industry has on our health, economy, and climate mean Colorado will begin to transition away from the industry. The Outdoor Recreation economy is significant in Colorado and provides an alternative, though not full replacement, for the extractive oil and gas industry. Bolstering the Outdoor Recreation industry through economic development, tax, and employment incentives can help ease the pain of shifting away from oil and gas, and towards a more environmentally sustainable economy.