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This m focuses on the areas of the state's economy most likely to be affected by the current - <br />drought — tourism and agriculture. A brief summary of the estimated impact of the drought on these <br />sectors is provided as well as a discussion of the impacts from previous droughts that have occurred in <br />Colorado. In addition, we provide an overview of the known impacts of the drought thus far on the <br />economy. The. next section discusses the economic implications of a drought on the occurrence of other <br />natural disasters in the state, primarily forest fires. Finally, this memorandum reviews the possible <br />impact to state and local revenues from the decline in agriculture and tourism in Colorado due to the <br />drought. <br />Impact on the State's Economy <br />The drought will affect the Colorado economy primarily through the tourism and the agriculture sectors. <br />These two sectors are extremely important to Colorado's economy. Once we have actual statistical data <br />regarding the impact of the drought on tourism and agriculture, we will be able to provide a more <br />complete economic impact statement. The impact to these sectors will be apparent in many of the main <br />economic indicators. Most notably, we will examine farm income, personal income, wages and salary <br />income, employment and the unemployment rate to determine the overall impact to Colorado's economy. <br />In addition, we anticipate that we will observe a decline in both retail sales and sales tax revenue from a <br />decline in tourism spending. <br />Economic Impact on Tourism <br />Tourism is one of the most important economic sectors in Colorado. Indeed, tourism is the state's third <br />largest economic sector and injects approximately $8.5 billion into the Colorado economy each year. In <br />addition, tourism accounts for almost 8 percent of all nonfarm employment in Colorado. Finally, the <br />tourism sector produces approximately $550 million in revenue for both state and local governments <br />each year. <br />The drought may affect tourism the following ways: <br />• A decline in skier visits due to lack of snow; <br />• A decline in hunting because of a loss of habitat caused by potential wildfires as well as a possible <br />decline in herd size from lack of precipitation in the grazeland; <br />• A decline in fishing and rafting because of lower stream levels; <br />• A decline in outdoor recreation because of fire bans and a lack of interest in camping without <br />campfires. In addition, public access to some areas might be restricted because of potential <br />wildfires; <br />• A decline in resort visits if water restrictions are imposed and golf courses are not able to be <br />watered; and <br />• A decline in both touring and parks visits if forest fires impact these areas. <br />Certain regions of the state are more dependent on tourism and consequently will be more affected by <br />the current drought. These regions are extremely dependent on tourism for both employment and <br />income. The part of the state most dependent on tourism is Region 12, which includes Eagle, Grand, <br />Jackson, Pitkin, and Summit counties. Tourism comprises 51 percent of the resort counties' <br />