Sports venues’ effect on social welfare : Cost-Benefit analysis of infrastructure investments within Lugnet area in Falun

Abstract: Economic analysis and evaluation of sport events and sports infrastructure is a widely researched topic, especially when it comes to mega-sports events. As many of major and mega events require large amount of resources, governments and municipalities worldwide have to make decisions regarding support for the events. To determine whether and to what extent events should be subsidised with public resources, a thorough analysis of potential impacts of the event has to be conducted. Most of the studies within this field choose Economic Impact Analysis as a method, while many researchers point out a need for costbenefit analysis, as only a comprehensive analysis of costs and benefits for society can justify public subsidies for sport events and sports infrastructure. This paper presents a cost-benefit approach of sports venue evaluation. A cost-benefit analysis made in this paper, on the case of Swedish outdoor area of Lugnet, Falun, presents possible effects of sports infrastructure investments on social welfare. Analysis was aimed towards investments made prior to hosting 2015 FIS Nordic World Ski Championships in Falun. Presenting results for three alternative scenarios, this study compares different effects on social benefit. This research paper highlights areas that need to be investigated to ensure the better quality of the results, thus it can be beneficial for further studies of the topic. Results presented in this paper can also be beneficial for policy makers, as many of the potential welfare effects were described.