Readers Question: What are the costs and benefits of the London 2012 Olympics?

A cost-benefit analysis seeks to examine all the various costs and benefits. These include both the monetary costs and benefits and the non-monetary costs and benefits.

Costs of London Olympics

So, with four months to go until the start of the Olympics and the IOC making its 10th and final inspection visit to London, it now seems like a good time to take stock. London 1908 and 1948 Olympic Games posters This is not the first time the Olympics have been staged in London%u2013 in fact, come July 2012, London will become the first city to host the modern Olympic Games for a third time after previous efforts in 1908 and 1948. London Preview What to expect at the 2012 Summer Olympic Games. Olympics 2012 by the Numbers The numbers behind the London Summer Games. Sport for All Wild cards are added to a strict qualification system to encourage greater sports participation worldwide. Bikinis Optional Changes are afoot, and underfoot, in London. Olympic Multitasker. For the third time in history, London will host the Olympic Games in 2012 four years after Beijing wowed the world. Events for the London 2012 Summer Games will take place in the Olympic Park in Stratford, East London; in the River Zone around Greenwich; and in various venues dotted around Central London. London Olympics and Sustainability. For the upcoming 2012 Summer Olympic Games in London, plans and preparation began years ago to create an impressive array of athletic venues and housing that not only fit the functional needs of the games but are also visually stunning and sustainably sound.

1. The financial cost of building facilities, which may only be used to their full potential for a short time during games.
2. The investment is short term. Many facilities can only be used for the 3-week duration of the Olympics. After that, there is a danger of ‘white elephant projects’ – facilities that can not be effectively reused. E.g. similar to the Millennium Dome.
3. Opportunity cost. It is estimated the cost of the Olympic village could cost up to £1billion. This is £1billion that cannot be spent on alternative investment schemes like transport and education in London.
4. The credit crunch means private sector investment has dried up. This increases the cost onto the taxpayers. Government spending is already under strain because of the bank bailouts and recession.
5. If the taxpayer has to step in, the Olympics will lose part of its £2.2bn contingency fund
6. The London Olympic logo is truly awful, and according to the Sun newspaper could trigger epilepsy.

Benefits of London Olympics.

1. Provides Jobs and Economic Activity. Important in times of a recession, when the private construction sector is in a steep decline. The government spending can be seen as part of an expansionary fiscal policy.
2. Hosting Olympics boosts the prestige of a country. It is a ‘once in a lifetime’ opportunity to provide a showcase to the world. Not everything can be reduced to simple accounts. (good example of a non-monetary benefits)
3. Hosting Olympics will provide a boost to tourism and travel to London, during the Olympics and hopefully after.
4. Building Olympic park has helped to regenerate the East end of London. Increases civic pride.
5. There is a lasting legacy of the Olympics. East London has new rail lines (Dockland light railway extension) and improved public transport, including improved international rail station at Stratford. This helps to reduce congestion and increase productivity.
6. Many of the venues will be used after the event, e.g. Olympic stadium will remain an athletic track, but also will be used by West Ham F.C. Other venues like the velodrome provide a much needed international standard track in the capital.
7. After the games, the Olympic Park will partly give way to a legacy of more available homes, to help ease London housing shortage.
8. Encourages sport in the UK, might make the UK have better fitness standards and less obese reducing demand for health care.
9. The Olympic Parkland has been created to leave a legacy for wildlife and the environment in the available area.

Conclusion

Personally, I’m glad we are hosting the Olympics. Yes, it might end up costing the taxpayer a lot. But, £1bn is less than 0.1% of total GDP. It’s a once in a lifetime opportunity to host the most important sporting event on the calendar. The Olympics may well make an economic loss in the short term, but does everything have to be ruled by profit maximising decisions? People will say it’s better to spend the money on health care and education. I don’t doubt these are higher priorities. But, we spend over £80bn on health care every year. I don’t see why we can’t spend £1bn on promoting the Olympics as a one-off event. (which might actually encourage people to be fit and therefore need less health care)

Let’s enjoy and take pride in the London Olympics.

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