Gains from investments in snowmaking facilities

Abstract

The process of making snow requires low temperatures as well as vast quantities of water and considerable amounts of energy for the air compression. In this article the effectiveness of investment in snowmaking systems is investigated (equipment, construction works) based on data for 109 French ski resorts covering eight winter seasons (2006/2007 to 2013/2014). Both static and dynamic panel data estimations show that ski areas with large investments in snowmaking systems have a higher number of skier visits. On average a 10% higher capital stock of snowmaking infrastructure leads to an increase in the number of skier visits by 8% over the winter seasons studied. However, positive effects of snowmaking can only be observed for ski areas located at high elevations, with a magnitude deceasing by higher cumulated investments in snowmaking, indicating diminishing returns to scale. Ski areas at lower elevations, benefit effectively from snowmaking to a lower degree and only in extremely dry or snow poor winter seasons.