Tourism in Taupo is almost as old as the town itself. During that time it has had a significant impact on the local economy and is recognised explicitly and supported as a growth industry of the region. For this same recognition and support to be afforded tourism at a national level the industry must show that it can compete effectively for the same human, physical and financial resources which are sought after by other sectors of the economy. A prerequisite to formulating policies aimed at sound resource utilisation is information on the demand for and supply of those resources and the impact which their use has on the economy, environment and society. This thesis examines the economic impact of the tourism industry in Taupo through estimation of the income and employment generated by tourism spending. Detailed data is obtained through surveys of the tourist population and local businesses to reveal the size and pattern of spending and the way in which this initial injection is circulated within and leaked from the local economy. Multiplier values for various tourist types are estimated and these reflect the propensity for each tourist type to generate income and employment. Observations are made on the uses to which the information can be put and the limitations of both the model used and the information generated are also examined.