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Brudenell River Golf Course in Prince Edward Island. The province will spend $858,900 in 2014-15 to run its four golf courses.

The cash-strapped government of Prince Edward Island owns four golf courses, and its attempts to sell them since 2007 have been futile.

No wonder.

The challenges facing the industry in Canada – rounds of golf are down and there is no growth in players over the past several years – are amplified in the tiny province, which has the most courses per capita in the country, according to Golf Canada.

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Nearly 25 years ago, the PEI government tied itself to the explosion of golf across North America and adopted the game as one of its tourism pillars – green fairways complementing Anne of Green Gables. It created a Crown Corporation to operate the courses, with the tourism minister of the day, Wes MacAleer, saying: "The vision is to have golf development pay its way."

It hasn't. The projections of revenue and growth were based on a "foundation of bunker sand," according to Ian Munro, an economist and author of a report released last week by the Atlantic Institute for Market Studies (AIMS).

Mr. Munro, a former islander and self-described former terrible golfer, documents how a combination of bad timing, poor forecasting and lack of rigour led to PEI's golf woes. He concludes that governments should stick to what they know – such as infrastructure and taxation – and leave golf courses to entrepreneurs.

In 2014-15, the government will spend $858,900 running the four courses, compared with $801,457 in 2012-13. In 2008, it wrote off more than $10-million in bad debt. At one point, the province owned five courses, but closed one in 2012 after it couldn't find a buyer. That course is now a hay field, the report says.

Tourism Minister Robert Henderson recently had the unenviable task of announcing several hundred thousand dollars to spruce up the province's four money-losing courses.

As his cabinet colleagues compete for funding for new hospital beds and more school books, Mr. Henderson is spending $116,000 for some new greens at the five-star Links at Crowbush Cove and $225,000 to replace three irrigation pump houses to ensure lush fairways at Crowbush, Mill River and the Brudenell River/Dundarave complex.

"Obviously, when you're on the floor of the estimates [committee] … and you're saying you invested in this stuff, sometimes comments get made that maybe that would have been better spent on an X-ray machine or books," Mr. Henderson says.

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In 2007, newly elected Liberal premier Robert Ghiz said the courses needed to be sold so the government could focus that spending on health care, education and social programs.

In his report, Mr. Munro notes that before 1990, there were 11 golf courses, totalling 162 holes, on PEI. Between 1990 and 2003, 20 new courses opened and the total number of holes reached 450. "PEI may well have been the epicentre of the 1990s golf boom in Canada," he wrote.

It all changed around the turn of the century – Mr. Munro cites the dot-com bubble bursting in early 2000 as a contributing factor to golf's decline, along with the 9/11 terrorist attacks and the recession. Since 2003, no new courses have opened on the island.

Last year, however, set a record for PEI tourism: The province saw an estimated 1.36 million visitors, up 3.8 per cent from 2013. It was the 150th anniversary of the 1864 Charlottetown Conference and there was a lot of promotion around that.

Still, "non-member" rounds of golf on the island were down 3.3 per cent compared with 2013, tourism statistics show, mirroring the trend across the country. Nationally, about 60 million rounds of golf were played in 2013 compared with 70 million in 2008, according to the 2014 Economic Impact of Golf in Canada.

It notes, too, that there are 5.7 million golfers in Canada, but the "number of people entering the game is equal to the number of people leaving the game." Despite these challenges, revenues are "equivalent to 2008 levels."

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"The game is still … the No. 1 recreational activity in Canada," says Scott Simmons, CEO of Golf Canada.

"Yes, rounds are down [compared with the last economic impact study from 2009] … and that's certainly not something that the industry is taking lightly."

He notes that in Canada golf is a $14-billion industry, employing 350,000 people and raising $533-million for charity in 2013.

Jeff Calderwood, CEO of the National Golf Course Owners Association, believes course ownership "really isn't the appropriate domain of taxpayers' funds, and government shouldn't be competing with private enterprise anyway."

Mr. Henderson says that, in the 1970s, it made some sense for PEI to "trigger a stimulus around creating an industry." But a lot of private-sector courses were created and it's time for government to find the perfect exit strategy, he says. "Ultimately, it is something we feel that would be best suited in private-sector hands," he says. "On the other hand, it's no fire sale here either."

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