The game of golf began as a modest sport for gentlemen on the links lands of Scotland at least 500 years ago.

But today the Royal & Ancient Game is now worth an astounding £1 billion annually to the ‘home of golf’ – this is according to new research which has been undertaken by KPMG in association with Oxford Economics.

The “Value of Golf to Scotland’s Economy” report, commissioned by the Scottish Golf Union in partnership with VisitScotland and Scottish Enterprise, was released today at the start of Golf Business Forum – a two day event organised by KPMG in St Andrews.

The report illustrates that the golf industry now generates an overall amount of £1.171 billion in revenues as well as making jobs for over 20,000 people in Scotland – this means that one in every 125 jobs in Scotland is in the directly related to golf. Wages alone add up to £300 million.

The report shows that, once costs are taken into account, golf contributes £496 million directly to the country’s gross domestic product (GDP) each year – this is 0.4% of Scotland’s entire economic output.

East Lothian and Edinburgh are expected to benefit around £70 Million when the Open Championship takes place at Muirfield later this year.

Scotland now has a total of 597 golf courses scattered around it, making jobs for more than 12,300 people and earning yearly revenues of £582 million. There are also at least eight new golf course developments in the planning and construction phases.

It’s not just the sales of green fees and memberships that are making the money. Golf equipment, clothing and accessories are worth an additional £157 million a year, making 1,660 jobs, whilst golf tourism is worth at least £120 million to Scotland’s economy.

Hamish Grey, chief executive of the Scottish Golf Union, said: “This report clearly demonstrates the significant value of golf to Scotland’s economy. Comparing it to other industries, we can now see for the first time that for example golf’s direct contribution to GDP is 89 per cent that of fishing and fish farming, and 83 per cent of air transport.

He added: “Scottish golf clubs are continuing to operate in challenging conditions, particularly in terms of finance and climate, and the Scottish Golf Union are providing our affiliated clubs with increased support, guidance and help with future business planning to ensure we have stronger clubs in the future to take advantage of the money spent in the industry.

“Our collective challenge is to work together to build on the evidence base from this report and ensure that future generations of Scots benefit from this great game and the related industry.”

Scotland will also be looking to benefit economically from when the Ryder Cup comes to town at Gleneagles in 2014.

Dr Mike Cantlay, chairman of VisitScotland, also welcomed the findings. He said: “Golf is a hugely important contributor to the economy of Scotland, and tourism in particular. With a number of major golf events on the horizon in Scotland, it was important to understand the scale of the industry as a whole in order that we continue to build and grow the industry in future.”

A spokesman for KPMG said: “In 2011, golf tournaments and endorsements generated total revenues of £46 million. However, the Open Championship was not played in Scotland in 2011. The R&A forecasts the 2013 Open Championship at Muirfield will deliver an economic benefit of approximately £70 million to the East Lothian and Edinburgh region.”