The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development
Edited by Alessandro Lanza, Anil Markandya and Francesco Pigliaru
Chapter 3: Land, environmental externalities and tourism development
* Javier Rey-Maquieira Palmer, Javier Lozano Ibáñez and Carlos Mario Gómez Gómez 1. INTRODUCTION Nowadays there is wide consensus that there are limits to a tourism development based on quantitative growth. Obviously, the availability of a ﬁxed amount of land in a tourism resort puts an ultimate limit on its carrying capacity. However, it is reasonable to assume that before the full occupation of land by tourism facilities other limiting factors will operate. Thus the continuous growth in the number of tourists and the associated urban development, especially in small tourism destinations, can give rise to costs in the form of congestion of public goods and loss of cultural, natural and environmental resources. These costs are not only borne by the residents but may also negatively aﬀect the tourism attractiveness of the destination, the willingness to pay for tourism services provided in the tourism resort and thus a fall in the returns to investment in the tourism sector. In this chapter we develop a two-sector dynamic general equilibrium model of a small open economy where tourism development is characterized as a process of reallocation of land in ﬁxed supply from low productivity activities (agriculture, forestry and so on) to its use in the building of tourism facilities. This change in the use of land goes along with investment aimed at the building of accommodation and recreational facilities. Land in the traditional sector, besides being a direct production factor in this sector, contains the cultural, natural and environmental...
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