The Economics of Tourism and Sustainable Development

The Economics of Tourism and Sustainable Development

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Alessandro Lanza, Anil Markandya and Francesco Pigliaru

Although economics has increasingly become a technical subject, this accessible book aims to present important economics results and relate them explicitly to the policy debate. Using a coherent analytical framework, this unique approach offers prescriptions for moving tourism, and economic development more generally, closer to a sustainable ideal. The authors begin by studying the macroeconomic effect of tourism in terms of growth performance and sources of growth. They also examine how the tourism–growth link is affected by the role of imports in the economy, and how tourism impacts upon land use. Further chapters investigate the important issue of forecasting visitor numbers and explore the need for a comprehensive accounting framework to take account of ecologically sustainable tourism. The authors also examine the microeconomic aspects of sustainable tourism and analyse the increasing popularity of environmentally friendly holidays.

Chapter 4: Tourism, increasing returns and welfare

Jean-Jacques Nowak, Mondher Sahli and Pasquale Sgro

Subjects: development studies, tourism, economics and finance, environmental economics, environment, environmental economics, tourism, geography, tourism


* Jean-Jacques Nowak, Mondher Sahli and Pasquale Sgro 1. INTRODUCTION Tourism has often been regarded as a major source of economic growth, and governments often invest in infrastructure to promote tourism and growth.1 Tourism supplements the foreign exchange earnings already derived from trade in commodities and sometimes finances the imports of the capital goods necessary for the growth of the manufacturing sector.2 Tourism has also been regarded as a mechanism for generating increased income and employment, both in the formal and informal sectors.3 Hazari and Ng (1993) have also highlighted important differences between trade in commodities and tourism.4 However, international tourism has also at times been considered an activity that imposes costs on the host country. Much attention in this context has been paid to inflationary and low multiplier effects of tourism expansion,5 increased pollution, congestion and despoilation of fragile environments,6 intra-generational inequity aggravation7 and even to adverse sociocultural impacts.8 Less obvious but more important costs of tourism have often been neglected, such as the adverse impacts of a tourism boom on other sectors resulting from general equilibrium effects. However, theoretical and empirical studies tell us that these effects can be quite substantial and have to be taken into account when assessing the net benefit of a tourism boom on an economy.9 The model used in this chapter captures the interdependence and interaction between tourism and the rest of the economy, in particular, agriculture and manufacturing. This is important in view of the...

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