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 10: A tale of two tourism paradises: Puerto Plata and Punta Cana – the determinants of room price in the Dominican Republic using a hedonic function approach

Giovanni Ruta and Suzette Pedroso

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


Giovanni Ruta and Suzette Pedroso* 1. INTRODUCTION The objective of this chapter is to estimate the effect of different variables on room price in tourist areas in the Dominican Republic (DR). It has been generally argued that environmental quality matters for the tourism industry as environmental goods and services are among the main inputs in the tourism production function. The government is currently designing a plan that will set the rules and guide tourism development over the next 10–15 years. A major challenge of the plan is to make the best use of the lessons learned during the past 30 years of tourism development in the DR. The data have been collected through a hotel survey, carried out by Horwath, Sotero Peralta Consulting, a leading firm in tourism industry analysis in the DR. The data set is composed of 83 observations, taken from hotels in tourist areas along the Dominican Republic coast. DR coasts can be divided in seven ‘macro’ areas but our analysis will emphasize two of them, which have been characterized by substantial tourism development: Puerto Plata and the Altagracia provinces are the main all-inclusive resort poles in the DR. Development has differed widely in the two areas, giving rise to a spectrum of challenges which manifest themselves in different ways in each zone. Our analysis identifies key areas of concern and provides insight into policy issues. 269 270 The economics of tourism and sustainable development 2. THE TOURISM INDUSTRY IN THE...

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