Economic welfare, the environment and the tourist product life cycle (original) (raw)
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A dynamic general equilibrium model of a small open economy specialized in producing tourism services is presented. The tourism package is a bundle of attributes provided by firms, the government and the natural environment. Investment in accommodation increases the number of visitors but also congests public goods and reduces environmental quality. The model is used to determine the conditions for the existence of a long-term double dividend. These conditions depend on both the initial level of environmental quality and the responsiveness of the tourism price to marginal changes in environmental and accommodation quality and congestion of public goods.
Dynamic implications of tourism and environmental quality
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1 The Economic Cycles of Tourism
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Tourism plays a very important role in the economy by contributing to other economic activities through multiplier effects. The objective of this paper is to analyse the economic cycles of tourism and their linkages to the rest of economic system. To this end, we formulate model which integrates the tourist life cycle within the dynamic evolution of the economy. The model converges to stationary state as cultural and environmental externalities evolve above the optimal social level. The model leads to an econometric specification which is estimat d with data from the Canary Islands, a region dependent on tourism and environmental resources for its development. The production cycle are strongly correlated with the tourist activity and with the index of environmental deterioration, observing long run saturation effect for some markets. However, the new cycles are reactivated by new origin markets, compensating the negative effects experienced in the preceding cycles.
Tourism specialization and environmental sustainability in a dynamic economy
Tourism economics, 2007
This study focuses on the dynamic behaviour of a small open economy specialized in tourism based on natural resources. The author analyses the steady-state properties in two scenarios, with and without public abatement expenditures, and a unique local saddle-point equilibrium is found for both cases. The analysis of the dynamics provides an alternative explanation for the observed positive growth performance of small open tourism-based economies and for the worldwide increases in tourist inflows, which are seen as transitional phenomena towards the path to the steady state. Moreover, in defining the conditions under which tourism development, improvements in environmental quality and economic growth can simultaneously occur, the model provides theoretical microfoundations for sustainable tourism. Finally, in both scenarios, the author analyses the issue of market failures, taking into account two different kinds of externality and finding the respective optimal tax rates that will induce private agents to replicate the social optimum.
Environmental effects of tourism industry investments: an inter-temporal trade-off
Optimal Control Applications and Methods, 2002
Efficient investment programs in touristic infrastructure have to take into consideration that any kind of tourism reduces the environmental quality. Since pollution shows negative repercussions as concerns the attractiveness of a touristic region, tourism planners have to determine a trade-off between adequate services for tourists and a clean environment. To deal with this problem in a dynamic context, a three-state optimal control model is formulated. It turns out that, even if pollution reduction is not a goal in itself, the profit-maximizing tourism industry should care for ecological conservation. The paper further shows that persistent periodic investment policies are optimal for realistic parameter sets, and provides an economic intuition for such behavior. From an economic point of view, this result implies that expansionary periods with high investment are followed by periods of stagnation with low investment.
Resource and Energy Economics, 2009
This paper examines the effects of exogenous and endogenous tourism on welfare and the environment. Despite a gain from the terms-of-trade improvement, an exogenous tourism boom can harm the environment and hence lower welfare of domestic residents. To limit deteriorating the environment, a pollution tax is imposed. In the presence of endogenous tourism, the optimal pollution tax may exceed the marginal damage of pollution. The higher pollution tax can actually attract more tourists and hence improve domestic residents' welfare.
SSRN Electronic Journal, 2000
In this paper we try to build a bridge between the traditional analysis of the evolution of tourism destinations and economic growth theory. With such an aim we develop an environmental growth model for an economy specialized in tourism and we derive the pattern of tourism development with numerical calculations. The results of our simulations do not contradict the general pattern of evolution implied in the Tourism Area Life Cycle Hypothesis, being environmental deterioration and public goods congestion the main reasons for the stagnation of the tourism destination. We also show the importance of the quality of private tourism services in the evolution of the tourism destination.