Sustainable Tourism
Lecture 8

 

Environmental Damage

1. Gross Domestic Product (GDP) - does not include environmental damage

  • GDP does not include pollution costs
  • GDP does not include the exploitation of resources
  • Example - A country cuts down its forests to supply the lumber market
    • GDP is higher from the lumber activities
    • Society loses its forests

2. Thomas Mathus - population is growing geometrically but food production is growing arithmetically

  • Malthus was a priest and economist
  • Wrote - Essay on the Principle of Population as It Affects the Future Improvement of Society (1798)
  • Land is a fixed, scarce resource and food production is limited
  • If the population exceeded its food production, then some people would "die off."
  • Economics is called the abysmal science
  • Problem - Malthus ignored the impact of technology
  • Technology increases the production from scarce resources

3. Resources are defined as two types

  • Renewable resources - the resources can be replenished
    • Bio-energy and bio-fuels
    • Water - tourists use fresh water, so government or companies process or purify water
  • Nonrenewable resources - once the resource is gone, it is no longer available to society
    • Petroleum and coal
    • Historic buildings
    • A beautiful, scenic area, forest, or beach
  • Open access property - property or resource owned by society or the absence of ownership.
    • Also called Tragedy of the Commons (Hardin 1968)
    • Property rights are not well defined
    • Outsiders cannot be excluded from using the property
    • Outsiders can consume the resource, leaving nothing behind
    • People have less incentive to develop, improve, or maintain land, if others cannot be excluded from consuming it.
    • Examples
      • Fishermen catch too many fish in public waters
        • Fish populations decrease to low levels that it hurts future fish catching.
      • Companies dump wastes onto public lands or waters.
      • Air can be an open access resource, and some firms pollute and send pollution into the air
      • Tourists
        • Hike, swim, or visit pristine natural areas
        • Generate trash and sewage
        • Scuba divers, boats, and jet skis damage coral reefs that supports hundreds of sea life
    • Correcting this market failure
      • Allow one firm to control the resource
      • The firm acts like a monopoly and develops the best plan to utilize that resource
      • Monopoly may abuse a resource too
      • Example - monopolist - owns rights to common land with a forest
      • Monopolist cuts down all the trees if lumber prices are high

4. Externalities - the consumption or production of one individual or firm affects another person's utility or production without their consent.

  • The externality influences profits and utility, but does not impact market prices.
    • The externality is not incorporated into the market price
    • Therefore, an externality is not efficient
  • Positive externality - an individual's or firm's actions generate benefits for nonparticipating parties
    • The private market may not supply enough
    • Supply function understates the true value of output
    • S is regular supply function and D is for demand
    • Society would desire a higher supply
    • Social Marginal Costs (SMC) - the marginal cost function that is beneficial for the whole society
    • Note - if there were no externality, then S and SMC would be the same.

The Social Marginal Cost

  • Examples
    • Inoculation for diseases - each person who is inoculated prevents the spread of a disease
    • Scientific knowledge or technological know-how
    • Bee keepers - bees pollinate farmers' crops, so they yield more fruits and vegetables
    • Tourism - gov. builds a new road to a beautiful natural site
  • Fixing positive externality
    • Government subsidizes the producers, or directly supplies the product, such as vaccines
    • Government is the lead developer in a tourist destination
  • Negative externality - an individual's or firm's choice or action negatively harms others without their consent
    • Property rights are not defined well
    • Not all costs are registered, therefore supply function understates the true cost of production
    • Example: A firm emitting pollution will typically not take into account the costs that its pollution imposes on others.
      • Market price is too low
      • Market quantity is too high
      • The goal is to have firms pay for pollution
      • The goal is not to set the pollution to zero!
      • The pollution is in excess of the 'socially efficient' level.
    • Note - if there was no externality, then MSC and S would coincide
  • Note - tourism creates sewage and trash, and strains resources such as fresh water
    • Tourists visiting natural environments can damage it through vehicle and foot traffic

Polluting firms creating a negative externality

Sustainable Tourism

1. Sustainable Tourism - sustainable development is applied to tourism

  • Sustainability - "development that meets the needs of the present without compromising the needs of the future generations"
    • Intergenerational equity
  • WTO recommends tourism needs to satisfy three broad principles
    • To improve the quality of life of the host community
    • To provide a high-quality experience for visitors
    • To maintain the quality of environment on which both the host community and the visitors depend
  • Make optimal use of environmental resources
    • Maintain ecological processes
    • Biodiversity
  • Conserve cultural heritage and traditional values
  • Ensure viable long-term economic operations
    • Balance among local community, tourists, and environment
  • Sustainable and mass tourism are polar opposites
    • Sustainable tourism is a niche market
      • Attract a low number of high-paying tourists
      • Means
        • Reduce wastes
        • Use biodegradable washing powders
        • Conserve energy
        • Recycling
      • Types
        • Ecotourism
        • Green tourism
        • Sustainable tourism
        • Nature tourism
        • Soft tourism
        • Adventure tourism
    • Sustainable tourism is hard to achieve
      • Too many theories and experts
      • Increase in tourism demand
      • Hedonistic philosophy - indulgence in pleasure rather than responsibility
      • Small-scale planned preservation
      • Local development
      • Money stays locally
  • Mass tourism - detrimental to the environment
    • Most common form of tourism
    • Consumes resources
    • Low spending and high volume
    • Large, unplanned, uncontrolled, and scattered development

2. Tools to achieve sustainable tourism

  • Government can use the instruments to reduce environmental damage
    • Command and control regulations
      • Example - water quality standards
      • Could have high regulatory and enforcement costs
      • Bureaucratic
    • Government protects a natural site or encourages development in specific locations
    • Taxes, subsidies, and grants
      • Government imposes a tax on the pollution emissions
      • Note - the tax has to be on the pollution itself
      • Example - government imposes a tax on pollution emissions from a coal electric plant
      • If government imposed a tax on coal, then firms could switch to a dirtier, cheaper coal
    • Tradeable rights and permits
      • Government creates a permit system for sulfur dioxide emissions from coal electric plants
      • Each permit allows a firm to emit one metric ton of pollution
      • Government sets the maximum pollution level and creates the maximum number of permits
      • Government gives the firms the permits
      • Some firms pollute more, and will buy permits
      • Other firms will use more technology to reduce emissions, and then sell their permits
    • Community programs - government encourages recycling
      • Create green consumers
    • Deposit fund schemes
      • Government puts a deposit fee on glass bottles
      • Example - Michigan has a $0.1 per bottle deposit
      • Most residents collect and return bottles
  • Carrying capacity - how many tourists can a destination support
    • Restrict the number of tourists below the carrying capacity
    • Physical - the actual number of tourists a site can support
      • Roads, parking lots, number of hotel rooms, etc.
    • Perceptual - measure of the number of tourists before visitor experience is damaged
      • Example - Rome, Italy has way too many tourists around the famous sites
    • Economic - the number of tourists who are welcomed to a location before the economy is adversely affected
      • Example - Venice - many residents moved out, as the number of tourists surged in record numbers
    • Ecological - a measure of tourists to a site before damage occurs to the environment
      • Example - Tourists are attractive to a remote location with plenty of wildlife
      • Hotels, restaurants, and roads start popping up everywhere
  • Environmental Impact Assessment (EIA) - project assessment of adverse and beneficial impacts of a new development
    • Examples
      • Large-scale resort
      • Dam
      • New highway
    • Used in the United State and Europe; not so much in other countries
    • Does not apply to small-scale development
    • Applies to new developments and not old ones
    • Projects may not be monitored for compliance
    • Opposition uses EIA to stop project
  • Willingness to Pay - use surveys to estimate amount tourists are willing to protect the environment
    • Similar to Contingent Valuation
    • Hypothetical questions about a hypothetical market
    • Willingness to pay = consumers' surplus + consumer expenditures
    • Example - government uses a survey to ask consumers and tourists to protect a baboon wild life preserve in central Malaysia
    • Note - green area is consumers' surplus, while total revenue is blue area

The Willingness to Pay

  • Companies have environment statements and policies
    • Create positive image of company
      • Brochures
      • Booklets
      • Annual Reports

Tourism in Costa Rica

1. Costa Rica means "Rich Coast"

  • Christopher Columbus discovered it in 1501
  • Important exports
    • Coffee - started in 1820s, and an important export until 1990s
    • Bananas
    • Eco-tourism - most tourists are from Canada and United States
      • 780,000 tourists in 1996
      • 2.1 million tourists in 2008
      • $2.1 billion in earnings in 2008
      • Tourism accounts for 8.1% of GDP, and accounts for 13.3% of direct and indirect employment
      • More revenue than coffee and bananas combined
    • Attracted direct foreign investment
      • Intel constructed a micro-processor plant in Costa Rica
      • Accounts for 20% of exports in 2006
      • Accounts for 4.9% of GDP in 2006
      • Rising class of software developers
  • Tourism changed economy
    • Costa Rica can protect its forests and biodiversity
    • Can move away from cattle raising, logging, and banana plantations
      • Cattle raising requires pastures and reduction of forests
      • Logging cuts down the trees
      • Banana plantations use pesticides and chemicals
  • Eco-tourism
    • Costa Rica is a small country (0.03% of the planet's surface), but has 5% of the world's wild life forms
    • Tortuguero - "Turtle area"
      • World renowned eco-tourism spot
      • Has two churches, three bars, and two souvenir shops
      • Not accessible by road
      • Protect the endangered sea turtles
      • Poachers hunt turtles for shells, meat, and eggs
        • Eggs is a rumored aphrodisiac
        • Aphrodite is the Greek goddess of love and sexuality
      • Villagers no longer hunt the turtles; their main income is from tourism
      • Lodges and hotels donate money to a fund, which helps fund schools and a water distribution system
    • Monteverde Reserve - set a 100 visitor-a-day ceiling
      • Preserve the ecology
      • Increased ticket prices

Terminology

  • Thomas Mathus
  • renewable resources
  • nonrenewable resources
  • open access property
  • externalities
  • positive externality
  • social marginal costs (SMC)
  • negative externality
  • sustainable tourism
  • sustainability
  • mass tourism
  • command and control regulations
  • tradeable rights and permits
  • carrying capacity
  • physical carrying capacity
  • perceptual carrying capacity
  • economic carrying capacity
  • ecological carrying capacity
  • environmental impact assessment
  • willingness to pay
 

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