How Tourism Can Save Nature

Michael Hübler

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: This paper sets up a two-sector, two-period trade model of a developing country which is abundant in a non-renewable natural resource but scarce in industrial goods. It shows that lower future travel costs, rising demand for tourism and higher preferences for the environment slow down today's optimal depletion of the natural resource that can be used for consumption or for exporting tourism services. The benefits that accrue from sustainable resource use can be distributed such that the myopic developing country and forward-looking industrialized countries, which demand tourism services, are better off. The paper explains the underlying economic mechanisms in mathematical and graphical form. It derives the socially optimal policy instrument and discusses and evaluates its implementation. Accordingly, a subsidy, which modifies relative prices by up to ten percent and is mainly financed by the industrialized countries, may suffice to correct for the not anticipated future development of tourism.

Keywords: international trade; tourism; non-renewable resource (search for similar items in EconPapers)
JEL-codes: F18 H23 O13 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-05
New Economics Papers: this item is included in nep-env and nep-tur
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