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How Tourism Can Save Nature

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  • Hübler, Michael

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.

Suggested Citation

  • Hübler, Michael, 2015. "How Tourism Can Save Nature," Hannover Economic Papers (HEP) dp-551, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    • Handle: RePEc:han:dpaper:dp-551
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    More about this item

    Keywords

    international trade; tourism; non-renewable resource;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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