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Chapter 14
Tourism’s Economic Impact
Learning Objectives
• Know the economic generators and impact of tourism
• Perceive the economic importance of tourism in various regions of the world
• Understand multipliers
• Know about balance of payments
• Comprehend elasticity and inelasticity
• Know about tourism satellite accounts
Three Major Goals of Tourism
1) Maximize the amount of psychological experience for tourists.
2) Maximize the profits for firms providing goods and services to tourists.
3) Maximize the direct (primary) and indirect (secondary) impacts of tourist expenditures on a community or region.
These goals are often compatible but in certain situations they can
be incompatible.
Constraints Faced in Tourism Goal Attainment
• Demand
• Supply of attractive resources
• Technical and environmental constraints
• Time constraints
• Indivisibilities
• Legal constraints
• Self-imposed constraints
• Lack of knowledge
• Limits on supportive resources
There are other local revenues that are not easily quantified, as not all tourist expenditures are
formally registered in the macro-economic statistics.
Money is earned from tourism through informal employment
such as street vendors, informal guides, rickshaw drivers, etc .
The positive side of informal or unreported employment is that the money is returned to the
local economy, and has a great multiplier effect as it is spent
over and over again .
Economic Multipliers• Direct Effect
Result from visitors spending money in tourist enterprises and providing a living for the owners and managers and creating jobs for employees.
• Indirect Effect This is the multiplier impact.
This is where visitor spending circulates and recirculates.
• Employment Multiplier
• Income Multiplier
Income Multiplier Formula
Example
$1,000 of tourist expenditure and an MPC of 1/2.
Multiplier =
= $2,000$1,000 x
.5-1
1
Multiplier =
whereM = marginal (extra)P = propensity (inclination)C = consume (spending) MPC S = savings (money out of circulation)
MPS
MPC-1
1
A more simpler formula is Multiplier = 1/MPS
A study of tourism 'leakage' in Thailand estimated that 70% of
all money spent by tourists ended up leaving Thailand (via foreign-owned tour operators,
airlines, hotels, imported drinks and food, etc .).
Estimates for other Third World countries range from 80% in
the Caribbean to 40% in India. Source: Sustainable Living
What is income elasticity of demand?
Price elasticity of demand?
Can you draw and label a product life
cycle?
Income ElasticityIncome Elasticity The change(%) in quantity demanded in
response to a given change(%) in income, price remaining unchanged
Price ElasticityPrice ElasticityThe change in demand resulting from change in price.
Most tourism products are price elastic.
Chapter 17
Tourism and the
Environment
• Recognize the world-wide importance of natural resource conservation and sustainable tourism development.
• Learn how ecotourism can benefit local people.
• Understand the dangers and limitations of ecotourism.
• Understand tourist codes of ethics and guidelines.
• Learn current environmental practices of tourism organizations and suppliers.
• Learn how to maintain natural destinations.
Learning Objectives
WTTC Key Environmental Issues
Global warming
Depletion of the ozone layer
Acid rain
Depletion and pollution of water resources
Depletion and pollutionof land resources
An average golf course in a tropical country such as
Thailand needs 1500kg of chemical fertilizers,
pesticides and herbicides per year and uses as much
water as 60,000 rural villagers.
Source: Tourism Concern
109 nations have coral
reefs
In 90, reefs are being
damaged by tourism activity
WTTC Implications of Resource Depletion
Political instability or increased competition for land could lead to loss of potential new tourism destinations and degradation of existing destinations.
Loss of landscape and wildlife could cause a decrease in customer satisfaction with tourism products and hence lower propensity to travel to some destinations.
Higher fuel prices could lead to operational price increases and corresponding decreases in the number of travelers in this “price-sensitive market.”
Elements of the WTTC Vision of Travel & Tourism
and the Environment
Travel & Tourism is an integral aspect of modern societies
Global awareness of environmental damage is developing rapidly
The resources of the world’s largest industry can and must be harnessed to achieve environmental goals
The industry has the potential to influence billions of customers per years and to use its leverage to achieve beneficial environmental effects
The customer challenge will exert a growing pressure to achieve environmental improvements
Environmental lobbies will add pressure to develop good environmental practice
Self-regulation must be developed rapidly and effectively and used to influence the development of appropriate and workable regulations
Corporate environmental mission statements are a vital first step toward self-regulation
Environmental leadership must come from the major international companies
The Premises of Sustainable Development
• The Premise of Interdependency
• The Premise of Multidisciplinarity
• The Premise of Previous Experience
• The Premise that Nature is Better
• The Premise of Politics and Power
Sustainable Development and Tourism:
The Critical Areas
• Defining the Relevant Population/Community
• Defining the Time Horizon
• Defining the Dimensions of Sustainability
• Defining the Values that Underlie Sustainable Development
Sustainable Development in Tourism:
A Possible Allocation of Responsibility
Sustainable Tourism
An Agenda for Action
ACTIVITIES: Coordinating the development of a tourism
philosophy and vision for the community/ region
Specifying the major goals of the community/region with respect to tourism
Obtaining consensus concerning the social, physical, and cultural carrying capacity of the community/region in question
Identifying the specific action initiatives necessary to meet the tourism development objectives while respecting the destination’s carrying capacities
Gaining agreement on the measures to be used in monitoring the impacts of tourism in the community/region
Gathering and disseminating information concerning the impacts of tourism on the community/region
PROGRAM ELEMENTS:
Maximum total visitation levels to a community/region
An obligatory tax to support tourism infrastructure planning, development, and maintenance
Community-supported legislation to protect and preserve unique resources and heritage sites
Community and industry consensus concerning architectural and signage standards
Support for standards and certification programs that encourage staff development and the delivery of high-quality service
Sustainable Tourism An Agenda for Action
• Responsible travel to natural areas that conserves the environment and sustains the well-being of local people
• Environmentally friendly travel that emphasizes seeing and saving natural habitats and archeological treasures
• A tool for conservation
• Ecologically responsible tourism
Definitions of Ecotourism
Some definitions of ecotourism are as follows:
•Provides jobs and income for local people
•Makes possible funds to purchase and improve protected or natural areas to attract more ecotourists in the future
•Provides environmental education for visitors
•Encourages heritage and environmental preservation and enhancement
Benefits and Importance of Ecotourism
Translating Idealism into Sustainable Tourism
- What Managers Need to Know -
Measures of
• The general relationship between tourism and the environment
• The effects of environmental factors on tourism
• The impacts of the tourism industry on the environment
Types of Indicators
• Core indicators of sustainable tourism which have been developed for general application to all destinations
• Destination-specific indicators applicable to particular ecosystems or types of tourism. These indicators fall into two categories:
Supplementary ecosystem-specific indicators for application to particular ecosystems (e.g., coastal areas, parks and protected areas, or mountainous regions).
Site-specific indicators that are developed uniquely for the particular site. These indicators reflect important factors of the site. Which may not be adequately covered by the core and supplementary eco-system-specific indicator sets, but are nonetheless needed for management of theparticular site.
Core Indicators of Sustainable Tourism
Indicator Specific Measures
Site Protection Category of site protection according to IUCNa indexStress Tourist numbers visiting site (per annum/peak month)
Use Intensity Intensity of use in peak period (persons/hectare)
Social Impact Ratio of tourists to locals (peak period and over time)
Development ControlExistence of environmental review procedure or formal controlsover development of site and use densities
Waste ManagementPercentage of sewage from site receiving treatment (additionalindicators may include structural limits of other infrastructuralcapacity on site, such as water supply)
Planning ProcessExistence of organized regional plan for tourist destination region(including tourism component)
Critical Ecosystems Number of rare/endangered speciesConsumerSatisfaction
Level of satisfaction by visitors (questionnaire-based)
Local Satisfaction Level of satisfaction by locals (questionnaire-based)Tourism Contributionto Local Economy
Proportion of total economic activity generated by tourism only
Composite Indicesb Specific Measures
Carrying Capacity Composite early warning measure of key factors affecting the
ability of the site to support different levels of tourism
Site Stress Composite measure of levels of impact on the site (its natural
and cultural attributes due to tourism and other sectorcumulative stresses)
Attractivity Qualitative measure of those site attributes that make it
attractive to tourism and can change over time
Tourism Industry Associations of Canada
• Enjoy our diverse natural and cultural heritage and help us to protect and preserve it.
• Assist us in our conservation efforts through the efficient use of resources, including energy and water.
• Experience the friendliness of our people and the welcoming spirit of our communities. Help us to preserve these attributes by respecting our traditions, customs, and local regulations.
• Avoid activities which threaten wildlife or plant populations, or which may be potentially damaging to our natural environment.
• Select tourism products and services that demonstrate social, cultural, and environmental sensitivity.
Common Features of All Codes
the need to make an overall commitment to the physical and human environment, to accept responsibility for environmental damage and take corrective action where necessary, and to promote and reward outstanding environmental performance;
the need to develop policies and strategies that take account of land-use planning regulations and the need to protect some areas from further development;
the need to develop management policies that enhance beneficial and minimize adverse impacts on the environment;
and
the need to cooperate with other firms, sectors and countries.
“development that meets the needs of the present without compromising the
ability of future generations to meet their
own needs”
Idea of Sustainable Development
Possible Negative Ecological Impacts of Tourism
• when visitor use is greater than the environments’ ability to cope with this use within the limits of acceptable change.
• where it causes increased consumption of scarce resources so that local communities are forced to compete with tourism for use of resources.
Other Possible Negative Impacts
• overuse of water resources
• taking land out of production
• impact on animals
• land degradation, erosion
• damage vegetation
• destruction of land forms
• destruction or defacing features
• visual degradation
• pollution
