Tourism Costs and Benefits

Economics of Tourism
Subject Code: 3082
22nd February 2018
Gopinathan.R
SMVD University
 Social Costs
• May attract visitors whose lifestyles and ideas conflict with the
community's.
• An example may be the visitors' use of drugs and alcohol.
• May change individual behavior and family relationships.
• May lead to an increase in transmitted diseases.
• Loss of traditional values and culture through imitation of visitor
behavior or cultural diffusion resulting from normal, everyday interaction.
• May create crowding and congestion.
• May compete with residents for available services, facilities, and existing
recreation opportunities.
• May result in harassment of visitors perceived to be wealthy and an
increase in crime.
• Can involve violations of human rights. People have been displaced from
their land and Beaches have been reserved for hotel guests while access is
barred to local people.
 Social Benefits
• Brings in (outside dollars) to support community facilities
and services that otherwise might not be developed.(Attraction)
• Encourages civic involvement and pride.
• Provides cultural exchange between hosts and guests.
• Encourages the preservation and celebration of local
festivals and cultural events.
• Facilities and infrastructure developed for tourism can also
benefit residents.
• Encourages the learning of new languages and skills.
• Tourism related funds have contributed towards schools
being built in some areas.(Remote areas, National Parks , Wildlife sanctuary )
 Environmental Benefits

• Fosters(Adopts) conservation and preservation of natural,

cultural and historical resources.
• Encourages community beautification and revitalization.
• Could be considered a clean industry.
 Environmental Costs
• May threaten specific natural resources such as beaches and
coral reefs or historical sites.
• May increase litter, noise, and pollution.
• Brings increased competition for limited resources such as
water and land, resulting in land degradation, loss of
wildlife habitats and deterioration of scenery. Directly
contributes to sewage and solid waste pollution.
• Emissions generated by forms of transport are one of the
main environmental problems of tourism.
 Economic Benefits
• Helps diversify and stabilize the local economy.
• Provides governments with extra tax revenues
each year through accommodation and restaurant taxes, airport taxes, sales
taxes, park entrance fees, employee income tax etc..
• Creates local jobs and business opportunities. These include those jobs
directly related to tourism (hotel and tour services) and those that indirectly
support tourism (such as food production and housing construction).
• The multiplier effect:
• Brings new money into the economy. Tourist money is returned to the local
economy as it is spent over and over again.
• Helps attract additional businesses and services to support the tourist
industry.
• Is labour-intensive.
• Earns valuable foreign exchange.
 Economic Costs
• Tourism development of infrastructure (Airports, Roads,
etc.) can cost the local government a great deal of money.
• May inflate property values and prices of goods and services.
• Leakages:
• If outside interests own the tourism development, most of
the economic benefits will leave the community.
• Considerable amount of foreign exchange revenues leaks back
out of the destination countries for tourism-related imports.
Tourist multiplier effect
 Economic Costs
• Employment tends to be seasonal. Workers may be laid off
in the winter season.
Tourism seasonality
• Many jobs in the tourism industry are poorly paid. This is a
particular problem in LEDCs where the local workforce
lack the skills to fill the better paid management positions.
• Tourist numbers can be adversely affected by events beyond
the control of the destination e.g. terrorism, economic
recession. This is a big problem in developing countries
dependent on tourism.
Tourism dependency
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Extreme Tourism