Does Tourism Eco-Certification Pay? Costa Rica's Blue Flag Program

Resources for the Future DP 12-50

30 Pages Posted: 15 Dec 2012

See all articles by Allen Blackman

Allen Blackman

Inter-American Development Bank (IDB)

Maria Naranjo

Tropical Agricultural and Higher Education Center

Juan Robalino

Universidad de Costa Rica - School of Economics

Francisco Alpizar

Tropical Agricultural and Higher Education Center

Jorge E. Rivera

George Washington University - School of Business

Date Written: November 8, 2012

Abstract

Tourism associated with beaches, protected areas, and other natural resources often has serious environmental impacts. The problem is especially acute in developing countries, where nature-based tourism is increasingly important and environmental regulation is typically weak. Eco-certification programs — voluntary initiatives certifying that tourism operators meet defined environmental standards — promise to help address this problem by creating a private-sector system of inducements, monitoring, and enforcement. But to do that, they must provide incentives for tourism operators to participate, such as price premiums and more customers. Rigorous evidence on such benefits is virtually nonexistent. To help fill this gap, we use detailed panel data to analyze the effects of the Blue Flag Program, a leading international eco-certification program, in Costa Rica, where nature-based tourism has caused significant environmental damage. We use new hotel investment to proxy for private benefits, and fixed effects and propensity score matching to control for self-selection bias. We find that past Blue Flag certification has a statistically and economically significant effect on new hotel investment, particularly in luxury hotels. Our results suggest that certification has spurred the construction of 12 to 19 additional hotels per year in our regression samples. These findings provide some of the first evidence that eco-certification can generate private benefits for tourism operators in developing countries and therefore has the potential to improve their environmental performance.

Keywords: Costa Rica, eco-certification, propensity score matching, tourism

JEL Classification: Q13, Q20, Q26, 013, Q54

Suggested Citation

Blackman, Allen and Naranjo, Maria and Robalino, Juan and Alpizar, Francisco and Rivera, Jorge E., Does Tourism Eco-Certification Pay? Costa Rica's Blue Flag Program (November 8, 2012). Resources for the Future DP 12-50. Available at SSRN: https://ssrn.com/abstract=2188931 or http://dx.doi.org/10.2139/ssrn.2188931

Allen Blackman (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Maria Naranjo

Tropical Agricultural and Higher Education Center ( email )

Turrialba
Costa Rica

Juan Robalino

Universidad de Costa Rica - School of Economics ( email )

San Jose
Costa Rica

Francisco Alpizar

Tropical Agricultural and Higher Education Center ( email )

Turrialba
Costa Rica

Jorge E. Rivera

George Washington University - School of Business ( email )

Washington, DC 20052
United States

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