Economic Development and Environmental Conservation: Evidence From Eco-Tourism

Abstract

Economic growth and environmental protection are key development challenges. Theoretically, eco-tourism could increase workers' income and increase the incentive to preserve forests. However, higher income is generally associated with larger environmental degradation. I study empirically the effect of eco-tourism on income and deforestation, with a randomized control trial in Colombia. Municipalities were randomly assigned to either a control group, or a treatment group that received eco-tourism promotion. I find an increase in the number of tourists and workers in surveyed businesses of treated municipalities. At the same time, I find a large reduction in deforestation around eco-tourism sites in treated municipalities. These results illustrate the importance of economic opportunities for local communities to preserve forests.

Keywords: Eco-tourism; Poverty; Deforestation; Colombia

JEL Classification: Q56, Z32