Land, Environmental Externalities and Tourism Development

44 Pages Posted: 24 Mar 2004

See all articles by Javier Lozano Ibáñez

Javier Lozano Ibáñez

University of the Balearic Islands

Javier Rey-Maquieira

University of the Balearic Islands

Carlos Gomez

Universidad de Alcalá

Date Written: February 2004

Abstract

In a two sectors dynamic model we analyze the process of tourism development based on the accumulation of capital (building of tourism facilities) and the reallocation of land from traditional activities to the tourism sector. The model incorporates the conflict between occupation of the territory by the tourism facilities, other productive activities and availability of cultural, natural and environmental assets that are valued by residents and visitors. We characterize the process of tourism development in two settings: the socially optimal solution and a situation where the costs of tourism expansion are external to the decision makers, where externalities on residents as well as intraindustry externalities are considered. Regarding the optimal solution, we show that it is optimal to limit tourism expansion before it reaches its maximum capacity even in a context where the economic attractiveness of tourism relative to other productive sectors rise continuously. However, in this context and when all the costs of tourism development are externalities the only limit to tourism quantitative expansion is its maximum capacity determined by the availability of land. Finally, we show that excessive environmental degradation from the future generations' point of view is not a problem of discounting the future but rather a problem of externalities that affects negatively the current and future generations.

Keywords: Intertemporal land allocation, Structural economic change, Tourism industry

JEL Classification: O41, Q24

Suggested Citation

Lozano Ibáñez, Javier and Rey-Maquieira, Javier and Gomez, Carlos, Land, Environmental Externalities and Tourism Development (February 2004). Available at SSRN: https://ssrn.com/abstract=504423 or http://dx.doi.org/10.2139/ssrn.504423

Javier Lozano Ibáñez (Contact Author)

University of the Balearic Islands ( email )

Ctra. de Valldemossa km 7,5
Palma, Baleares
Spain
971172786 (Phone)
971172389 (Fax)

HOME PAGE: http://www.uib.es/

Javier Rey-Maquieira

University of the Balearic Islands ( email )

Ctra. de Valldemossa km 7,5
Palma, Baleares
Spain

Carlos Gomez

Universidad de Alcalá ( email )

Madrid, Alcala de Henares 28801
Spain
+ 34 91 885 42 84 (Phone)
+ 34 91 885 42 39 (Fax)

HOME PAGE: http://www2.uah.es/econ

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