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Tourism Specialization and Environmental Sustainability in a Dynamic Economy

Author

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  • Fabio Cerina

    (University of Cagliari and CRENoS, Viale Sant'Ignazio 78, 09123 Cagliari, Italy)

Abstract

This study focuses on the dynamic behaviour of a small open economy specialized in tourism based on natural resources. The author analyses the steady-state properties in two scenarios, with and without public abatement expenditures, and a unique local saddle-point equilibrium is found for both cases. The analysis of the dynamics provides an alternative explanation for the observed positive growth performance of small open tourism-based economies and for the worldwide increases in tourist inflows, which are seen as transitional phenomena towards the path to the steady state. Moreover, in defining the conditions under which tourism development, improvements in environmental quality and economic growth can simultaneously occur, the model provides theoretical microfoundations for sustainable tourism . Finally, in both scenarios, the author analyses the issue of market failures, taking into account two different kinds of externality and finding the respective optimal tax rates that will induce private agents to replicate the social optimum.

Suggested Citation

  • Fabio Cerina, 2007. "Tourism Specialization and Environmental Sustainability in a Dynamic Economy," Tourism Economics, , vol. 13(4), pages 553-582, December.
    • Handle: RePEc:sae:toueco:v:13:y:2007:i:4:p:553-582
    DOI: 10.5367/000000007782696032
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    References listed on IDEAS

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    More about this item

    Keywords

    tourism specialization; sustainability; environmental quality; transitional dynamics; corrective tax; pollution abatement;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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