Tourism Projects And Cost-Benefit Analysis

In tourism, more than in any other sector, the investor in a big project is neither a company nor a tourism entrepreneur but the public sector. Indeed, many projects belong to the general tourism infrastructure, and the benefits do not only accrue to the paymaster, who may also consider their negative effects. In other words, externalities must be taken into account. This chapter focuses on five topics. First, it focuses on the nature of investment appraisal and explores the difference between micro and macro approaches. Secondly, attention is paid to externalities in tourism. The third section deals with the identification of cost and benefit items or the cost-benefit scheme, where Environmental costs are an important part of the scheme. In the same section, we proceed with the quantification and valuation of cost and benefit items and the calculation of the NPV and IRR. A fourth part of this chapter is focused on CBA versus economic impact analysis. In a last section, we illustrate the application of CBA in the tourism sector with a practical example.