Ecotourism: An economic analysis

Ecotourism refers to tourists travelling to a nature site because of the amenity and recreational value derived from having contact with some aspect of the natural world. While ecotourism is a rapidly growing phenomenon, very much of this growth is unsustainable. This article reviews why this unsustainability arises and how it can be avoided. The first section sets out an economic model of ecotourism as the utilisation of open access to renewable natural sites. This model is used to demonstrate how open access can lead to both economic and environmental inefficiency. The second section examines management solutions to the open access problem. This involves determining an owner of the site, either the state, or the local community, or a private group. This owner must then choose policy instruments to restrict open access. This involves choosing between price and quantity instruments, deciding how to reduce rent dissipation and determining whether to restrict total numbers of tourists or damage done per tourist. The third section introduces case studies. State ownership is illustrated by the coral reefs of Koh Phi Phi, Thailand and the Galapagos Islands, Ecuador. Community ownership is demonstrated by Annapurna, Nepal, and private ownership is illustrated by the Monteverde Cloud Forest Reserve, Costa Rica.