Problems in Use of Economic Instruments to Reduce Adverse Environmental Impacts of Tourism

Economic instruments are often proposed as effective means of environmental control – as ways of achieving an efficient balance between environmental and other objectives. By imposing charges or quantitative restrictions, it is possible to achieve an optimal level of usage of resources which reflects environmental costs and the benefits to the users. This paper argues, however, that there are often significant limitations to using economic instruments, such as user pays, as a means of optimizing the environmental trade-offs which may be created by tourism, or as a means of minimizing the cost of meeting environmental constraints. The paper begins with an outline of some adverse environmental impacts of tourism. It then discusses the different instruments that might be used to control them and the criteria for choosing between them. The problems that may arise in using these instruments in tourism contexts are then examined. The paper concludes that while economic instruments may be appropriate in many situations, in some circumstances they will not be effective and other mechanisms, such as codes of environmental conduct, will play an important role in environmental protection.