Common-pool Resources, Ecotourism and Sustainable Development

This paper establishes an ecotourism model to analyze the role of local residents and government in achieving sustainable development. By incorporating into the model the properties of common-pool resources to which the tourism activities are linked, we prove that ecotourism cannot guarantee sustainable development for a rural area unless it is accompanied by suitable policies to reduce firms numbers and/or a tourist tax. More specifically, we find two stable equilibra: one characterized by low or even a zero level of natural resources, and the other a high level. In the low equilibrium, extinction or zero stock of natural resources occurs under open access to zero transport cost and marginal environmental maintenance cost. The high equilibrium corresponds to higher social welfare, and that can be assured by policies of a tourist tax, license fee, limiting the number of firms and restriction on the population of potential tourists. More importantly, we prove that although the high equilibrium is better than low equilibrium, it may not be optimal. The optimum welfare can only be achieved by a direct tax on tourists, not solely by policies controlling the number of firms. JEL Classification-JEL: Q01, Q57, L83