Tourism and the environment

Journal article: This paper examines the effects of pollution taxes on welfare and environment for a small open economy. In the presence of tourism, pollution taxes provide a double dividend of less pollution and improvements in the tourism terms of trade. The optimal pollution taxes are derived under exogenous and endogenous tourism, and they can be greater or less than the marginal damage of pollution perceived by the domestic residents. Numerical simulations show that the optimal tax rate is larger under exogenous tourism.

Author(s)

Bharat R. Hazari, Jean-Pierre Laffargue, Chi-Chur Chao, Hamid Beladi

Journal
  • Resource and Energy Economics
Date of publication
  • 2009
Keywords
  • Endogenous tourism
  • Optimal pollution tax
Pages
  • 39-49
Version
  • 1
Volume
  • 31