Discussion Paper No.1705

Abstract :
We consider an open rural region of a developed country with two sectors: an environmentally sensitive agricultural industry and locally operated tourism, which generates pollution. We …nd that if residents’ preference for environmen- tally unfriendly touristic service is small, introducing additional capital, labor, and tourists promoted by local government may harm residents’economic welfare. Even if tourism is environmentally friendly, we can assert that the inflow of capital or labor can still possibly have negative effects. On the other hand, if residents’prefer- ence for touristic service is large, increased tourists from outside may have positive effects.

Keywords : tourism, environmental pollution, remittance

JEL code: R23, Q56, F22