A NOTE ON THE MECHANISMS TO OBTAIN SUSTAINABLE ECOTOURISM THROUGH PRICE MANAGEMENT

Abstract

This note studies a market signal mechanism for assessing the short and long term tradeoff offered by the existence of natural resources in a tourism destination. We develop a theoretical model in which the destination price index is the tool for obtaining the sustainability of tourist areas. We assume that the stock of natural resources accumulates due to the regenerative natural capacity, but, at the same time, it is negatively affected by the number of tourists. When the demand price elasticity is higher than one, we show that there is a tradeoff between the use of the natural resources and the development of the tourism sector. In this scenario, we analyze how the optimal price changes as the parameters of the model vary.