seminal contribution of Davis and Whinston (1961). While they were concerned with strategies by householders to under-invest in their properties, acting as free riders and so leading to the creation of slums, their argument can be considered in reverse. Intervention by public agencies to conserve and improve the environment will result in some owners being willing to pay to improve the quality of their properties, resulting in a rise in the values of all property and rents and land values in an area, referred to as gentrification in the UK. This argument will be considered below in the context of tourism.
The total economic value of resources
While the notion of TEV is the foundation of the estimation of the benefits derived from resources in environmental economics, its relevance to evaluating the tourism resources base has hardly crept into the literature. However, given tourism’s reliance on the natural environment it is not difficult to appreciate its implications and application. With regard to its implication, TEV suggests that the resource base, which is treated largely as a free good by tourism firms, has a much greater value than has been envisaged. This should increase the importance of the environment as an input into the tourism product by rising its opportunity cost in terms of alternative uses in, for example, agriculture, industry or urban property development. It should also emphasize to governments, tourism bodies and the business sector the necessity of safeguarding this resource base.
However, it must be recognized that virtually all resources used by tourist and tourism business have other uses. Whether tourism compliment or conflicts with these in an empirical matter on a case-by-case basis. Indeed, it is very likely that there are multiple uses for resources so that a number of competing demand need to be reconciled. Tourism may complement other uses where, for example, the development of a resort contributes to an improvement in the infrastructure, facilities and services. Conversely, in a rural area, such as a national park or nature reserve, it might conflict with environmental goals by causing erosion, trampling or disturbance of wildlife, notwithstanding the fact that it might contribute to conservation management through entry fees and on-site expenditure by visitors.
Where tourism can co-exist with other uses, the question arises as to what the level of usage ought to be to optimize the uses and non-use value gained. The decision should rest on the relative value of tourism as against other uses and whether, as the level of a specified use is increased, the value derived from it starts to decline; in effect, diminishing returns set in. basically, the choice is akin to a problem met in the real property market on the allocation of land, (see Evans,2004) regarding the existing use value of an urban site and its alternative use value; in short the opportunity cost of the current use of the site.
In the explanation below, for simplicity, it is assumed that total quantity of the resource available is exogenously determined and that the choice is between the expansion of tourism and one other alternative use of a resources. For land-based uses the choice could be between tourism and agriculture; this is not necessarily suggesting that each is a sole user. Figure 9.5 in the previous chapter can be adapted to demonstrate in figure 10.1 the point where the value generated by tourism and the alternative use of a resources is optimized. The horizontal axis of the figure indicates the total availability and capacity of a resource. Here, as an example, it is instructive to consider a marine resources, reflecting the case study given in chapter 9 on the seas adjoining the Baja California Peninsular in Mexico. The figure shows the tourism marginal economic value (TMEV), denoted by OPM, moving from left to right, consisting of such activities as catch and release non-consumptive fishing and other water-based recreational activities; the shape of the curve largely