Changing Economies » Tourism Benefits and Problems

What you'll learn this session

Study time: 30 minutes

The economic, social and environmental benefits of tourism
The problems caused by tourism development
How tourism can be managed sustainably
Case studies of tourism in both HICs and LICs/NEEs
The multiplier effect and how tourism impacts local economies

Tourism: Benefits and Problems

Tourism is one of the world's largest industries, providing jobs for millions of people and bringing money into local economies. However, it can also cause problems for local communities and environments. This guide explores both sides of tourism development.

Key Definitions:

Tourism: Travel for leisure, business, or other purposes, usually involving a stay away from home.
Mass tourism: Large numbers of people visiting popular holiday destinations.
Ecotourism: Responsible travel to natural areas that conserves the environment and improves the welfare of local people.
Multiplier effect: How money spent by tourists circulates through the local economy, creating additional income.

💰 Economic Benefits

Tourism brings significant economic advantages to destinations:

Job creation - directly in hotels, restaurants and tour companies and indirectly in supporting industries
Foreign exchange - tourists bring foreign currency into the country
Infrastructure development - roads, airports and utilities are improved
Tax revenue - governments collect taxes from tourism businesses
Multiplier effect - money circulates through the local economy

🏠 Social Benefits

Tourism can positively impact local communities:

Cultural exchange - interaction between tourists and locals
Preservation of traditions - cultural practices maintained for tourism
Improved facilities - locals benefit from new amenities
Education opportunities - increased language learning and training
Reduced migration - people can find work locally rather than moving away

The Multiplier Effect Explained

When tourists spend money in a destination, that money doesn't just benefit the businesses they directly pay. It circulates through the local economy, creating a ripple effect of economic benefits.

How the Multiplier Effect Works

Imagine a tourist spends £100 at a local hotel:

The hotel uses some of this money to pay local staff
The hotel buys food from local suppliers
Staff spend their wages in local shops
Local suppliers pay their workers, who also spend locally
This cycle continues, multiplying the original £100 spent

Studies show that for every £1 spent by a tourist, the total benefit to the local economy can be £1.80 or more!

Problems Caused by Tourism

Despite its benefits, tourism can create significant challenges for destinations if not managed properly.

💲 Economic Problems

Seasonal employment
Leakage of profits to foreign companies
Over-dependence on tourism
Rising prices for locals
Low-paid, unskilled jobs

👪 Social Problems

Cultural change and loss of identity
Conflict between tourists and locals
Increased crime rates
Demonstration effect (locals copying tourist behaviour)
Overcrowding and pressure on services

🌲 Environmental Problems

Pollution (air, water, noise)
Habitat destruction
Erosion of natural sites
Strain on water resources
Litter and waste management issues

Sustainable Tourism Management

To maximise benefits and minimise problems, tourism needs to be managed sustainably. This means balancing economic benefits with environmental protection and community needs.

Strategies for Sustainable Tourism

Carrying capacity - limiting visitor numbers to what an area can support
Ecotourism - promoting environmentally responsible travel
Community involvement - ensuring locals have a say in tourism development
Education - informing tourists about responsible behaviour
Regulations and taxes - using rules and fees to manage tourism impacts
Spreading tourism - developing new areas to reduce pressure on popular sites

Case Study: Tourism in the Maldives

Background: The Maldives is a small island nation in the Indian Ocean, known for its beautiful beaches and coral reefs.

Benefits:

Tourism accounts for about 28% of GDP
Provides jobs for thousands of Maldivians
Has funded improvements in healthcare and education
Increased global awareness of climate change threats

Problems:

Environmental damage to coral reefs
Waste management challenges on small islands
Cultural tensions with conservative local values
Economic vulnerability to global tourism downturns

Management strategies:

"One island, one resort" policy to contain impacts
Eco-friendly resorts using renewable energy
Marine protected areas to conserve coral reefs
Tourist taxes used for environmental protection

Case Study: Tourism in Barcelona, Spain

Background: Barcelona is one of Europe's most popular city destinations, attracting over 30 million visitors annually before the pandemic.

Benefits:

Tourism contributes approximately 15% to the city's economy
Creates thousands of jobs across various sectors
Has funded restoration of historic buildings
Promotes Catalan culture internationally

Problems:

Overcrowding in popular areas like La Rambla
Housing crisis as apartments convert to tourist rentals
Local businesses replaced by souvenir shops
Anti-tourist sentiment among residents

Management strategies:

Restrictions on new tourist accommodation
Increased tourist tax to fund city services
Promotion of less-visited neighbourhoods
Regulations on tour groups in the historic centre

Comparing Tourism in HICs and LICs/NEEs

Tourism affects different types of countries in different ways:

🏛 Tourism in HICs

Often focuses on cultural attractions, cities and established resorts
Better infrastructure to handle large tourist numbers
Stronger regulations to protect environment and heritage
Tourism usually forms a smaller percentage of overall economy
Main issues include overcrowding and maintaining authenticity
Examples: UK, Spain, USA, Japan

🏜 Tourism in LICs/NEEs

Often focuses on natural attractions and lower costs
May lack infrastructure for sustainable tourism
Greater economic impact but also greater leakage to foreign companies
Tourism can form a major part of the economy
Main issues include environmental damage and economic dependency
Examples: Kenya, Thailand, Peru, Maldives

Key Exam Tips

When answering questions about tourism benefits and problems:

Always consider economic, social AND environmental factors
Use specific examples and case studies to support your points
Consider different perspectives (tourists, locals, businesses, government)
Discuss both short-term and long-term impacts
Explain how problems can be managed sustainably
Compare how tourism affects different types of locations

Revision Checklist

Make sure you can:

Explain the multiplier effect with an example
List at least three economic, social and environmental benefits of tourism
List at least three economic, social and environmental problems caused by tourism
Describe strategies for sustainable tourism management
Compare tourism impacts in at least one HIC and one LIC/NEE case study
Explain how tourism can be developed sustainably

🧠 Test Your Knowledge!