Abstract
Foreign tourism has expanded very fast in Iceland in recent years. Much of this tourism targets relatively few places of particular natural beauty. This has resulted in two notable external effects; deterioration of some of the natural features of these sites and significant crowding in the more popular ones. These manifestations of scarcity suggest the social desirability of limiting access to these sites.Basic economic theory holds that optimal use of scarce resources may be accomplished by means of prices. On that basis this paper considers prices for access to natural tourist sites. Optimal pricing rules are derived, their content explained and their practical applicability considered. Comparison of these optimal pricing rules to those that might be set by individual owners is briefly examined. While motivated by the Icelandic problem, the findings of the paper have general applicability.
Highlights
On that basis this paper considers prices for access to natural tourist sites
There has been a great increase in foreign tourism in Iceland in recent years
According to official statistics (Ferðamálastofa 2017) about 1.3 million foreign visitors came to Iceland in 2015 and the corresponding number in 2016 was probably close to 1.8 million
Summary
There has been a great increase in foreign tourism in Iceland in recent years. According to official statistics (Ferðamálastofa 2017) about 1.3 million foreign visitors came to Iceland in 2015 and the corresponding number in 2016 was probably close to 1.8 million. On that basis this paper considers prices for access to natural tourist sites. These observations have made it clear that, far from being abundant, many of these tourist sites are scarce resources and, – at least if socially optimal use is desired – access to them needs to be restricted.
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