The Effects on Environmental Investment of Changes in Tourism Demand

Abstract

In this short paper we analyze the impact of tourist demand in hotel rooms on the investment of hotels on environmental quality. In particular we show that when income of the tourists increases, then in order to maintain the demand for rooms, the hotels must increase the investment on the environmental quality of the region where there is an increment of the tourist activity. In the particular case where we have three different hotel chain located in three different tourist regions, we show that the incentive of hotel chains to invest in environmental quality depends on the demand in days of rest on the part of tourists and on the level of aggregate income. We also show that if total income increase then the incentive to invest in environmental quality increases in the region where the price of room is lower.