Tourism's economic contribution versus economic impact assessment: differing roles for satellite accounts and economic modelling.

Abstract

Abstract Understanding tourism's economic contribution is essential for both practitioners and policy makers. Estimating tourism's economic contribution to a destination (nation or region) requires a different approach than assessing tourism's economic impacts on the destination. Tourism satellite accounts can estimate tourism's economic contribution to a destination. For economic impact estimation, however, to determine the effects on key economic variables in response to changes in tourism demand, an economic model is required. This chapter first provides a brief overview and discusses tourism satellite accounts' uses in estimating the economic contribution of tourism. Next, the chapter critically examines the validity of tourism satellite accounts. Do tourism satellite accounts provide realistic estimates of the economic impacts on the destination of shocks to tourism demand? The chapter argues that the preferred model for economic impact analysis is computable general equilibrium modelling rather than input-output modelling. To illustrate the two techniques' differences, a model of tourism shock compares the estimates of input-output models to a computable general equilibrium model. The results show TSA provides an important basis for CGE modelling to estimate the economic impacts of tourism shocks. Both the TSA, in their capacity to estimate the economic contribution of tourism, and CGE models, with their capacity to estimate economic impacts of tourism shocks, are important tools for policy making. Both techniques represent substantial advances in managing tourism.