Content

Introduction ------------------------------------------------ pg 1
Positive effects of tourism ---------------------------- pg 2-3
Negative effects of tourism---------------------------- pg 3-4
Recommendation-----------------------------------------

pg 4

Conclusion-------------------------------------------------

pg 4

Reference---------------------------------------------------

pg 5

Introduction

Tourism is a fast growing sector in the world due to its promising benefits to the
host country and region. Tourists inject money into multiple sectors from food, hotel,
shopping and many others, there is no doubt about its economic benefits but on the
other hand of the scale some of the downsides of tourism are becoming a major
global issue. To the eyes of tourist, Sri Lanka is a dreamland which is primarily a
Sun, Sea and Sand land, therefore most of the tourist activities of visitors take place
on the beaches, this is why today we see many beach resorts running successfully
without any flows. Tourists who visit Sri Lanka are, therefore, primarily involved in
activities such as going to the beach, snorkelling, scuba diving and glass-bottom
boating. As our country is popular for its tourism industry we can cover the topic of
positive and negative effects of externalities due to tourism.
Positive effects of Tourism
*Positive Environmental externalities
The tourism also helps a country to improve and promote the conservation of wildlife
as well as resources such as rainforests. As a result of this it also generates funding
for marine parks through entrance charges and guiding fees, which basically
explains the tourists about that particular park. The funds are also generated for
maintaining animal preserves as well. The tourism reduces issues such as
deforestation and over fishing in developing countries.
*Positive Economic and social externalities
Tourism creates new jobs particularly in the service sector. Due to this people get the
opportunity for new jobs such as servers, hotel staff, life guards, retail outlets, tour
guides etc. Almost all of these jobs are new to the economy and this will boost the

economy of the country. Social effects can be considered as another benefit from
tourism to a country. The development to infrastructure such as roads,
transportation, communication, etc.. and new leisure facilities that result from tourism
also provides benefits to the residence of that particular country. Tourism also inspire
to safeguard the traditional customs, craftwork, and festivals of a country which,
otherwise will not be considered as tradition with the time passes and unfortunately
lead to wane. It also creates a civic pride to the nations. The communication
between the two parties will also create a great understanding with each other.

Negative Effects of Tourism

*Negative Environmental externalities
Lets take Sri Lanka as an example; our tourism industry is mainly dependent on the
coral reefs and their associated ecosystems such as sea grass beds and
mangroves. These ecosystems are threatened by human behaviour such as coastal
pollution, rapid coastal development. Not only in Sri Lanka, but in any tourist
destination, If the environment is degraded all parties are going to lose. As the
environment plays a major role in any tourist destination if not well protected visitors
will fail to come and the countries will lose an important source of economic benefit.
In other words the environment will produce reduced economic, ecological, and
amenity benefits.
*Negative Economic and Social externalities

We have learnt in Microeconomics, the study of equitable distribution of scarce

goods or benefits. In our example lets take the Sri Lankan beach tourism as the
tourism product; the demand in this case would be the beach and its sun, sand or
sea. When the cost of provision of the good does not take into account of negative
externalities such as environmental damage, in the long run this would result in
market failure and if not corrected it will result in a loss in social welfare (dead weight
loss).
Recommendations
As mentioned above correcting the market failures is important, this can be achieved
with the help of government through implementing taxes. Applying this to our case of
Sri Lanka would result in investors being pushed to internalise environmental costs
which would hopefully lead into a better environmental sustainability in the tourist
industry. Additionally new strict rules can be applied to keep these precious locations
out of pollution by educating both local and foreign visitors.
Conclusion
Finally we conclude that in many countries including our case Sri Lanka, tourism has
a generally negative effect. Although tourism has shown a few short term benefits, in
the long run environmental sustainability is an issue that needs more attention. It is
important for both the government and public to take actions on these issues in order
to avoid market failure.

Reference

Coral reefs: threats. (n.d.). WWF. Retrieved , from

http://wwf.panda.org/about_our_earth/blue_planet/coasts/coral_reefs/coral_threats/

Mankiw, N. G. (2001). Principles of economics (2nd ed.). Fort Worth, Tex.: Harcourt College
Publishers.

Environmental guidelines for coastal tourism development in Sri Lanka. (1995). Colombo:
Coastal Conservation Dept. [of Sri Lanka].