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  • Print publication year: 2009
  • Online publication date: June 2014

7 - Autocorrelation


Economic issues include:

Tragedy of the commons and environmental externalities

Game theory and the Prisoner's Dilemma

Tourism life-cycles and sustainable development

Econometric issues include:

Breusch–Godfrey LM and Durbin–Watson tests for autocorrelation

Generalised Least Squares (GLS) and the Cochrane–Orcutt procedure

Data issues include:

Measuring the environment

The issue

The tourism industry has great potential to boost incomes, growth and development in poorer countries. World Travel and Tourism Council (WTTC) estimates of the economic contribution made by tourism in 2005 include revenues of $6201.5 billion, employment of 221.6 million workers and an 8.3% share of GDP. For the Caribbean alone, a region heavily dependent on its tourism industry, 2005 estimates indicate that tourism has contributed 15% of GDP, 15% of jobs and $45.5 billion of revenue.

This growth in the tourism industry has not come without a cost. If tourism is not carefully planned then there will be negative consequences for the natural environment and for socio-economic and cultural institutions more generally. Even when judged in terms of prospects for the tourism industry alone, if the environmental resources on which tourism depends are exploited and destroyed by rapid growth in tourism demand then the contribution of tourism to sustainable development in the long term will be limited. In managing a tourism industry that will be sustainable in the future, policy makers need to take account of the environmental consequences.

Further reading
Holden, A. (2000) Environment and Tourism, London: Routledge.
Opperman, M. and Chon, K-S. (1997) Tourism in Developing Countries, Thomson Business Press.
Stock, J. H. and Watson, M. W (2003) Introduction to Econometrics, Harlow: Pearson Education/Addison-Wesley.
Varian, H. (2006) Intermediate Microeconomics 7th edition, London: W. W. Norton & Co. Chapter 34 (on the tragedy of the commons and environmental externalities).
Academic articles and working papers
Baddeley, M. (2004) ‘Are tourists willing to pay for aesthetic quality? An empirical assessment from Krabi Province, Thailand, Tourism Economics, vol. 10, no. 1, 45–61. Reprinted in Hybers, T. (ed.) (2007), Economics and Management of Tourism 2 – Tourism in Developing Countries, Cheltenham: Edward Elgar, pp. 608–24.
Hardin, G. (1968) ‘The Tragedy of the Commons’, Science, vol. 162, no. 3859, 1243–7.
Newspaper articles
The Economist (2008) ‘Commons sense: Why it still pays to study medieval English landholding and Sahelian nomadism’, 31 July 2008.
Policy reports
Penner, J. E., Lister, D. H., Griggs, D. J., Dokken, D. J. and Mcfarland, M. (1999) Aviation and the Global Atmosphere – Summary for policy makers, Intergovernmental Panel on Climate Change: Cambridge: Cambridge University Press. Downloadable from
Roe, D., Ashley, C., Page, S. and Meyer, D. (2004) Tourism and the Poor: Analysing and Interpreting Tourism Statistics from a Poverty Perspective, ProPoor Tourism Working Paper No. 16, March, London: Pro Poor Tourism (PPT).
Stern, N. (2006) The Stern Review Report on the Economics of Climate Change, Cabinet Office – HM Treasury/Cambridge University Press, Cambridge UK.
,UNWTO (annual) Tourism Market Trends, Madrid: UN World Tourism Organisation.