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Evaluating the Economic Viability of Public Investments in Tourism

Published online by Cambridge University Press:  05 November 2019

Onil Banerjee
Affiliation:
Environment, Rural Development, Environment, and Disaster Risk Management Division, Inter-American Development Bank, 1300 New York Avenue N.W., Washington, DC20577, USA, e-mail: onilb@iadb.org
Martin Cicowiez
Affiliation:
Facultad de Ciencias Económicas, Universidad Nacional de la Plata, Calle 6 Entre 47 y 48, 3er Piso, Oficina 312, 1900 La Plata, Argentina
Adela Moreda
Affiliation:
Environment, Rural Development, Environment, and Disaster Risk Management Division, Inter-American Development Bank, 1300 New York Avenue N.W., Washington, DC20577, USA
Corresponding
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Abstract

Various methods have been applied to evaluating the economic viability of public investments in tourism. In this article, we capitalize on the strengths of computable general equilibrium and cost-benefit analytical techniques and develop an integrated approach to evaluating public investments in tourism. We apply the approach to the evaluation of a US$6.25 million investment in tourism in Uruguay from the perspective of a multilateral development bank and a beneficiary government. These perspectives differ in a cost-benefit analysis (CBA) due to the timing of the costs incurred. The integrated approach is powerful in that it captures first and subsequent rounds of investment impacts of benefits and costs; resource diversion and constraints are accounted for, and the estimation of benefits is consistent with the welfare economics underpinnings of CBA.

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© Society for Benefit-Cost Analysis, 2019

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