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Policy instruments for sustainable tourism

Policy instruments for more sustainable tourism management are not different in essence from instruments in other fields of environmental public policy. They can be classified into economic (or market-based), regulatory (or command-and-control) and institutional instruments. Economic instruments comprise environmental taxes, user fees, financial incentives and tradable market permits, regulatory instruments include quotas and zoning, while institutional instruments refer to eco-labels and changes in property rights. Sometimes a combination of various policy instruments might be more effective than implementing a single one.

Tourist environmental tax

This tax is levied on tourists for environmental purposes. Debates on the consequences of levying a tax on tourism usually focus on the effects on the number of tourists due to higher prices. Whether or not a drop in tourism income will result depends mainly on the amount of tax being levied and the ability of a destination to compensate for higher prices with a higher quality of tourism products and services. Different levels of environmental tax in high and low tourist seasons can enable more equal distribution of the number of tourists during the year, and consequently reduce pressures on the environment and increase the stability of incomes. Although there are many different ways in which tourist environmental tax can be collected, the tax bases that embrace the majority of tourists and are most frequently used in practice are either tourist arrival or departure, or number of nights spent at a destination.

User fees

When access to a specific environmental resource can be controlled, user fees charged to tourists can serve as a simple mechanism for capturing part of the benefits derived from the use of the resource. The most common applications of this instrument in tourism are entrance fees to protection areas.

Financial incentives

These can be designed to change behaviour either by increasing or reducing the prices of particular goods or services. There are many ways in which financial incentives for reducing negative tourism impacts might be applied. Governments can encourage the introduction of the use of environment friendly equipment for water and energy-saving at hotels by lowering taxes, providing subsidies or reducing import tariffs. In a similar manner, taxes or tariffs on non-environmental goods or services could be raised. Incentives in the form of taxes on construction activities, or taxes on second homes and higher building permit costs might be useful for reducing construction activities that frequently coincide with tourism development.


These can be applied to almost any product or service offered to tourists that satisfy certain environmental criteria (accommodation facilities, tour operators, beaches, restaurants, marinas or tourist destinations). Because of the major growth in the number of eco-labels over the last 15 years, many of them are not known to the wider public and tourists can be confused. To be meaningful, an eco-label must be internationally recognised and administrated by a reputable organisation. The ‘Blue Flag’ is probably the best known international eco-label in tourism, which has been awarded to beaches and marinas in 36 countries worldwide. Green Globe 21 is also a certification for sustainable travel and tourism products and services, used principally in Asia, the Caribbean and Australia.


Setting a limit on the number of visitors admitted to a destination during a fixed period may include closure of certain places, like environmentally fragile areas at certain times; establishing a maximum number of accommodation units; determining a maximum number of persons allowed at certain tourist attraction, particular area or a whole country. These instruments prevent overcrowding and consequently natural resource degradation. Bhutan is the only country that has introduced a tourist quota at the national level. Its quota allows 6,000 foreign tourists and 3,000 tourists from neighbouring countries per year, with established fixed minimum daily expenditures per tourist.


Zoning regulation can be a very effective instrument for limiting construction activities, which is one of the biggest problems related to environmental degradation caused by tourism development. This instrument allows for planned tourism development and is relatively inexpensive and easy to implement. The physical plan is the basic implementing document. It can restrict construction in environmentally sensitive areas (e.g. 100 metres from the coast) or minimise areas allocated for new construction. It usually also determines development standards, like building density and height limits, which control many aspects of the layout and design of tourist facilities. In the Maldives, for example, regulations state that the built environment should utilise no more than 20 percent of the total land area in order to maintain the natural beauty of an island environment. Moreover, two-storey buildings are allowed only if there is enough vegetation to screen them from view. Ecological economic zoning has also been proposed in another context (climate change policy) to protect Brazilian rainforests under the REDD (Reduced Emissions from Deforestation and Forest Degradation) initiative.

For further reading:

European Environmental Agency (2006) Using the market for cost-effective environmental policy. EEA report 1/2006.

Panayotou, T. (1994) Economic instruments for environmental management and sustainable development. UNEP/EEU: Environmental Economics Series Paper No 16.

This glossary entry is based on a contribution by Ivana Logar

EJOLT glossary editors: Hali Healy, Sylvia Lorek and Beatriz Rodríguez-Labajos

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