Environmental management of Tropical North Queensland’s natural environment
has two effects on the competitiveness of the region’s tourism industry as measured
by the industry’s aggregate profitability. While it affects tourism businesses’ operating
costs, it also has an effect on tourists’ demand for visiting the destination.
This conceptual structure is a departure from the traditional consideration of only
the compliance cost effect of imposed environmental regulations. In addition to the
incorporation of demand effects, it includes the associated voluntary environmental
management activities by the region’s tourism industry.
The expected overall impact of the combined public and private environmental
management framework in Tropical North Queensland has been estimated inthis paper. This comprises an empirical analysis of the region’s tourism industry
through simulations of a model of imperfect competition. It has been shown that,
taking into account cost and demand effects, environmental management has a
positive impact on the industry’s aggregate profitability. The sensitivity analysis
with respect to assumed model parameters shows that the magnitude of the positive
relationship between environmental management and industry profitability varies
depending on the assumptions adopted. Hence, the simulation results are of an
indicative nature only. Given the estimated direction of the change in aggregate
profitability, the evidence suggests the importance of the environment to the
competitiveness of Tropical North Queensland’s tourism industry.
The unspoilt condition of the environment has a significant effect on tourists’
demand. This implies that Tropical North Queensland’s environment and the associated
management regime are strategic resources for the region’s tourism industry.
Environmental management is a strategic investment in the region’s core tourism
product. While environmental management results in business costs to tourism
operators, there are demand pay-offs that justify the investment. Alternatively,
the consequences of not undertaking the investment would be adverse in terms of
tourism profitability. Overall, for tourism businesses, environmental management
is more than a matter of complying with externally determined regulations. This
establishes the importance of cooperation with respect to the management of the
region’s environmental attractions – within the industry, and between industry and
regulatory authorities.
It has been assumed that the existing environmental management framework
can protect the current condition of the region’s environment in an effective and
efficient fashion. The protection of the environmental condition might be relatively
easy to achieve, at reasonably low costs to tourism businesses, given current
visitor numbers in the region. However, continued increases in the popularity of the
region as a tourist destination may require a change in the management framework
and affect the region’s competitiveness. The absorption of greater visitor numbers
is environmentally sustainable if the carrying capacity of the region’s environmental
resources can be enhanced (see, for instance, Tisdell 1998). With respect
to efficiency, the required measures to avoid increased damage from tourism might
involve higher environmental protection costs to tourism businesses and alter the
region’s cost/price competitiveness.
The findings presented in this paper have implications for other nature-based
tourist destination regions in Australia and elsewhere. The tourism industry in
these regions may also benefit from environmental management. Alternatively,
the competitiveness of the industry could be harmed if the environment were
not protected. However, as was the case for Tropical North Queensland, this
depends crucially on the effectiveness and efficiency with which the environmental
attractions are managed at those destinations. In other words, environmental
management does not necessarily lead to net benefits to the destination’s tourism
industry. The environmental management cost effect could outweigh the associated