The nationwide economic and environmental impacts of tourism: A computable general equilibrium approach for Thailand

The Thai economy depends on tourism. More than half of Thai industries are interdependent with tourism. Any changes that affect tourism could have substantial economy-wide impacts. This research applies SAM-based CGE models and databases with tourism and water resources extensions to investigate the effects of tourism in Thailand on resource allocation, sectoral outputs, income distribution, macroeconomic variables and the environment.; The research finds that a tourism boom in Thailand can stimulate real GDP. It increases imports of intermediate inputs in manufacturing, but the current account deficit declines owing to the extra foreign receipts. Tourism benefits all household classes in terms of an increase in consumption, utility and income. However, it is not pro-poor or pro-agriculture as long as the owners of primary factors in agriculture do not participate in tourism-related activities.; A tourism boom induces reallocation of primary factors toward domestic-oriented production and away from export-oriented production and import-substituting production. It widens the differential between agriculture and non-agriculture in labor wages and rates of return on capital. The direction of these effects is still the same under a range of assumption about economic structures.; In Thailand, water scarcity is a major policy concern. A tourism boom stimulates demands for piped water and increases the total costs of an existing water subsidy. The research finds that subsidy removal can reduce demands for piped water while causing only small effects on other sectors. It tends to benefit low income and agricultural households. Hence, it can be thought of as a pro-poor or pro-agricultural household policy. The government can use savings from water subsidy removal to fund additional pro-poor or pro-growth projects, whilst also correcting an environmental distortion, e.g. an excessive demand for water and production of wastewater. So, there is evidence of a double dividend.