Tourism taxes inevitable to fend off the traveller crush

Noah Smith In 1953, mountaineers Tenzing Norgay and Edmund Hillary made the first confirmed summiting of Mount Everest, the world’s highest peak.

Tourism taxes inevitable to fend off the traveller crush

In 1953, mountaineers Tenzing Norgay and Edmund Hillary made the first confirmed summiting of Mount Everest, the world’s highest peak. Recently, Everest has grown so popular that photos are surfacing showing huge lines of climbers waiting to surmount that same peak. On the rarefied ground where once only Mr Norgay and Mr Hillary tread, now climbers are dying because of overcrowding.

A less dramatic version of this scene is being played out around the world — for both good and ill. The number of international tourist arrivals has been increasing more or less exponentially since the mid-20th century and totalled about 1.4bn in 2018. Europe has seen the biggest share, but the Asia-Pacific region is growing fast. This growth has been driven by a confluence of factors.

Most obviously, disposable incomes have grown around the world, with China’s gains especially impressive in recent years. Areas that were once off-limits now are accessible as the world has generally become a more peaceful and open and air travel is cheap and ubiquitous.

Google Maps has made it much easier to find one’s way around a strange country, translation apps have made foreign-language communication less daunting, and Airbnb has expanded the range of available accommodation.

Tourism is big business: Direct receipts from tourism totalled $1.6 trillion (€1.4trn) in 2017, 2% of the entire world economy. The World Travel and Tourism Council estimates the amount is much larger, reaching $8.8trn in 2018, and supporting as much as 10% of all jobs on the planet.

But tourism has a down side as well. As the Everest example shows, travel to the most popular destinations is subject to what economists call congestion externalities — when you go to a famous place, your presence makes the experience just a little less convenient and comfortable for everyone else.

Multiply that effect by the millions, and the world’s tourists are crowding each other out of a good time.

For cities, the experience can be even more harrowing. Mobs of travellers strain infrastructure never built to handle so many human bodies. If a city tries to accommodate the inflow by building large amounts of new infrastructure, those streets and trains will sit empty in the off season or if the city loses tourist appeal.

Travellers can be accommodated with Airbnb, but this can push up rents for locals. Logistically, it’s simply inefficient for every location in the world to always be prepared to house, feed, and transport many more people than actually live there.

These problems are only going to get worse. The new middle classes of India, Bangladesh, and Indonesia are going to want their chance to see the Swiss Alps, the canals of Venice, and the lights of Times Square.

The problem can be ameliorated by spreading tourists around to less crowded destinations, as Japan is trying to do. Some destinations, like Amsterdam, are cutting back on advertising and self-promotion. But eventually, there will be no choice but to start charging tourists a fee.

A few places are already trying this. Venice will soon start charging people to come to the city for day trips. New Zealand has introduced a tourist tax. Various other European countries and cities have implemented or plan to implement taxes on hotels and other overnight accommodation. This is a simple application of congestion pricing, the textbook economics solution to the problem of overcrowding.

The inevitable rise of congestion pricing will be bad news for the emerging global middle class. There will be more tourists than in the age before air travel and the internet but tourism may never become as ubiquitous a middle-class luxury as sliced bread or automobiles. The world is big, but it isn’t big enough to be everyone’s personal playground.

Bloomberg

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