Monthly Archives: September 2015

Welfare from Tourism Activities – A Critical Component for Tourism Regulatory Reforms (Part II)

This is the second article for the series I planned on Tourism regulatory reforms in India. Through much delayed than promised in my previous blog on this series. However, I sincerely hope that this might be useful and interesting to those who are involved with this partially invisible big industry and also for the general readers who take interests in diverse economic issues.

the first question that I would like to answer is why do I touch this complex issue of “Welfare” which is more familiar to social scientists, especially economists and more or less vaguely understood as a common parlance to common men. the primary reason for introducing this particular term in relation to regulatory reform is that the objective of any regulatory reforms process is to increase welfare with or without existence of competition. This prompts that a clear understanding of definition of welfare is required to develop the linkage between tourism, its stakeholders, welfare and finally their importance to regulatory reforms process.

What is welfare?    

In the simplest of words, welfare is when one person’s well-being can be improved without affecting others’ well-being adversely for the good of the society.  As long as this concept remains within a small society, it easy to manage and monitor. The moment the sphere of its applicability increases, it is not only difficult to monitor, about also becomes complex enough to understand how the welfare of the entire society can be captured. For instance, tourism is a global phenomenon, apart from being multi-sectoral. Therefore, to understand the welfare implications of tourism, one needs to capture welfare of “Hosts” and “Guests” as well welfare across sectors like economic, cultural, political, environmental and so on. This complex gamut of tourism suggests that clearly there will be winners and losers in terms of welfare.

To make this simpler, lets divide the tourism economy between “Producers” and “Consumers”. The producers are those who are providing tourism services and consumers are who are enjoying tourism services. All stakeholders (except the policy makers!!) can be categorised in these two groups for each and every kind of tourism activities. Because of diverse characteristics of of tourists and their intentions of maximizing tourism utilities, certainly there are winners and losers. To make it even more explicit, we can explore the concept further from utilitarian perspective.

Derek Hall and Frances Brown explained it nicely in one of their paper on eithis, responsibility and well-being related to tourism. Well-being of a society, though more applicable to Western countries at present, can be though of in three different types:

1. Consumerisation – The society derives its well-being from quantity and variety of material goods

2. Welfare-statism – where well-being is derived from the quantity of public goods and services citizens receive as their rights

3. Eco-welfarism – where well-being is derived from the quality of relationships between people and the relationships between people and natural environment.

These points suggests that welfare from tourism will cut across social, behavirourial, medical, psychological, economic, cultural, environmental – almost every sphere of life. For the developed countries it promotes the concept of Quality of Life. Leisure and tourism is considered as a central part of it by contributing in enhancing welfare through a combination of relaxation of mind , intellectual stimulus and physical activity for fitness. But, when we see tourism enhancing consumers’ welfare, does it also contribute positively to producers’ welfare? If we consider the less developed countries, the answer is no for certain. Most of the time we look at tourism activities from a producers’ approach, where work in providing opportunities for relaxation and rest for consumers is the key component. The key question is whether tourism also does increase quality of life from producer’s perspective. The experience says that in most of the cases it is marginal and sometimes negative.

This is where it is crucial to understand why regulatory reforms are required, especially in the less developed, countries to to keep a parity between producer’s and consumer’s welfare. Unless the industry is regulated in a proper fashion and enhance fair competition while taking care of restraining adverse impact on the host community, sustainable tourism cannot be achieved. To make a clear case of how tourists’, i.e., consumers activities minimize producers’ welfare, I will discuss it in the next article of this series.