Dynamic implications of tourism and environmental quality

Many studies draw attention to the rising number of tourists seeking destinations in environmental hotspots. However, it is also recognized that tourism activities significantly deteriorate the environment. Our paper investigates the dynamic interaction between tourism and environmental quality, focusing on its effect on the development of tourism‐driven economies. We use a theoretical model to study the dynamic implications of this interaction. In this respect, we point out the role played by environmental maintenance activities and ecotourism. Ecotourism allows the economy to improve welfare in the long‐term, but we identify a social cost regarding current generations’ welfare. Finally, the existence of imbalance effects between tourism infrastructures and environmental quality provides new insights into the transitional dynamics of tourism destinations.