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«NATURAL AMENITIES, TOURISM AND INCOME DISTRIBUTION David W. Marcouiller University of Wisconsin-Madison, USA Kwang-Koo Kim Institute for Human ...»

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Annals of Tourism Research, Vol. 31, No. 4, pp. 1031–1050, 2004

# 2004 Elsevier Ltd. All rights reserved.

Printed in Great Britain

www.elsevier.com/locate/atoures 0160-7383/$30.00

doi:10.1016/j.annals.2004.04.003

NATURAL AMENITIES, TOURISM

AND INCOME DISTRIBUTION

David W. Marcouiller

University of Wisconsin-Madison, USA

Kwang-Koo Kim

Institute for Human Settlement, South Korea Steven C. Deller University of Wisconsin-Madison, USA Abstract: Understanding the distributional mechanisms of aggregate amenity-led economic growth is a necessary prerequisite to informed rural tourism planning. This applied study develops an empirical county-level model for the US lake states that incorporates five alternative natural amenity types and other growth variables to explain the distribution of income as measured by Gini coefficients. Results suggest that certain types of natural amenities are clearly related to the distribution of income. This extends earlier work which hypothesized that amenity-based development creates a ‘‘hollowing out’’ of the income classes.

Analyses of tourism impacts from the sole standpoint of employment and income growth neglect to account for key components of rural development structure. Keywords: income distribution, new growth theory, amenity-led development, tourism planning. # 2004 Elsevier Ltd. All rights reserved.

´ ´ Resume: Agrements naturels, tourisme et la distribution des revenus. Il faut d’abord ´ comprendre les mecanismes de distribution de la croissance economique totale derivant

´ ´ ´

des agrements naturels avant de proceder a la planification bien informee du tourisme ´ ´ ` ´ rural. Cette etude appliquee developpe un modele empirique au niveau du comte pour les ´ ´ ´ ` ´ etats de la region des grands lacs nord-americains. Ce modele comprend cinq sortes d’agre´ ´ ´ ` ´ ments naturels et d’autres variables de croissance pour expliquer la distribution des revenus mesuree par des coefficients de Gini. Les resultats indiquent que certa

–  –  –

INTRODUCTION

While many rural communities are experiencing depopulation and economic decline, others are experiencing rapid in-migration and Dave Marcouiller (Department of Urban and Regional Planning, 106 Old Music Hall, 925 Bascom Mall, Madison, WI 55706, United States. Email dwmarcou@wisc.edu conducts research on rural development planning and resource economics). Kwang-Koo Kim is an Associate Research Fellow with the Korea Research Institute for Human Settlement and a recent PhD recipient from the University of Wisconsin-Madison. Steven Deller (Agricultural and Applied Economics) focuses on the economics of communities and regional development.

<

DISTRIBUTIONAL AMENITY RELATIONSHIPS

significant economic growth. The importance of natural amenities in explaining rural growth patterns is becoming widely accepted within the rural development literature (Isserman 2001; OECD 1999; Power 1988). Both descriptive analysis (McGranahan 1999) and more advanced statistical modeling approaches (Deller, Tsai, Marcouiller and English 2001) have consistently found that rural areas endowed with natural and built amenities—such as scenic beauty, recreational sites, and tourism attributes—experience higher rates of economic growth than the US average.

These findings of economic growth differentials reflect important transitional stages of rural economies. Taken at face value, the empirical work suggests that amenity-rich communities without extensive development should strategically pursue mass tourism for rapid aggregate economic growth. For planning and public policy, this boosterism inference runs counter to those who argue that tourism development is inferior to traditional modes of economic growth, because of the predominance of low-wage employment opportunities in these businesses and because of class issues associated with service type jobs (Ashworth 1992; Hall 2000; Marcouiller 1997; Rothman 1998; Smith 1989; Williams and Shaw 1988). In sum, growing concern over such reliance focuses on the unequal distribution of benefits and on the tendency for tourism to create a ‘‘hollowing out’’ of the income distribution (Leatherman and Marcouiller 1996, 1999;

Wagner 1997). The policy analysis dilemma is that aggregate measures of economic growth mask key development characteristics of rural regions.

There is a strong need for empirical work that focuses on specific indicators of development rather than on simplistic and myopic measures of economic growth, such as changes in employment and aggregate income levels. Studies that address issues of distributional implications, transitions in economic structure, and the role of technology offer a clearer focus on regional development indicators. In particular, looking at growth without assessing distributional effects of change overlooks the strong developmental trend of increased intraregional income inequality. Indeed, assessing the distributional aspects of economic growth provides the real-world problem set of how tourism and other amenity-driven developments affect the lives and livelihoods of rural populations.





Rising American income inequality has been widely reported in two general dimensions. The first dimension of inequality is disparity among regions, especially the persistent income gaps between urban and rural economies (Hansen 1995; Renkow 1996). The second dimension is a trend of an aggregate increase in family income inequality regardless of geographic location. The long-term trend of income inequality (as measured using a Gini coefficient) in the United States is shown in Figure 1. The Gini coefficient is based on the Lorenz curve that shows the relationship between the cumulative percentage of total income within an economy and the cumulative percentage of income received when units are arranged in ascending order according to income. The Gini coefficient ranges from 0, indiMARCOUILLER, KIM AND DELLER 1033

Figure 1. Family Income Distribution in the United States (indexed 1979 ¼ 1)

cating perfect equality, to 1, indicating perfect inequality. In reference to Figure 1, it is important to note that income inequality for US family income, measured by the Gini coefficient, has persistently risen from 0.35 in 1970 to 0.365 in 1980, and from 0.396 in 1990 to 0.44 in 1997 (Cline 1997; Karoly 1996; Morrill 2000; Weicher 1997; Weiner and Monto 1998).

Several factors help explain income distribution both among and within regions. The research reported here explores two thematic areas relevant to the distribution of income: the distributional role of tourism development and its closely related basis in natural amenity resources. Other studies have suggested and applied several methods to measure the distributional consequences of development alternatives, including tourism (Alavalapati and Adamowicz 2000; Kottke 1988; Wagner 1997; Zhou, Yanagida, Chakravorty and Leung 1997).

Studies to date, however, have yet to address the explanatory elements of income distribution that involve spatial relationships between natural and built amenities supporting tourism.

Although significant work has helped to understand the elements associated with developmental impacts in their aggregate, tourism remains rather ill-defined and non-standardized. This is particularly true in rural regions. This general dearth of usable definitions limits regional analysis. Given its poorly defined nature, a more generic and

DISTRIBUTIONAL AMENITY RELATIONSHIPS

concisely tractable set of regional characteristics is needed. One critical component that serves as the basis for producing tourism is a region’s natural and built amenity base.

Theoretically, natural (and other forms of) amenities can be thought of as motivators for regional migration, tourism demand structure, and a foundation for regional quality-of-life attributes (Power 1988). From the standpoint of economic growth theory, amenities can be considered as latent regional factor inputs to the local production of goods and services (Marcouiller 1998). Growth theory, (according to the latter source) suggests that the extent and distribution of wealth are dependent upon a region’s endowment of both tangible factor inputs (land, labor and capital; also commonly referred to as primary factor resources) and more latent factor inputs (such as an amenity base and publicly provided goods and services).

Within rural areas, traditional growth engines have focused on allocating tangible factor inputs in such a way that output from resource extraction and from forward linked manufacturing processes are maximized. Increasingly, the joint resource production dilemma focuses on use of the more latent amenity aspects of natural resources for their role in producing tourism.

Although economically latent, the regional incidence of amenities as a factor input can be measured and incorporated within explanatory models. Standardized definitions of natural amenities vary widely, offered mostly in an ad-hoc fashion. For example, Nord and Cromartie (1997) focused on climatic characteristics; McGranahan (1999) referred to climate, topography, and water area; and Isserman (2001) included natural areas, outdoor recreation, broad vistas, and peaceful sunsets. Natural amenities can be region-specific characteristics directly associated with land and water resources. Typically, they involve aesthetics associated with forests and open space, water (lakes, rivers, and coastline), topography (mountains, canyons, and hills), and climate (Marcouiller, Clendenning and Kedzior 2002).

Only recently have efforts been made to evaluate empirically the effects of natural amenities on economic development. Early studies examined their location-specific effects on housing location decisions and individual welfare. Graves (1979, 1980, 1983) and Knapp and Graves (1989) found these effects (such as climate) were significant in explaining population migration. Roback (1982) showed that local amenities affected land prices as well as local wages and housing rents. Roback (1988) also noted that differences in them generated both wage and rent differentials across regions, and that these differences implied that some people might enjoy local amenities at the expense of higher rents and lower wages. Porell (1982) showed that both economic and amenity factors were important determinants of migration. Hoehn, Berger and Blomquist (1987) discovered statistical differences in housing prices and wages due to location-specific effects. These early studies, however, measured amenities mainly as factors of climate (sunshine, precipitation, humidity, or heating/cooling days), urban conditions (crime rates, school quality, or congestion), and environmental qualities (the level of particulates, visibility, MARCOUILLER, KIM AND DELLER 1035 water pollution discharges, landfill waste amounts, or the number of hazardous waste sites). Again, and of importance to this research, there is a general dearth of literature that makes the connection between natural and built amenities, tourism, and the distribution of income.

Understanding the relationship between amenities, tourism, and income distribution in rural planning has relevance in economic, social, and environmental dimensions. As infrastructure and technology reduce the economic effects of geographic distance, sense of place with respect to work and pleasure increasingly focuses on the presence of amenities and on the reliance on tourism as an economic mainstay of local communities. The economic transformation of traditional rural communities represents key challenges to development planning. As rural development takes place, amenities are transformed, tourism grows, community structure is altered, and social class is affected by both the generation of wealth and its distribution.

NATURAL AMENITIES AND INCOME DISTRIBUTION

Acknowledging the importance of economic growth is a precursor to more comprehensive assessments of development. Indeed, many consider economic growth to be a necessary, but insufficient determinant of development. The distributional aspects of growth are meaningful in assessing the developmental impacts of change. This is particularly true for strategies like tourism and amenity-based migration that some studies suggest present hollowing-out effects on income distribution. Thus, the empirical problem addressed is quite straightforward: how are regional amenities and tourism structure related to the distribution of income?

Study Methods Analytically, the models developed for this research have been built upon new growth theory (sometimes referred to as endogenous growth theory). This focuses on the importance of economies of scale, agglomeration effects, and knowledge spillovers and suggests that ‘‘economic growth tends to be faster in areas that have a relatively large stock of capital, a highly educated population, and an economic environment favorable to the accumulation of knowledge’’ (Button 1998:146). A contribution of the research reported in this article is the extension of Button’s notion of regional ‘‘capital’’ stock to include natural amenity endowments. Extensions of new growth theory suggest that cumulative causation effects of market forces cause the concentration of capital, labor, and outputs in some regions at the expense of other regions, so that unbalanced regional development is self-reinforcing rather than self-correcting.

Concepts of growth theory are not new. Myrdal was among the first to suggest cumulative causation as a hypothesis to predict regional income divergence in the 50s. He argued that ‘‘the play of forces in

DISTRIBUTIONAL AMENITY RELATIONSHIPS



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