The Economic Benefits of Investing in Cultural Tourism: Evidence from the Colonial City of Santo Domingo
This paper draws together quantitative methodologies from environmental and tourism economics to develop a framework for evaluating investments in cultural tourism. Indirect and induced benefits of investment in cultural tourism contribute to the overall returns on investment and not including these considerations can result in a nontrivial undervaluation of returns. To illustrate the approach, the framework is applied to a hypothetical US$90 million investment in cultural tourism in the Colonial City of Santo Domingo in the Dominican Republic. While there is an opportunity cost of allocating resources to cultural tourism, this paper demonstrates the costs of not doing so by considering a disinvestment in cultural tourism. Results of the analysisshow greater economic growth and household well-being with increased investment, with disinvestment generating significant negative consequences for economic output, employmentand terms of trade.