The Market Triumph of Ecotourism: An Economic Investigation of the Private and Social Benefits of Competing Land Uses in the Peruvian Amazon

Annual revenue flow to developing countries for ecotourism (or nature-based tourism) could be as large as US$ 210×10(12), providing an enormous financial incentive against habitat loss and exploitation. However, is ecotourism the most privately and/or socially valuable use of rainforest land? The question is rarely answered because the relevant data, estimates of profits and fixed costs, are rarely available. We present a social cost-benefit analysis of land use in an ecotourism cluster in the Tambopata region of Amazonian Peru. The net present value of ecotourism-controlled land is given by the producer surplus (profits plus fixed costs of ecotourism lodges): US$ 1,158 ha(-1), which is higher than all currently practiced alternatives, including unsustainable logging, ranching, and agriculture. To our knowledge, this is the first sector-wide study of profitability and producer surplus in a developing-country ecotourism sector and the first to compare against equivalent measures for a spectrum of alternative uses. We also find that ecotourism-controlled land sequesters between 5.3 to 8.7 million tons of above-ground carbon, which is equivalent to between 3000-5000 years of carbon emissions from the domestic component of air and surface travel between the gateway city of Cusco and the lodges, at 2005 emission rates. Ecotourism in Tambopata has successfully monetized the hedonic value of wild nature in Amazonian Peru, and justifies the maintenance of intact rainforest over all alternative uses on narrow economic grounds alone.