Voting for Environmental Donations: Experimental Evidence from Majorca, Spain

We analyze group-voting on binding minimum contributions to environmental projects and assess how such institutions affect subsequent voluntary donations. Mature tourism destinations such as the island of Majorca (Spain) suffer environmental pressures caused by decades of intense tourism development, reducing the environmental quality and tourism appeal of the island. Financed from the local tax base, public administrations have developed costly projects to mitigate this degradation. Alternative fundraising policies applied in recent years include a tax to the tourism industry and more recently voluntary donations by tourists. In this paper we explore the fundraising possibilities of applying taxes and voluntary donations complementarily by using an economic field experiment with international tourists. Participants were allowed to vote to apply a minimum compulsory donation in addition to which they could make a voluntary donation. Our results show that participants only self-impose mandatory contributions when they must choose between a high or low tax, passing in some cases the high tax. In addition, we find that neither the act of voting nor the fact that a vote is actually passed changes voluntary contributions. Therefore, consistent with previous experimental literature addressing international tourists behavior, our data does not support a crowding-out of voluntary donations by the application of tourism taxes ear-marked for environmental purposes. From a policy perspective, this result supports the potential for a complementary use of taxes and voluntary donations for fundraising environmental projects in tourism destinations.