Chukyo University Institute of Economics
Discussion Paper Series
June 2024

No. 2401
How can we solve the problems caused by over-tourism?

Kenji Kondoh

How can we solve the problems caused by over-tourism?

Kenji Kondoh∗

Abstract: This paper focuses on two major negative effects of over-tourism caused by excessive
tourists overwhelming the capacity of tourist spots. The first is traffic congestion, when a floodof tourists shuts locals out of the public transport system. The second is environmental
pollution. Copious tourist trash negatively affects the natural environment and the
productivity of the environmentally sensitive agricultural industry. Applying the neoclassicalstandard economic model, this paper theoretically investigates the economic effects ofcountermeasures such as a tourism tax and expanding transportation capacity to show theconditions under which those measures will be effective.
Keywords: Over-tourism, Tourism tax, Public transport, Tourist trash
JEL Classification: Z30, R40∗ School of Economics, Chukyo University, JAPAN.

Email: kkondo@mecl.chukyo-u.ac.jp
11. Introduction
Over-tourism or mass tourism is defined as excessive tourists causing cultural, economic,
and environmental damage, reducing residents’ welfare.
For example, Chart #1 shows the current status of over-tourism in Japan. The numberof foreign visitors in 2019 was almost four times that in 2010. After the COVID-19 pandemic,
the weak Japanese yen led to the number of foreign visitors quickly recovering, and by 2023,
it had returned to pre-pandemic levels. Chart #2 shows that in some tourist hot spots, such as
Kamakura, tourists have come to outnumber locals.
-------Charts #1 and #2 around here------The main factors of over-tourism can be categorized into underlying and proximate
causes. Regarding the underlying causes, the success of the urban regeneration movement
should be mentioned. For example, Bilbao in Basque Country, Spain, was formerly a declining
industrial city full of old factories and infrastructure. However, the famous Guggenheim
Museum transformed it into a city of art. Regarding the proximate causes, shorter working
hours have allowed more leisure time. Global development has created a large middle classthat can afford to travel. In addition, decreasing trip costs promoted by low-cost carriers, such
as EasyJet and Ryanair, support people’s travel desires. The relaxation of visa requirements is
another proximate cause of tourism expansion. Online travel agents facilitate personal trips.
Popular social networking services contribute to raising the profile of tourist hot spots. Cruise
ship travel has made it possible for many travelers all at once to comfortably visit famoussightseeing spots worldwide. Finally, governmental policies in some countries, such as Japan,
encourage inbound tourists 1.

1

According to the Japan Tourism Organization, the number of visitors reached a record

high of 31.88 million in 2019, up from 8.35 million in 2012. By country and region, China
contributed the most at 9.59 million, followed by South Korea, Taiwan, and Hong Kong.
The Japan Tourism Agency estimated that travel consumption amounted to 4.8135 trillion
yen, a 4.4-fold increase in seven years. This was due to the depreciation of the yen under thesecond Shinzo Abe administration, which began in 2012, and the relaxation of visa issuancerequirements for Thailand, Indonesia, China, and other countries. Airport slots and dutyfree shops have also been expanded. The Japanese government has positioned tourism as apillar of its growth strategy, and in 2016, set a target of increasing the number of visitors to
2

The effects of over-tourism can be categorized into three groups. First are the effects
on culture. Owing to globalization, local and traditional cultures, including languages andbeliefs, are sometimes ignored by tourists who do not grasp their value 2. Moreover, crime andantisocial behavior increase. Second are the effects on local economies. Services for tourists
are of no merit to locals, except for service suppliers. Local people must bear the investment
costs of new infrastructure. Local shops for residents may be changed into shops for tourists.
Additionally, local and traditional job opportunities may switch to tourism-related jobs.
Multinational tourism organizations or hotel chains have been introduced and have obtained
market power. Moreover, in some hot spots like Kiyomizudera in Kyoto, access by train or
subway is inconvenient, so tourists rush to low-cost local buses. Due to the huge number oftourists, residents cannot use buses, which are indispensable in their daily lives. Third are theeffects on the natural environment. Overcrowding can cause congestion and pollution,
increasing carbon emissions. The increased waste is almost out of control, harming the naturalenvironment, reducing the environmentally sensitive agricultural industry’s productivity, anddestroying sustainability. In addition, increased water consumption may prevent residents
from accessing clean drinking water.
Possible policies for resolving the over-tourism problem can be categorized into threegroups. First are distribution policies. Seasonal distribution encourages tourists to visit fromspring to summer or autumn to winter. Spatial distribution encourages exploring secondary
tourist spots. Temporal distribution involves inducing tourists to visit hot spots in the earlymorning or late at night. Second are billing policies. Introducing an expensive admission fee
or event participation fee can discourage tourists with lower budgets from visiting certain
spots and can reduce the number of tourists. An admission tax reduces the number of tourists
and can financially support local governments 3. Third are restriction policies. To preserve theenvironment, behavioral restrictions may be required 4. Entrance or traffic restrictions, suchas Venice’s no-car policy or Zermatt’s electric vehicle policy, may be effective. Instituting an
upper limit on tourists along with required preliminary bookings, as introduced by Alhambra

Japan to 40 million in 2020 and 60 million in 2030.
2

It is frequently reported that foreign tourists break the local rules in Gion, Kyoto,surrounding maiko girls and causing trouble.
3

Around 40 years ago, in Kyoto, a special tax was imposed as an entrance fee for temples.

But different from museums, temples are religious facilities, and imposing a tax contradicts
national policy—that is, tax-free religious cooperation.
4

For example, in the Ogasawara islands, Tokyo, only guided tours with a limited number oftourists can access fragile spots like Minamishima.
3

Palace in Granada and the Sistine Chapel in Rome, may also be useful. All of these restrictive
policies are effective under certain conditions but are insufficient to resolve the current overtourism problem.
Most recent studies on over-tourism describe the current status and future challenges 5.
However, economic analyses on over-tourism are scarce. Yubal (2022) adopted a game theory
approach and examined cooperation or competition between municipal managers. Nepal and
Nepal (2021) presented case studies of five countries. They studied the effects of economic
policies, taxes, and tourism fees. To the best of the author’s knowledge, no theoretical studies
have been conducted on the economic effects of restrictive policies used to resolve overtourism based on ordinary neoclassical economic models.
This study’s aims are as follows: Considering the current serious problem of overtourism caused by excessive tourists overwhelming the capacity of tourist spots, I focused on
two major negative effects. The first is traffic congestion, when a flood of tourists shuts
residents out of the public transport system. The second is environmental pollution. Copious
tourist trash negatively affects the natural environment and the productivity ofenvironmentally sensitive agricultural industries. Applying the neoclassical standard
economic model, the economic effects of countermeasures such as a tourism tax andexpanding transportation capacity were theoretically investigated to show the conditions
under which those measures can be effective.
The remainder of this study is organized as follows. Section 2 presents the model.
Section 3 is devoted to the analysis. Section 4 presents the concluding remarks.

2. The Model
This study considered small local regions in Japan such as Kamakura, Matsumoto, orNara. To simplify the analysis, the inter-regional trade of goods was ignored. These regions
have three industrial sectors. First is the agricultural sector. Following Copeland and Taylor(1999), this industry was considered to be environmentally sensitive, with productivity that

5Harrison and Sharpley (2017), Milano et al. (2019, 2021), and Séraphin et al. (2020) are,respectively, collections of selected papers about over-tourism. Higgins-Desbiolles et al.
(2019) is an overview of recent contributions on this topic. Several studies have focused on
the sustainability of tourism; for example, see Blázquez-Salom et al. (2021) and HigginsDesbiolles (2021).
4depends directly on the stock level of the natural environment.
The production function of the agricultural industry can be expressed as follows:

A = LA E ,(1)where A is the output, E is the stock level of the natural environment, and LA is thelabor input to the agricultural industry. Assuming perfect competition, the competitive wage
rate w should satisfy

w= E,

(2)

where the unit price of agricultural goods is taken as numeraire.
The second sector is publicly managed cleaning services. Tourists generate pollutionthat negatively affects natural environments. The author believes that publicly managed
cleaning services can mitigate these negative effects. The stock level of the naturalenvironment can be expressed as follows:

E = E − T + δ LC ,(3)

where E is the natural environmental stock before damages, LC is the labor input to thecleaning service industry, δ is the recovery parameter by one unit of labor employed by thecleaning service, and T is the number of tourists. Every tourists must pay tourism tax twhen they visit this small town. It is assumed that T is a decreasing function of t —that is,=
T T (t ), T ' < 0 .
The third sector comprises publicly managed transport services. Residents and tourists
use this service, but some fail to get on owing to overcapacity. The possibility of using thisservice depends on random probability. Let Q denote the capacity of one unit of transport,5q is the price of one unit of transport, c is the marginal cost of one unit of transport, and

LB is the labor input to the public transport service. Each worker can transport Q numberof customers. Considering that public sector management is unified and the finances of thistown are balanced, all profits from the transport sector and tourism tax income should be
distributed to employed public servants in the transport and cleaning sectors. Then, thefollowing equation is obtained:w( LB + LC ) = Q(q − c) LB + tT .
The wage rate of public servants is also

(4)

w under the assumption of free labor mobility

between sectors.
The full employment condition is

LA + LB + LC =
L,

where

(5)

L denotes the labor endowment of this small region. As previously mentioned, thetotal number of potential users of public transport dominates the capacity of the totaltransport services. Thus, the expected number of residents who can successfully use public
transport can be expressed as

L
QLB .
L +T

Concerning the economic welfare of residents, to simplify the analysis, the Cobb–
Douglas utility function is introduced, as follows:u (QLB=

where

L)α A(1−α ) ≡ Bα A(1−α ) ,L + T (t )(6)

u is the utility level. Maximizing the welfare subject to the budget constraint

conditions,qB + A =
wL ,

6

(7)

gives the first order condition,

α A.
(1 − α )qB =(8)

As there is no regional trade and tourists are assumed to stay for only a short period, all the
produced agricultural goods are consumed by residents 6.
After substituting (2) into (4) and (7), by four equations, (4), (5), (7), and (8), four
endogenous variables, LA , LB , LC , and q are determined if Q, t , L and α are provided
exogenously.

3. Analysis
The total differentiation of (4), (7), (8), and (5) yields

 0
 A
 1
α A1

 1

A1 − (q − c)Q ( LB + LC ) A12 + A1
qB1
A2 − LA12−(1 − α )qB1
α A2
1
1

−QLB   dLA   dL B B−(1 − α ) B   dLC 0  dq  (q − c) LB  −( LB + LC ) A13 + (T + tT ′) 
 −B



− A3 + LA13 − B32
 dQ +  dt ,= 
(1 − α )qB2  −α A3 + (1 − α )qB3





0
0




where

A ≡ A( LA , LC , t ), A1 =∂A ∂LC =δ LA 2 E > 0,
∂A ∂LA = E > 0, A2 =A3 =∂A ∂t =− LAT ' 2 E > 0,

6

(9)0, A12 =A11 =∂ 2 A ∂L2A =∂ 2 A ∂LA∂LC =δ 2 E > 0,

Otherwise, we may consider that tourists purchase and consume some agricultural goods

produced in this region. Even then, as their total payment should be equal to the value of
their consumed agricultural goods, the aggregate value of consumption by residents remains
unchanged.
7

B ≡ B( LB , Q, t ),A13 =∂ 2 A ∂LA∂tC =−T ' 2 E > 0,

B2 =∂B ∂Q =
LB L ( L + T ) > 0,

and

B1 =
∂B ∂LB =QL ( L + T ) > 0,

B3 =∂B ∂t =−QLB LT ′ ( L + T ) 2 > 0.

Thedeterminant of the LHS matrix of (9), ∆ , can be expressed as=∆ QLB dq ( A2 − A1 ) B1 − QLBα LA1 A12 + Bα ( A2 − A1 )[ A1 − (q − c)Q]
+ ( A2 − A1 − A12 L ) B[(1 − α )Qc − α A1 ],where we apply(10)

LA A12 = A2 , LB B1 = B, and ( LB + LC ) A12 + A1 =−( A2 − A1 − LA12 ).

The sign of (10) is negative under the following assumptions:
Assumptions#1.

α < c q,which implies that consumer preferences for agricultural goods are

sufficiently large.
#2. A1 > A2 , which implies that, in the agricultural industry, the marginal products of labor
input to the agricultural sector directly dominate those of the indirect effects on the cleaning
sector.
#3. A1 − ( q − c)Q > 0, which implies that the publicly managed transport service sector isin deficit.

In other words, Assumption #2 implies that δ is sufficiently small to satisfy δ < 2 E LA .

3.1. Increase in public transport capacity
One possible solution to over-tourism is to expand the public transportation capacity.
Effects caused by an increase in Q yielddL=∆ A cLB BA12 [ LA − (1 − α ) L ],
dQ
8

(11)

∆

dLB
=
−[ A2 − A1 − (1 − α ) A12 L ]cLB B > 0,
dQ

(12)

dLC 1
∆ =
cA1 LB B < 0,
2
dQ

(13)

α dB 1 − α dA
du
= u(
+
)
dQ
B dQ
A dQ
dL
dL
dL
αu
(1 − α )u=( B1 B + B2 ) +( A1 A + A2 C ).
B
dQ
A
dQ
dQ

(14)

With increased capacity in one unit of transport service, labor input to the public transport
sector decreases, and labor input to the public cleaning sector increases. The sign of (11)depends on the following parameters: If α is larger (smaller) than ( LB + LC ) L , then (11)is positive (negative), implying that labor input to the agricultural sector decreases (increases).
It can be concluded that

A1

dL
dLA
1
+ A2 C =− cLB BA1 (1 − α ) L > 0 , which implies∆
dQ
dQ

that an increase in Q will positively affect the total output of agricultural goods. Regardlessof the decreasing LB , if the direct effect of increasing Q dominates the indirect effectcaused by decreasing LB , then an increase in Q will have a positive effect on the total
number of public transport users, B . Then, the sign of (14) is positive. Consequently, thefollowing proposition can be established:
PROPOSITION #1
Under Assumptions #1–3, if an increase in public transport capacity raises the total numberof public transport users, the economic welfare of the residents in the region will be enhanced.
Note that we can consider the opposite scenario when the indirect effect of decreasing

LB dominates and QLB decreases overall. If the public sector’s revenue is low and α issufficiently large, there is the possibility that the economic welfare of this region will be
reduced.

93.2. Increase in tourism tax
Another possible solution to over-tourism is imposing a larger tourism tax on tourists’inflow. The effects caused by an increase in t yielddL
dLA+ A2 C ] = ( A2 − A1 )[(1 − α )( LB + LC ) − α LA ]cB
dQ
dQ− A1 A12 [α LA A 13 ( B + QLB ) + (1 − α )qQLB B3 − (T + tT ′)(1 − α ) B],

(15)

du
α dB 1 − α dA
)
= u(
+
dt
B dt
A dt
dL
dL
dL
(1 − α )uαu( B1 B + B3 ) +( A1 A + A2 C ),
=
B
dt
A
dt
dt

(16)

∆[ A1

where the sign of (15) is negative if α < ( LB + LC ) L and T + tT ′ < 0 . Also, similar to 3.1.,
if B3 , the direct effect of increasing B , dominates the indirect effect caused by decreasing

LB , an increase in t will cause a positive effect on the total number of public transport users,
B . Then, the following proposition can be asserted:
PROPOSITION #2
Under Assumptions #1–3, if α is smaller than ( LB + LC ) L , and an increase in tourism
tax reduces the total tax revenue, the economic welfare of residents in this region will beenhanced by increasing the tourism tax.
Again, it is important to note that whether increasing the tourism tax enhances regional
economic welfare depends on several factors. The tourism tax would be effective only if all
the above conditions are satisfied.

4. Concluding Remarks

10Under the above assumptions, ordinary economic policies are valid. Increasing transportcapacity and tourism taxes contributes to improving regional economic welfare. In otherwords, if one of these assumptions or conditions is not satisfied, the reverse conclusions may
arise. If consumers’ preference for agricultural goods is small and the publicly managed
transport service sector is profitable, welfare may decrease due to increased transport capacity.
In addition, if consumers’ preference for agricultural goods is small, the publicly managed
transport service sector is profitable, and the total tax revenue decreases, welfare may decrease
due to the increased tourism tax rate.
This study is only the first step, and the potential future topics are vast. The effects ofseasonal, spatial, and temporal distribution policies should be examined using different
frameworks. Additionally, the effects of upper-limit restriction policies on tourists’ inflow are
worth studying.

11

Acknowledgement
I am very grateful to Nicola D. Coniglio, Annalisa Vinella, Raffaele Lagravinece, Akihiko
Yanase, Minoru Kunizaki and Hiroshi Kurata for their helpful comments. This study isfinancially supported by DAIKO FOUNDATION. Remaining errors are my own.

References
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Journal of Travel Research, 61(6), 1327–1341.

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Chart #1
Number of foreign tourists in Japan

35000
30000
25000
20000
15000
10000
5000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023(1-9)0

Source: Japan National Tourism Organization
Chart #2
Exchange Population Rates of Tourist Spots

Source: Nara and Maekawa (2019); data from the World Tourism Organization

14