INTRODUCTION

What is Social Cost Benefit Analysis?

Cost-benefit analysis is a process for evaluating the merits of a particular project or

course of action in a systematic and rigorous way. Social cost-benefit analysis refers to
cases where the project has a broad impact across society {and, as such, is usually carried
out by the government.
While the cost and benefits may relate to goods and services that have a simple
and transparent measure in a convenient unit (e.g. their price in money), this is frequently
not so, especially in the social case. It should therefore be emphasized that the costs and
benefits considered by (social) `cost-benefit' analysis are not limited to easily quantifiable
changes in material goods, but should be construed in their widest sense, measuring
changes in individual `utility' and total `social welfare' (though economists frequently ex-
-press those measures in money-metric terms).
In its essence cost-benefit analysis is extremely, indeed trivially, simple:
evaluate costs and benefits for the project under consideration and proceed with it if, and
only if, benefits match or exceed the costs.

There are a variety of factors:

• Benefits and costs may accrue to different sets of people. If this is so we need
someway to aggregate and compare different benefits and costs across people.
• Benefits and costs may occur at different points in time. In this case we need to
compare the value of outcomes at different points in time.
• Benefits and costs may relate to different types of goods and it
may be difficult to compare their relative values. This usually occurs
when one of the goods does not have an obvious and agreed upon
price. For example, we may be spending standard capital goods today
in order to obtain environmental benefits tomorrow.
• Benefits and costs may be uncertain.
• Benefits and costs may be difficult to calculate and, as a result, there may
be widely differing views about their sizes. One might think this could be
subsumed under uncertainty, however the two points are rather different: two
people agreeing that an outcome follows some probability distribution is
different from them arguing about its mean and variance.

Usually, in real-world cases the dominant issue is usually the last one: the basic job of
calculating estimates for the project's costs and benefits. This especially true in the
`social' case where the projects under consideration may involve costs and benefits that
very difficult to quantify { what is the benefit of the national security derived from
military spending, how large are the benefits from education, etc. Necessarily this
quantification only makes sense on a case-by-case basis. Here we are concerned with
general principles and we therefore focus only on the preceding four items and look at
how they can be incorporated into the analysis in a general way.

(Source: Cost Benefit Analysis in Nutshell by RUFUS POLLOCK, EMMANUEL COLLEGE,

UNIVERSITY OF CAMBRIDGE)

TOURISM

“Tourism” is the totality of the relationship and phenomenon arising from travel and stay
strangers. The stay does not imply the establishment of a residence and connected with
remunerated activity.

IMPORTANCE OF TOURISM

In creating better appreciation of other people’s ways of the life and institution, tourism
may create goodwill for a country. Each year many tourist travel to participate in
particular events ranging from congress to corona tings; their visits also afford
opportunities to improve co-operation as well as project the correct image of a country to
the out side world.

Politics, society, education, and culture thus often provide motivations for tourist to travel
away from home, they influence tourism and tourism in turn has an influence on them.
These factors also help explain participation in tourism generally as we have seen. An
evaluation of the significance of tourism may be extending to such aspects as organized
sport and religion.

The main economic significance of tourism-that money earned in places of normal

residence is spent in places visited-is common to all tourism, whether domestic or
international. Each year vast sums are transferred from the economy from whom it is
earned, to economies in receiving areas where they provide a source of income, a means
of livelihood, and amenities for the resident population.

The outstanding economic effect of tourism lies in the purchasing to spend at a much
bigger rate than when they are at home. The flow of money generated by tourist
expenditure finds its way into the overall economy of the tourist destination, as the
money is turned over and re-spent. But international tourist expenditure introduces an
additional aspect of economic significance, as countries, which have separate political
and economic entities, have to balance their transactions with the rest of the world.

International tourism, therefore, enters into the balance of payments accounts of

individual countries and ease of major significance in international trade. For countries,
which generate tourist traffic, it represents an import, in much the same way, as the
import of merchandise. Globally tourism countries are a major item in world trade, which
has shown a much faster rate of growth in recent years than trade in goods.
Tourism is evaluated mainly in terms of its economic significance, but reference is made
also to its role as source of other, less quantifiable, benefits and to some of the problems
which tourism presents to individual destinations.

When traveling away from home, tourists come in contact with places they visit and with
their inhabitance, and so social exchanges take place. Their presence and their social
background affect the social structure and mode of life at the destination. Tourists are in
turn affected by the experiences and often carry back home with them new habits and
new outlook on life.

Tourism has an educational significance. In the wider sense it has the altogether
beneficial effect which contact between people of different races and nationalities can
bring about. In a narrow sense much tourist activity takes the form of study trips and
attendance at courses and conferences with specified educational aims in view.
Tourism is often accompanied by cultural exchange and by cultural enrichment of those
who travel as well as those at the receiving end. The cultural factors that may attract
tourists to a particular destination are architecture, historical monuments and birthplaces
of famous people. These are some of the places most visited by the tourists. Festivals and
exhibition rely heavily to visitor traffic as their audience.

Tourism can be classified into:

a. Tourists visit places for recreational purposes. Such tourists spots are usually hill
stations, beaches etc, such tourists like to get away from the daily grind of life and
freshen themselves.
b. CULTURAL TOURISM:
Such type of tourist satisfies the cultural curiosity of the tourist. Such tourist spots
include ancient monuments, places of historical and religious importance etc
c. ADVENTURE/SPORTS:
This type of tourism is very particular with the youth. This type provides people to have
adventure like diving, skiing, rafting etc.

d. HEALTH
Such type of tourism takes people to places of recovery like places with curative
possibilities. E.g.: Hill-Stations, hot springs, spas etc.

e. CONVENTION/EDUCATIONAL:
Tourism such as these is meant for organizing conventions for political, cultural or
academic reasons.

Tourism can also be classified on basis of region:

Domestic:
Domestic tourism is for tourists belonging to their own country and do not require any
papers or documentation for travel.

International:
Such type of tourism refers top traveling to other countries other than their own and with
different political and economic systems. This requires documents such as visa,
passports, etc. to cross the borders.

MODERN TRENDS IN TOURISM

The tourism industry is spread over a land mass of 324 million sq.kms with a population
of around million, with at the rote of about 13 million every year, with 14 major and 20
not languages and 845 dialects, each state habits, religious customs and festivals.
For a foregone visitors to indo, it some how gets on his blood. Love it or not. One can
never ignore India. One visit to India can never satisfy the thirst of screening visitor and
when back in his/her place , desire to get back there.
India is luxurious country. Some places are featureless as some spectacular, the food can
be terrible as it is magnificent and the country defies imagination and cold logic. There is
diversity and get unity.
This is India of the Indus valley civilization; there is also Bharat, the land of Emperor
Bharatha.
It mixture of natural beautiful and diversity of culture attracts a lot of tourism. India is a
country where tourists can enjoy the adventure of Himalayas and the beauty of the sea.
They can explore the desert and jungle of Assam. Behind this terrific beauty, India has a
never-ending culture, religion, temples, church and mosques. Tourism in India is
presently the 3rd largest after gum and jewelers and ready-made garments.

The fettle of India tourism is not very attractive when compared to the world scenario.
The annual foreign tourist arrival in India is 2 million where as the foreign exchange
earnings touched Rs.70 billion. Most of the India tourism thrives on domestic tourism.
Each year, 100 million domestic tourist criss-cross the borders of the states.

The government of India had put forward some strategy on order to improve this sector.
Now the Indian tourism exchange industry has become the 11th largest foreign exchange
earner of the world and during 1997-1998 the estimation made on the earnings of foreign
exchange was Rs. 11032/- crore. Tourism budget has been increased from 100 crore to
160 crore recently and the government has also helped in their organization of visit India
year 1999-2000 which boost up the industry.

The government, in collaboration with Rajasthan tourism had put forward the Palace of
Wheels. It is a luxury train with 14 deluxe saloons. The train covers 8 destinations in 7
days. In February 1995, the Gujarat tourism launched a similar train called Royal Orient
which is centrally air-conditioned.

Tourism industry in India shows a positive trend for the future and with the developments
as well as those, which will occur in future, will without any doubt shoot up the industry.
(Source: a presentation on tourism in Kerala.
http://www.scribd.com/doc/11517707/42/COST-BENEFIT-ANALYSIS)
TOURISM AND SOCIAL COST BENEFIT ANALYSIS

The Major Economic Impacts of Tourism

1. Increasing foreign exchange Earnings

2. Increasing Income

3. increasing employment

There are also some strategies adopted to increase the economic benefits from the
tourism industry. A few of them are:

1. Encouraging import substitution

2. Implementing incentive programs

3. Dealing with multinational companies

SOCIO-CULTURAL IMPACTS OF TOURISM INDUSTRY

Positive Impacts