Modeling the Impact of Australia’s Mining Boom on Tourism: A Classic Case of Dutch Disease

Abstract

The Australia tourism industry faces challenges associated with a boom in minerals exports. The erosion of the price competitiveness of destination Australia associated with exchange rate appreciation has adversely affected inbound and domestic tourism while generating increased outbound tourism flows. The mining boom has also driven up labor costs, making it difficult for tourism stakeholders in mining areas to recruit and retain staff. This article highlights the importance of both tourism and mining to Australia, and the changes that are taking place in each sector. It employs a computable general equilibrium model to estimate the economic effects of the boom on Australia’s tourism industry and tourism market segments. A micro-level analysis, supplemented by input from key tourism organizations, then highlights the extent and range of tourism impacts associated with the boom, and the strategy implications for different groups of tourism stakeholders.