Conference Agenda

Developing alternative economic sectors is widely promoted as a strategy to reduce pressure on natural resources while improving livelihoods, yet opportunities to rigorously evaluate whether diversification reduces harvesting pressure are rare. We provide such an evaluation using linked data on tourism, artisanal fisheries, prices, and fisher occupations from the Galapagos Islands. We develop a resource-economic model in which both resource prices and the opportunity cost of harvesting depend on the development of a non-resource sector, namely tourism. The model predicts that harvesting declines only when wages in the alternative sector rise more rapidly than resource profitability; otherwise aggregate effort is maintained and reallocated across resources toward those with higher marginal profitability. Calibrating the model using observed wage and price responses indicates that diversification should primarily induce within-sector reallocation rather than exit from harvesting. We test these predictions using the collapse of tourism during the Covid-19 lockdown as a negative demand shock. Tourism substantially raises fishers’ revenue by increasing local prices, yet the decline in tourism did not reduce aggregate landings. Instead, effort shifted toward more profitable fisheries, moving extraction away from endemic and biologically vulnerable species toward healthier stocks. Dual-sector fishers expanded effort while single-sector fishers reduced it. Diversification toward a non-resource sector can thus generate income gains while inducing environmental losses by reshaping harvesting incentives rather than reducing extraction.