The All-Inclusive Deal
A foreign company proposes a 200-room all-inclusive resort on 30 acres of coastal land. It asks for a 15-year property tax holiday and duty-free imports of building materials. The company says construction will create 300 temporary jobs and the resort will employ 150 people. About 60 of the permanent jobs would be managers brought from abroad. Because guests would eat and drink inside the resort, local restaurants, taxi drivers and straw vendors expect little extra business. The resort would draw water from the island's supply and generate waste that the local dump cannot process. The government wants foreign exchange and employment, but local fishers fear sewage will damage the reef. The island's unemployment rate is 14 per cent, and many young people leave for Nassau. The government must negotiate the terms or reject the project.
1. Compare the benefits and costs, and explain who gains and who loses.
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Benefits include 300 temporary construction jobs, 150 permanent jobs, foreign exchange, and tax revenue after the holiday. Costs include the 15-year tax holiday, duty-free imports, water use, waste the dump cannot process, and possible reef damage from sewage. Only 90 of the 150 permanent jobs would go to locals if 60 managers are imported, so the local employment gain is smaller than advertised. All-inclusive resorts can create leakage: guests spend inside the resort, so local restaurants, taxi drivers and straw vendors gain little. The gains are concentrated among the developer, construction workers, and the 90 local employees; the losses fall on fishers, the local dump, and taxpayers who forgo revenue. The reef is a common resource, so sewage risk is an externality the developer does not pay for unless required. A strong answer separates direct, indirect and induced effects and notes that temporary jobs are not a long-term development benefit.
2. Recommend conditions for approval or rejection.
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Recommend conditional approval, because 150 jobs matter in a 14 per cent unemployment economy, but only if the externalities are internalised. Conditions: a sewage treatment plant with independent monitoring and a bond; a guarantee that at least 100 of the 150 permanent jobs go to Bahamians, with a training plan for management roles; a smaller tax holiday, for example five years rather than 15; no duty-free import of goods available locally; a local procurement rule for food and services; and a water audit with a cap. These conditions address the reef, the leakage, the fiscal cost and the water supply. If the developer refuses the sewage plant or local hiring, reject the project, because the reef supports the fishing economy and the beach that tourism depends on. The key judgement is that jobs are not a reason to accept irreversible environmental damage.