The Cost—Benefit Model as Applied to Tourism Development in the State of South Carolina,USA

Abstract

Local governments in the USA offer a variety of economic incentives to attract industry. In 1995, the US state of South Carolina mandated that a cost–benefit analysis be conducted before one type of incentive, the ‘fee-in-lieu of property tax’, was offered. This paper reviews and analyses the South Carolina model. The authors then develop a modified model that incorporates the features which are unique to the tourism industry. They conclude that the method described in the paper is readily transferable to any state or local government and recommend that these governments develop a similar approach using their specific costs and benefits in order to make rational decisions when offering incentives.