Does Tourism Eco-Certification Pay? Costa Rica's Blue Flag Program

According to advocates, eco-certification can stem environmental damages from tourism in developing countries. Yet we know little about tourism operators’ economic incentives to get certified. To help fill that gap, we use detailed panel data to analyze the Blue Flag beach certification program in Costa Rica where nature-based tourism has caused significant environmental damage. We use new hotel investment to proxy for private benefits, and fixed effects and propensity score matching to control for self-selection bias. We find that Blue Flag certification spurs significant new hotel investment, particularly in luxury hotels and in economically advantaged communities.