What Bhutan Can Teach the World About Tourism and Growth

The rise of anti-tourism protests in the 21st century, which reverberated across Spain, Italy, Portugal, and other parts of Europe, indicates how tourism can reach a breaking point. As countries become more integrated and travel becomes easier, the question of whether destination countries are reaching their capacity arises.

While tourism brings forth greater understanding of traditions, physical environment, and intellectual ideas, it may also destroy environments, become commercialized, and exceed a country’s carrying capacity. As policies now orient towards this issue, one country has been consistent. Backed by effective institutions, Bhutan has emerged as a leading example of how deliberate government decision-making can successfully promote both environmental and economic sustainability.

It didn’t all start this way. Prior to the establishment of a hereditary monarchy in 1907, Bhutan was largely decentralized and plagued by civil unrest. Landlocked south of China and north of India, and nestled among the Himalayas, it was also largely isolated. 

Understanding Bhutan’s tourism policies requires an understanding of their core principles.

At the heart of Bhutan’s ethos lies Buddhism, which emphasizes compassion and looks at the natural environment as the “source of all life.” For policymakers, development is not solely economic growth; it encompasses well-being. This has led them to reject the notion of Gross Domestic Product (GDP) in favour of Gross National Happiness (GNP).

These foundational values inform Bhutan’s good governance: during his reign, the fourth King, Jigme Singye Wangchuck, prioritized well-being and environmental protection over profit and deforestation. This commitment to “environmental stewardship” is central to national progress and has been embedded in Bhutan’s laws and policies.

Guided by a philosophy that encapsulates a “High Value, Low Volume” approach aimed at maintaining a rich living culture, Bhutan officially opened its doors to tourism in 1974. The term ‘High Value’ refers to ensuring that visitors are mindful and responsible, that each person contributes significant revenue, and that this income supports quality infrastructure. On the other hand, ‘Low Volume’ involves regulating visitor numbers so they do not exceed the carrying capacity of Bhutan’s environment and infrastructure.

Contrary to modern states’ prioritization of mass tourism for short-term economic gains, Bhutan’s tourism vision aims to promote “authenticity” by exposing visitors to a “well-protected cultural heritage and natural environment”. These take shape in two primary forms: regulation and engagement.

Since 1991, the Royal Government of Bhutan has implemented a Sustainable Development Fee (SDF), a form of tourism tax that charges individuals $100 USD per person per night, with reduced fees for Indian tourists. However, because Indians constitute roughly 70 per cent of annual visitors, this policy may prove ineffective or, in some cases, face criticism for being discriminatory and ‘elitist’. Nevertheless, these funds are allocated to support health and education, preserve culture, tradition, heritage, and the environment, and improve infrastructure. For example, the Trans Bhutan Trail, which reopened in 2022 and runs from east to west, allows tourists to engage with Bhutan’s natural landscape and interact with local communities. In this regard, the government collects fees and reinvests them in the country to fund public goods that contribute to long-term sustainability.

In addition to the SDF, Bhutan has implemented direct regulations, including a tourist cap of 300,000 per year, explicit protection of 60 per cent of forests from deforestation, and strict permits for national parks that help protect endangered species such as snow leopards, tigers, and red pandas.

According to local guide Dorji Bahdi, “You don’t really know a place until you’ve stayed in a local’s home.” Bhutan’s vision of ‘High Value’ tourism focuses on engagement and quality experience, something that homestays embody. Facilitated by digital platforms that streamline bookings, these homestays are easily accessible. Not only do they provide additional income for rural communities, but they also offer visitors an authentic immersion in Bhutan’s historically rich lifestyle and tradition, making them a clear win-win-win for hosts, guests, and the state alike.

Overall, these policies help promote a deeper understanding between locals and foreigners, enhancing mutual appreciation of culture and lifestyle and strengthening relationships without sacrificing natural habitats. Bhutan’s case is a unique and exemplary one, standing out in an industry where so many other countries have struggled.

It is essentially because conservation is a “constitutional mandate” that sustainable tourism is treated not just as an afterthought. Instead, it is a way of life that seeks, through meaningful exchange and mutual growth, to actively transform the nation as a whole. Rather than relying on single indicators such as GDP, Bhutan’s GNH-based development policy relies on state transparency regarding the progress of these policies and the allocation of fees, which ensures government accountability and follow-through.

The efficacy of these strategies may inspire other tourist hotspots, such as Spain or Japan. Specifically, a strict cap on the number of visitors, a gradual shift toward slow and immersive travel, and transparency regarding the use of tax revenues could be fruitful in constructing an economy that not only seeks to improve locals’ living conditions in the present but also aims to enhance the resilience of future generations. A focus on improving infrastructure, on the other hand, will facilitate the dispersion of individuals from highly concentrated areas while benefiting locals in the long term.

Nevertheless, there is no one-size-fits-all solution, especially because countries vary in available resources and geopolitical conditions. The reason Bhutan was able to succeed may have been largely due to its small land area and small population—advantages that countries like Spain and Japan do not possess.

Furthermore, tourists will continue to flock to hotspots such as Barcelona or Tokyo simply because of their inherent popularity. Interestingly, the share of tourism in Bhutan’s GDP is much higher than in developed countries, highlighting how small economies, through effective governance, can reap the benefits of tourism while preserving the well-being of local citizens. Hence, the challenge remains in identifying the intersection among economic growth, governance, culture, and the environment, key determinants of sustainable development.

People today may think of the future as a distant place they will never live to see. However, within Bhutan’s ethos, individuals also have a responsibility to uphold their ‘obligation’ to future generations, ensuring that “no one is left behind”.

Edited by Idan Miller

Featured image: DochuLa Pass in Bhutan. Photo by Göran Höglund (Kartläsarn) is licensed under CC BY 2.0.