More Tourism, More Crime: Evidence from Croatia

For all its benefits, mainly through contributing to economic growth, tourism can cause certain negative externalities, increased crime incidence being one of them. More crime leads to immediate costs to residents, tourists and the host country, but can also imperil the destination's image and fend off tourists in the future. We study the impact of tourism on crime in Croatia by estimating the elasticity of property crime with respect to tourist arrivals on monthly panel data at the county level over the period 1998-2016. We find robust evidence that tourism increases property crime. The elasticity varies spatially and by type of property crime, being higher in coastal than in continental counties, and higher for theft than for larceny. The estimates are used for counter-factual calculations which show that, had tourism been the only factor affecting property crime, the number of crimes would have evolved over 2006-2016 to a much higher level than it actually has. The elasticities are large enough that, absent sufficiently strong countervailing factors, even a moderately paced tourism growth can bring a sizeable increase in property crime over a decade. From the policy perspective, it is important to understand the countervailing factors and to consider the costs of tourism-induced crime in social cost-benefit assessments of tourism growth.