Final answer:
Feasibility studies help lenders evaluate whether developers have sufficient equity for tourism development projects by examining factors that influence economic development, project viability, local community engagement, and environmental impacts, exemplified by case studies like those in Sumatra and the Maldives.
Step-by-step explanation:
Feasibility studies play a critical role in the assessment of tourism development projects by helping lenders determine if developers and investors have sufficient equity to invest. These studies evaluate various factors that can encourage or hinder economic development, including the availability of savings for investment, infrastructure needs, and potential ecological impacts, such as deforestation and multiplier leakage in the local economy. A feasibility study would also consider the success of past interventions in similar settings, adhering to a counterfactual design to assess effectiveness.
Case studies, such as the one conducted by Linkie et al. (2008) in Sumatra's Kerinci Seblat National Park, emphasize the importance of considering both socio-economic and biophysical covariates in the assessment process. This ensures that the economic transition outcomes are evaluated against the internal challenges faced by nations during such projects. Furthermore, the tourism industry's attraction factors, based on examples like Melanesia and the Maldives, also come into play, weighing environmental concerns and economic opportunities within the feasibility study.
The investment portfolio for tourism-related developments must be diversified to ensure economic success, accounting for the need for local community buy-in and addressing issues such as staff retention and training, which are fundamental for project stability and success. Ultimately, lenders look for a positive balance between potential returns and the risks associated with these factors.