Pii: S0921-8009(00)00190-7

Tourism is viewed in many industrial nations as an environmentally friendly way to revitalize distressed rural economies and communities. In the forest regions of Dalarna and interior Maine, hopes are pinned on nature-based tourism, with the presumption that natural capital is underutilized. This paper explores the potential and pitfalls of nature tourism as a basis for sustainable rural development in regions where most land is held privately but quasi-open access for recreation has been either a right (Dalarna) or a customary entitlement (Maine). The paper applies theories of common pool resources and impure public goods to show that both property regimes are mal-adapted for sustainable nature tourism. Limited exclusion combined with rivalness in land uses mis-aligns incentives facing landowners, tourists, and recreation businesses. Short-term effects include congestion, reduced economic opportunity, and depressed production of non-recreational goods. Longer-term effects include environmental degradation and weak incentives for value-added investment. Tourism development is further impeded by a scale mis-match between small ownerships and large efficient recreation management units. The analysis suggests that sustainable nature tourism faces four land use challenges. © 2000 Elsevier Science B.V. All rights reserved.