The Greening Role of Tour Operators Javier Lozano 1 • Italo Arbulu ´ 1 • Javier Rey-Maquieira 1 Received: 15 December 2014 / Accepted: 27 July 2015 Ó Springer Science+Business Media New York 2015 Abstract This paper shows that the tour operators (TOs) can play a coordinating role in the adoption of environ- mental management upstream the tourism supply chain. This is done using a dynamic model to analyze the envi- ronmental management adoption by hotels in a tourism destination induced by a TO. The TO can create incentives to greening hotels’ management through the sharing of an environmental price premium. We show that the extent of green management adoption depends on interest rate, the willingness to pay for environmental quality, and hotels’ organizational inertia. We also show how the financial yields from green management are shared between TOs and hotels. Finally, we consider a destination manager that subsidizes hotels’ green management. If the destination manager does not take the greening role of TOs into account, she could mistake the true trade-off that she faces between the destination’s economic and environmental outcomes for the win–win setting that characterizes the general problem. Keywords Sustainable tourism  Green management  Tour operators  Environmental policy  Dynamic modeling  Optimal control Introduction Tourism firms experience several coordination problems that result in the inefficient use of tourism resources. One kind of coordination problem, rather specific of tourism destinations, stems from the property fragmentation of the privately supplied part of the tourism product that this way becomes an anticommon (Candela et al. 2008). Our focus is rather on a more classical source of lack of coordination resulting from the use by tourism companies of environmental common pool resources (CPR). Thus, certain parts of the tourism product are non-excludable but subtractable; as a consequence, a tourism firm imposes external costs on the rest of the sector when using CPR, which results in a socially inefficient management (Ostrom et al. 1999; Blanco et al. 2009a, b; Briassoulis 2002; Cal- veras and Vera-Herna ´ndez 2005). As explained by Candela and Figini (2012), this coor- dination in tourism destinations can be provided either endogenously by the market (for instance, by tour opera- tors) or exogenously by a destination manager (a public authority or a private association of firms). It is often argued that government intervention is the best way to guarantee an efficient use of environmental CPR (Forsyth 1997; Tapper 2001; Razumova et al. 2009). However, compared to manufacturing, environmental regulation has neglected the tourism sectors (Cespedes-Lorente et al. 2003). This shortcoming may be mitigated by firms having enough private incentives to voluntarily improve their environmental management since a positive relationship between environmental management and financial perfor- mance is documented in several studies (Blanco et al. 2009b; Chava 2014; A ´ lvarez et al. 2001). Non-profit organizations may also help providing reputational capital to overcome the information asymmetries between tourism & Javier Lozano javier.lozano@uib.es Italo Arbulu ´ iarbulu@malaga-webb.com Javier Rey-Maquieira javier.rey@uib.es 1 Department of Applied Economics, University of the Balearic Islands, Cra. deValldemossa, km 7.5, 07122 Palma de Mallorca, Baleares, Spain 123 Environmental Management DOI 10.1007/s00267-015-0587-9