If tourism raises income in a region but waste and congestion increase greatly, how should net welfare be measured?

Correct answer: By deducting environmental and congestion costs from income gains

The governing idea is net social benefit: welfare depends on benefits as well as costs imposed on residents and the environment. Tourism may increase sales, wages, tax revenue, and measured GDP, but waste disposal, traffic delays, noise, pollution, and loss of local amenity reduce welfare. A proper assessment therefore compares the income gains with these external costs and deducts them where possible. Options A–C measure only one benefit.