The Impacts of Digital Nomads: Examining the Positive and Negative Effects - 2/6
The Changing Landscape of Host Communities
In the first part of this series, we talked about who digital nomads (DNs) are and what their motivations are for this lifestyle. Now we'll take a closer look at the positive and negative impacts DNs cause in the destinations they visit.
Many governments are making efforts to attract these location-independent citizens to their countries and allow them to easily stay for longer periods of time than would be possible with the traditional tourist visa. According to Bruns' database, there are over 40 countries that offer (or are in the process of offering) visas for digital nomads.
But what's in it for the countries and the host communities?
When we look at the impact of digital nomadism on host communities, a good question to ask is one from researcher Young:
‘‘Under what circumstances can a new industry (or in this case type of tourism and types of visitors) that will bring about such fundamental changes be introduced and survive in a host country?’’
Whether positive or negative, the changes that DNs bring to host communities are indeed fundamental. We can see that cities are already changing because of DNs, trying to adapt to this growing segment. From coworking spaces to work-friendly cafes and leisure activities like yoga and meditation centers - all things that may not have been relevant to the local community before.
The evolution of DN offerings in cities will inevitably go through some changes and cycles. The standard in the tourism industry is Butler's ''Cycle of Evolution,'' in which he presented the stages that destinations go through as the number of tourists continues to grow.
Just change ''number of tourists'' to ''number of digital nomads.'' I assume that most destinations are still in the exploration and development phase of their DN strategies. We are still too early in the development of proper infrastructure and strategies to speak of consolidation of the DN field.
Although some destinations (Lisbon, Bali, Mexico City) may already be moving into the critical range and it will be interesting to see how they will handle the new growth of this segment.
Therefore, it is important to study and consider the positive and negative impacts in the early exploration phases and implement appropriate strategies accordingly.
Let us now turn to the positive and negative impacts of DNs, starting with the former.
Positive impacts
With their relatively high incomes and long lengths of stay, DNs can directly boost local economies, often in regions that have experienced economic slowdowns or brain drain.
These regions, particularly in rural areas and southeastern Europe, have seen young and educated people leave to seek better opportunities elsewhere. The arrival of DNs reverses this trend by bringing new, often significant wealth and potentially contributing to a ''brain gain'' in these communities.
As we mentioned in the last post, the median salary of a DN is $85,000 per year and they spend an average of 35% of their income locally.
The growth of the local economy is driven by DNs' spending on a wide range of services such as housing, food, transportation, and entertainment. It's worth noting that this spending goes beyond traditional tourism, as DNs' stays are longer.
Not only that, DNs can significantly help solve one of the biggest challenges for tourism destinations - seasonality. Destinations could strategically attract DNs to visit in the off-season by offering incentives such as lower-cost monthly stays or events and festivals geared toward DNs.
This creates an environment for sustained economic growth, as opposed to the seasonal or temporary stimulus provided by short-term tourism. These economic benefits accrue to various sectors of the local economy, from small businesses to local artisans, and help create new jobs.
Increased tax revenues (if properly collected) are another positive aspect that local authorities can invest in infrastructure or public services, leading to the overall development of the community. The main objective of the Portuguese government in attracting remote workers was to receive foreign income to fill the gap in the national treasury.
In addition to the financial benefits, the cultural interaction that DNs bring to local communities could also be of great benefit. Because these people come from different countries and cultures, they bring different ideas, skills, and experiences. This cultural enrichment broadens the worldview of both DNs and the locals with whom they interact.
I think it's especially valuable for young people in rural areas, who can get an up-close look at potential lifestyles and careers, rather than just a superficial look on the Internet. DNs could make a big impact in such communities while having a culturally fulfilling experience.
It promotes understanding, tolerance, and global connectivity. It also allows DNs to share their skills and knowledge with locals, leading to a transfer of know-how and skills. This dynamic can stimulate local entrepreneurship and innovation, leading to the creation of new businesses and services. A good example of this is Gran Canaria, a DN hotspot, where DNs are ''not seen as distinct "outsiders" but part of the fabric of the destination community.''
A concrete project that puts this into practice is called Neulandia. Its main goal is to find a rural town that has a specific problem - from an old factory building that they would like to put to new use, to the lack of cultural life in the town. Neulandia then proposes a solution to the municipalities so that they can bring in between 10 to 20 DNs to live in the town for about 6 months and work on the idea of how to solve the town's problems.
It may not be obvious at first glance, but the influence of DNs also extends to environmental sustainability. A key feature of their lifestyle is the lack of a fixed workplace, which eliminates the need for a daily commute - they typically do not use a car. This reduction in daily commuting results in leads to fewer carbon emissions, contributing to environmental conservation.
Despite frequent air travel, DNs tend to have a smaller carbon footprint than traditional tourists due to their slower travel pace and reliance on public transportation. It is estimated that they produce 75% fewer CO2 emissions than the average American.
DNs are often entrepreneurial and innovative individuals. They typically prioritize environmental and social concerns when developing business ideas, demonstrating a strong commitment to sustainability and social responsibility. This attitude can influence local businesses and policies, leading to more sustainable and equitable practices in host communities.
My research has found that the DN lifestyle can bring significant benefits to both the people who adopt it and the communities they temporarily visit. Their influence covers a broad spectrum and impacts various aspects of society, the economy, and the environment, contributing significantly to the vibrancy, diversity, and sustainability of host communities.
But it's not all nice and fuzzy. There are also negative impacts to consider and, interestingly, most positive impacts can also be turned into negative ones.
Negative impacts
In "The Golden Hordes," Turner and Ash discuss how international tourism, especially in developing countries, often has unintended negative consequences. They have coined the term "pleasure periphery" to describe places that have become major tourist destinations, often to their detriment. These places, Turner and Ash argue, are often exploited and subject to various forms of degradation, including environmental damage and cultural erosion. The book is a critique of mass tourism and its impact on local culture, economy, and environment.
They say: ''On the one hand, tourists are a valuable source of foreign exchange, but on the other, their arrival leads to the systematic destruction of everything that is beautiful in the world.''
We are not there yet with the DNs' impact (and I hope we won’t be), but it's a good warning to keep in mind. At the moment, perhaps the biggest downside of the DN lifestyle, the one most written about in the media, is the gentrification effect it is having on local housing markets. It seemed as if DNs were suddenly being blamed for the housing crisis in major cities.
DNs, as well as tourists, often from wealthier countries, can drive up rents and property prices, forcing locals out of the market and changing the socioeconomic composition of the neighborhood.
This phenomenon, which Airbnb and other short-term rental platforms have sparked in major cities, is creating an economic cycle that excludes low-income locals from their own communities.
A corresponding shift in the housing market can be observed in the increased demand for long-term accommodation options. The category of long-term stays on Airbnb (+28 days) has nearly doubled since 2019, indicating a shift away from short-term tourism to longer stays.
This trend was further supported by Parsons, who noted that nearly half of Airbnb bookings are for stays of a week or more, with one in five bookings exceeding 28 days.
Research in Cluj, Romania, illustrates this dilemma as the city experiences "siliconization" due to the influx of Western DNs and tech companies. Local Roma communities have been displaced, highlighting the social justice implications of this trend.
Another key issue is the tendency of DNs to exploit geo-arbitrage, benefiting from the lower cost of living in one location while earning an income typical of a higher-cost location. This trend improves the quality of life for DNs but can drive up prices for residents and exacerbate economic inequalities.
While DNs contribute to cultural diversity, as noted above, the same influx can also lead to cultural tensions. In Portugal, for example, local resistance to the influx of foreign DNs is already visible in the form of protests and graffiti. A similar situation developed in Mexico during the pandemic, when the country became a DN hotspot due to its open borders and laid-back Covid-19 response. Some of the local men also complain that they face more challenges in finding a partner, as DNs are often better off financially and can therefore be more attractive to local women - as a result, they push local men out of the dating market.
While the environmental aspect is on the plus side, it's worth noting that some DNs travel internationally frequently, move weekly, and contribute to global carbon emissions. Further research would be needed here to properly assess the environmental impact of DNs and perhaps compare these results with those of regular tourists.
When we discuss the potential downsides of the DN lifestyle, it becomes clear how important further research and proactive policy decisions are to effectively manage this trend. Clearly, the influx of DNs into a community presents challenges, as is the case with any novelty that invades a host community. Especially those that are already sensitive and at critical capacity.
Attention and a call for the creation of policies and mechanisms to balance supporting the lifestyle of DNs with protecting the interests of the host community is needed.
The way forward
As the trend toward digital nomadism continues to grow, it is important to further explore these positive implications. It is equally important to explore how we can further support this emerging lifestyle and mitigate potential challenges that may arise. Consideration must be given to policies, infrastructure development, and cultural initiatives that allow DNs to seamlessly integrate into their host communities while minimizing negative impacts.
The idea of "giving back" to the host community is particularly intriguing. It is important to explore the ways in which DNs are willing and able to contribute positively to their host communities, offsetting any potential negative impacts. This concept embodies a form of reciprocity that goes beyond economic transactions and extends to social and cultural exchanges.
The future of work is here, and with it comes the responsibility to ensure that it unfolds in ways that uplift individuals and communities alike and foster a sense of unity, understanding, and shared prosperity.
Let us ensure that the destinations that attract DNs do not become the new ''pleasure peripheries.''
See you next week when I'll expand on the discussion of gentrification and how it relates to digital nomadism.
Sources
A supplier side view of digital nomadism: The case of destination Gran Canaria
Digital nomads in siliconising Cluj: Material and allegorical double dispossession
Europe seeks to tackle ‘brain drain’ of young people from hard-hit regions
Everyone wants to be a digital nomad. Here’s how to do it ethically
Global Gentrification—Are Digital Nomads Ruining Everything? (Part 1 of 4)
Pandemics and geoarbitrage: digital nomadism before and after COVID-19
The golden hordes: International tourism and the pleasure periphery
"The idea of "giving back" to the host community is particularly intriguing. It is important to explore the ways in which DNs are willing and able to contribute positively to their host communities, offsetting any potential negative impacts. This concept embodies a form of reciprocity that goes beyond economic transactions and extends to social and cultural exchanges."
Sure, we just should not forget that for systemic solutions, the nomads themselves will probably not be enough from an overall perspective. There are nomads-emitting and nomads-receiving countries with their tax flows, differences in living standards, etc. Do the emitting countries owe anything to the receiving countries, since, for instance, "earning an income typical of a higher-cost location" happens in the former while the "benefiting from the lower cost of living" takes place in the latter?