The relationships between heritage, tourism and community are complex and inter-related. Although the heritage system was initially proposed and set up for conservation, the enthusiasm for heritage conservation derives from its potential as a resource providing economic benefits, such as through the tourism industry. Although tourism development brings incentives to the heritage owners and other stakeholders to preserve the heritage, it also changes the nature and universal value of the heritage. In addition, neither the conservation of heritage nor heritage tourism necessarily brings benefits to the community. Yet, the policies are often formulated from one particular approach and lack a systematic and dynamic view and often lead to counter-intuitive results in the long run. This study attempts to develop a holistic system dynamics model of the Xidi world heritage village and analyse the interaction of the social, economic and heritage sectors to examine policies to achieve the goals of development and conservation. The study shows that conservation alone is not enough, policies which attempt to target the needs of the local community, including providing economic opportunities, can be a better choice if the development is carefully planned and effectively controlled to avoid the over-consumption of resources.

This paper presents a tourism destination development sequence for Dali, Yunnan Province, China. The development of Dali highlights limits in the power of the local government as the lead stakeholder, which took a top-down approach to economic development. The government sought to address increasing control of the tourism sector by external tour operators through increasing its own control of local tourism attractions. This approach has been only partially successful in reducing distortions in the tourism channel. The origins of these distortions are described and analysed. A number of additional responses are suggested to improve the local benefits obtained from the inflow of tourists to this new destination area including development of a more market oriented competitive strategy that seeks to co-opt stakeholders into collaborative activities.