Does rural tourism benefit from agriculture?

Rural tourism enterprises have been developed in rural areas as an alternative to agriculture. The inter-relationships between tourism and agriculture have been discussed at the macrolevel in the relevant literature but not at the firm level. The objective of this paper is to investigate if and how rural tourism enterprises on working farms differ from such enterprises without agricultural activity. The analysis is based on in-person surveys of 197 operators of rural accommodations in Israel. It was found that the farm activities on a working farm are of no value to the visitors. However, on the production side, farmers seem to benefit from the existence of farm activities by using labor more efficiently. In addition, we found that a concentration of firms and attractions creates positive externalities that benefit the single firm.