The international competativeness of an industry is determined by its ability to sell goods and services of higher quality and/or at lower cost than its cometitors. Therefore, issues relating to international competitiveness can be conceptualised through their impact on sustained industry profitability. Using this framework, an index is then applied to the tourism industry using a case study where the industry's international competativeness is laregly dependent on natural environment related attributes and associated regulations. Complying with regulations can reduce competitiveness because of increases in the costs faced by the industry relative to competitors unaffected by regulations. However, it is also shown that compliance with regulations can also enhance the quality of natural environment related attributes-thus increasing industry revenue. Hence the impact of environmental regulations on international competitiveness depends on the outcome of these two opposing forces on industry profitability.