Environmental management at nature-based tourism destinations includes a private and a public component. The former refers to voluntary environmental protection activities carried out by individual (and groups of) tourism operators. These activities are motivated by the dependence of the product provided by the tourism industry on the quality of the natural environment. Public sector management, on the other hand, refers to the environmental regulations imposed on tourism businesses. The overall environmental management structure has a dual effect on the competitiveness of the tourism industry at nature-based tourism destinations. While the industry may benefit from environmental management through demand stimulation, the tourism businesses also incur the associated management related costs. In this paper, the overall effect of environmental management on competitiveness, as measured by aggregate tourism industry profitability, is estimated in a case study of Tropical North Queensland.