I reackon it accounts for a good chunk of the thai economy is supported by this whether people like it or not.
take it away and it leaves the question, how do you replace this money and from where?
it amounts to a large sum of foriegne currency entering/ or being taken to Thailand (MONEY COMING INTO A COUNTRY IS ALWAYS BETTER THAN MONEY BEING TAKEN OUT OF A COUNTRY FOR ANY COUNTRY) this money enters the economy in various ways from air port tax and revenue, accomadation, food and drink outlets, shopping, tours, taxis, buses,hoping in a tuk tuk, riding an elephant to beach chair hire even to visiting a temple and donating money, in other words whenever you spend money there you are contributing towards that countrys economy, and this is all before mentioning about anyone that will then go onto pay for sex? (anyone going in for sex is going to be spending far more money on other things, like the above)
So hyperthetically speaking for a minute lets ban all the people from entering Thailand that end up paying for sex (i think we can say this is a large number if we are being honest) and think of how many different people and industries it effects and that money is now no longer entering the Thai economy.
lets assume all these people stop flying to Thailand what do you think is going to be the knock on effect to the price the air fare or frequency of flights (do all these extra air hostesses and pilots now loose there job? would you personnally like to help keep them employed by paying at least double or more for your airfare or are you secretly happy now this sector of people actually help subsidise the price of your ticket )
people of Thailand being girls/ lady boys or whatever don't do this just because it is fun (sure some may even have a good time along the way I guess) they do it to support their families often through no other option as a way out of poverty and of their own free will, they are not doing this activity for the same reason as a westerner may do it and they are not sleeping around for free like many western girls going out getting drunk and sleeping with multiple partners, have a look at the stats for single mothers in your own country like the UK, Europe, USA, Australia who have gone out and got themselves knocked up voluntarily and claim welfare at the tax payers expense, (apprently sleeping around for free is ok, getting paid for it is not? can i ask do you work for free and if not why not? why are unions always after better conditions or god forbid a pay rise? do we not prostitute our selves out everytime we go to work? ) there for as far as bringing money into the country it is a strong source of income and can only be good for the economy!
you may not like or want to agree with this however your question is asking about the effects on the ECONOMY and it obviously contributes a lot to it !
What effects does it have on society is a complety different question which I think is maybe what you ment to ask ?