Tourism and economic growth: a panel data analysis for Pacific Island countries

The contribution of tourism to the economic growth of Pacific Island countries (PICs) has achieved significance in the past decade. The shift in the economic policies of the PICs from the late 1980s has been decisively away from import substitution and agriculture to urban-based manufacturing and services sectors. Tourism is the main component of the services sector in the PICs. The contribution of tourism to economic growth in Fiji, Tonga, the Solomon Islands and Papua New Guinea is expected to grow. The authors use panel data for the four PICs to test the long-run relationship between real GDP and real tourism exports. They find support for panel cointegration and the results suggest that a 1% increase in tourism exports increases GDP by 0.72% in the long run and by 0.24% in the short run.

Tourism and poverty relief

This paper examines the issue of how tourism affects poverty in the context of the effects of tourism on an economy as a whole and on particular sectors within it. A framework for analysing the channels through which tourism affects different households is developed, and a computable general equilibrium model of the Brazilian economy is used to examine the economic impact and distributional effects of tourism in Brazil. It is shown that the effects on all income groups are positive. The lowest income households benefit from tourism but by less than some higher income groups. Policies that could redistribute greater shares of the revenue to the poor are considered.

Economic Survey of Latin America and the Caribbean 2009-2010: The distributive impact of public policies

Includes bibliography

Export promotion policies in CARICOM: main issues, effects and implications

Includes bibliography

Foreign direct investment in the Caribbean: Trends, determinants and policies

Includes bibliography.

An assessment of the economic impact of climate change on the Agriculture, Health and Tourism sectors in Saint Lucia

This report analyses the agriculture, health and tourism sectors in Saint Lucia to assess the potential economic impacts of climate change on the sectors. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change in Saint Lucia. It also has the potential to provide essential input for identifying and preparing policies and strategies to help advance the Caribbean subregion closer to solving problems associated with climate change and attaining individual and regional sustainable development goals. Some of the key anticipated impacts of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050. An evaluation of various adaptation strategies for each sector was also undertaken using standard evaluation techniques. The key subsectors in agriculture are expected to have mixed impacts under the A2 and B2 scenarios. Banana, fisheries and root crop outputs are expected to fall with climate change, but tree crop and vegetable production are expected to rise. In aggregate, in every decade up to 2050, these sub-sectors combined are expected to experience a gain under climate change with the highest gains under A2. By 2050, the cumulative gain under A2 is calculated as approximately US$389.35 million and approximately US$310.58 million under B2, which represents 17.93% and 14.30% of the 2008 GDP respectively. This result was unexpected and may well be attributed to the unavailability of annual data that would have informed a more robust assessment. Additionally, costs to the agriculture sector due to tropical cyclones were estimated to be $6.9 million and $6.2 million under the A2 and B2 scenarios, respectively. There are a number of possible adaptation strategies that can be employed by the agriculture sector. The most attractive adaptation options, based on the benefit-cost ratio are: (1) Designing and implementation of holistic water management plans (2) Establishment of systems of food storage and (3) Establishment of early warning systems. Government policy should focus on the development of these adaption options where they are not currently being pursued and strengthen those that have already been initiated, such as the mainstreaming of climate change issues in agricultural policy. The analysis of the health sector placed focus on gastroenteritis, schistosomiasis, ciguatera poisoning, meningococal meningitis, cardiovascular diseases, respiratory diseases and malnutrition. The results obtained for the A2 and B2 scenarios demonstrate the potential for climate change to add a substantial burden to the health system in the future, a factor that will further compound the country’s vulnerability to other anticipated impacts of climate change. Specifically, it was determined that the overall Value of Statistical Lives impacts were higher under the A2 scenario than the B2 scenario. A number of adaptation cost assumptions were employed to determine the damage cost estimates using benefit-cost analysis. The benefit-cost analysis suggests that expenditure on monitoring and information provision would be a highly efficient step in managing climate change and subsequent increases in disease incidence. Various locations in the world have developed forecasting systems for dengue fever and other vector-borne diseases that could be mirrored and implemented. Combining such macro-level policies with inexpensive micro-level behavioural changes may have the potential for pre-empting the re-establishment of dengue fever and other vector-borne epidemic cycles in Saint Lucia. Although temperature has the probability of generating significant excess mortality for cardiovascular and respiratory diseases, the power of temperature to increase mortality largely depends on the education of the population about the harmful effects of increasing temperatures and on the existing incidence of these two diseases. For these diseases it is also suggested that a mix of macro-level efforts and micro-level behavioural changes can be employed to relieve at least part of the threat that climate change poses to human health. The same principle applies for water and food-borne diseases, with the improvement of sanitation infrastructure complementing the strengthening of individual hygiene habits. The results regarding the tourism sector imply that the tourism climatic index was likely to experience a significant downward shift in Saint Lucia under the A2 as well as the B2 scenario, indicative of deterioration in the suitability of the island for tourism. It is estimated that this shift in tourism features could cost Saint Lucia about 5 times the 2009 GDP over a 40-year horizon. In addition to changes in climatic suitability for tourism, climate change is also likely to have important supply-side effects on species, ecosystems and landscapes. Two broad areas are: (1) coral reefs, due to their intimate link to tourism, and, (2) land loss, as most hotels tend to lie along the coastline. The damage related to coral reefs was estimated at US$3.4 billion (3.6 times GDP in 2009) under the A2 scenario and US$1.7 billion (1.6 times GDP in 2009) under the B2 scenario. The damage due to land loss arising from sea level rise was estimated at US$3.5 billion (3.7 times GDP) under the A2 scenario and US$3.2 billion (3.4 times GDP) under the B2 scenario. Given the potential for significant damage to the industry a large number of potential adaptation measures were considered. Out of these a short-list of 9 potential options were selected by applying 10 evaluation criteria. Using benefit-cost analyses 3 options with positive ratios were put forward: (1) increased recommended design speeds for new tourism-related structures; (2) enhanced reef monitoring systems to provide early warning alerts of bleaching events, and, (3) deployment of artificial reefs or other fish-aggregating devices. While these options had positive benefit-cost ratios, other options were also recommended based on their non-tangible benefits. These include the employment of an irrigation network that allows for the recycling of waste water, development of national evacuation and rescue plans, providing retraining for displaced tourism workers and the revision of policies related to financing national tourism offices to accommodate the new climate realities.

An assessment of the economic impact of climate change on the Agriculture, Health and Tourism sectors in Jamaica

This report analyses the agriculture, health and tourism sectors in Jamaica to assess the potential economic impacts of climate change on the sectors. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change on Jamaica. It also has the potential to provide essential input for identifying and preparing policies and strategies to help move the Region closer to solving problems associated with climate change and attaining individual and regional sustainable development goals. Some of the key anticipated manifestations of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050. An evaluation of various adaptation strategies was also undertaken for each sector using standard evaluation techniques. The outcomes from investigating the agriculture sector indicate that for the sugar-cane subsector the harvests under both the A2 and B2 scenarios decrease at first and then increase as the mid-century mark is approached. With respect to the yam subsector the results indicate that the yield of yam will increase from 17.4 to 23.1 tonnes per hectare (33%) under the A2 scenario, and 18.4 to 23.9 (30%) tonnes per hectare under the B2 scenario over the period 2011 to 2050. Similar to the forecasts for yam, the results for escallion suggest that yields will continue to increase to mid-century. Adaptation in the sugar cane sub-sector could involve replanting and irrigation that appear to generate net benefits at the three selected discount rates for the A2 scenario, but only at a discount rate of 1% for the B2 scenario. For yam and escallion, investment in irrigation will earn significant net benefits for both the A2 and B2 scenarios at the three selected rates of discount. It is recommended that if adaptation strategies are part of a package of strategies for improving efficiency and hence enhancing competitiveness, then the yields of each crop can be raised sufficiently to warrant investment in adaptation to climate change. The analysis of the health sector demonstrates the potential for climate change to add a substantial burden to the future health systems in Jamaica, something that that will only compound the country’s vulnerability to other anticipated impacts of climate change. The results clearly show that the incidence of dengue fever will increase if climate change continues unabated, with more cases projected for the A2 scenario than the B2. The models predicted a decrease in the incidence of gastroenteritis and leptospirosis with climate change, indicating that Jamaica will benefit from climate change with a reduction in the number of cases of gastroenteritis and leptospirosis. Due to the long time horizon anticipated for climate change, Jamaica should start implementing adaptation strategies focused on the health sector by promoting an enabling environment, strengthening communities, strengthening the monitoring, surveillance and response systems and integrating adaptation into development plans and actions. Small-island developing states like Jamaica must be proactive in implementing adaptation strategies, which will reduce the risk of climate change. On the global stage the country must continue to agitate for the implementation of the mitigation strategies for developed countries as outlined in the Kyoto protocol. The results regarding the tourism sector suggest that the sector is likely to incur losses due to climate change, the most significant of which is under the A2 scenario. Climatic features, such as temperature and precipitation, will affect the demand for tourism in Jamaica. By 2050 the industry is expected to lose US$ 132.2 million and 106.1 million under the A2 and B2 scenarios, respectively. In addition to changes in the climatic suitability for tourism, climate change is also likely to have important supply-side effects from extreme events and acidification of the ocean. The expected loss from extreme events is projected to be approximately US$ 5.48 billion (A2) and US$ 4.71 billion (B2). Even more devastating is the effect of ocean acidification on the tourism sector. The analysis shows that US$ 7.95 billion (A2) and US$ 7.04 billion is expected to be lost by mid-century. The benefit-cost analysis indicates that most of the adaptation strategies are expected to produce negative net benefits, and it is highly likely that the cost burden would have to be carried by the state. The options that generated positive ratios were: redesigning and retrofitting all relevant tourism facilities, restoring corals and educating the public and developing rescue and evacuation plans. Given the relative importance of tourism to the macroeconomy one possible option is to seek assistance from multilateral funding agencies. It is recommended that the government first undertake a detailed analysis of the vulnerability of each sector and, in particular tourism, to climate change. Further, more realistic socio-economic scenarios should be developed so as to inform future benefit-cost analysis.

An assessment of the economic impact of climate change on the coastal and human settlements, tourism and transport sectors in Barbados

This report analyses the coastal and human settlements, tourism and transport sectors in Barbados to assess the potential economic impact of climate change on the sectors. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change on Barbados. Some of the key anticipated manifestations of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050 (tourism and transport sectors) and 2100 (coastal and human settlements sector). An exploration of various adaptation strategies was also undertaken for each sector using standard evaluation techniques. The analysis has shown that based upon exposed assets and population, SLR can be classified as having the potential to create potential catastrophe in Barbados. The main contributing factor is the concentration of socioeconomic infrastructure along the coastline in vulnerable areas. The A2 and B2 projections have indicated that the number of catastrophes that can be classified as great is likely to be increased for the country. This is based upon the possible effects of the projected unscheduled impacts to the economy both in terms of loss of life and economic infrastructure. These results arise from the A2 and B2 projections, thereby indicating that growth in numbers and losses are largely due to socioeconomic changes over the projection period and hence the need for increased adaptation strategies. A key adaptation measure recommended is for the government of Barbados to begin reducing the infrastructure deficit by continuously investing in protective infrastructure to decrease the country’s vulnerability to changes in the climate. With regard to the tourism sector, it was found that by combining the impacts due to a reduction in tourist arrivals, coral reef loss and SLR, estimated total economic impact of climate change is US $7,648 million (A2 scenario) and US $5,127 million (B2 scenario). An economic analysis of the benefits and costs of several adaptation options was undertaken to determine the cost effectiveness of each one and it was found that four (4) out of nine (9) options had high cost-benefit ratios. It is therefore recommended that the strategies that were most attractive in terms of the cost-benefit ratios be pursued first and these were: (1) enhanced reef monitoring systems to provide early warning alerts of bleaching events; (2) artificial reefs or fish-aggregating devices; (3) development of national adaptation plans (levee, sea wall and boardwalk); (4) revision of policies related to financing carbon neutral tourism; and (5) increasing recommended design wind speeds for new tourism-related structures. The total cost of climate change on international transportation in Barbados aggregated the impacts of changes in temperature and precipitation, new climate policies and SLR. The impact for air transportation ranges from US$10,727 million (B2 scenario) to US$12,279 million (A2 scenario) and for maritime transportation impact estimates range from US$1,992 million (B2 scenario) to US$2,606 million (A2 scenario). For international transportation as a whole, the impact of climate change varies from US$12,719 million under the B2 scenario to US$14,885 million under the A2 scenario. Barbados has the institutions set up to implement adaptive strategies to strengthen the resilience of the existing international transportation system to climate change impacts. Air and sea terminals and facilities can be made more robust, raised, or even relocated as need be, and where critical to safety and mobility, expanded redundant systems may be considered.

An assessment of the economic impact of climate change on the tourism sector in the Bahamas

The Bahamas is at great risk and vulnerability given its geographical features as a low-lying, sea encircled country. If projected sea level rise is reached by 2050, between 10-12% of territory will be lost, especially in coastal zones where the main tourism assets are located. Vulnerability could also be manifested if flight carbon emission taxes are established in the main source markets, representing an economic threat to the tourism sector for the islands. The impact of climate change on main tourism demand variables will cause some losses to the country‟s income and government revenues. This would be acting conjointly with some local threats to tourism assets and trends in future global tourism demand. The second and no less important threat is tropical cyclones, which may be associated with raising sea level. Estimations posited the amount of losses in excess of 2400 million US$ for the four decades under examination. It is to be pointed out that there is still a lack of comparatively accurate data collection and analysis on this subject, a point deserving more attention in order to deepen the understanding of, and to extract better lessons from these extreme events. In the same period, total estimated impacts of progressive climate change are between 17 and 19 billions of B$ with estimated discount rates applied. The Bahamas is a Small Island Developing State with low growth on GHG emissions (second in Latin America), as well as a relative short capacity to lower emissions in the future. The country has a relative delay in the application of renewable energy systems, a solution that, provided documented studies on-site, might turn out to be fundamental in the country‟s efforts to establish mitigation related policies. The Bahamas currently has institutions and organizations that deal with climate change-related issues and an important number of measures and courses of action have been set up by the government. Nevertheless, more coordination among them is needed and should include international institutions. This coordination is essential even for the first steps, i.e. to conduct studies with a bottom-up approach in order to draw more accurate programs on adaptation and mitigation. It is fundamental for tourism to keep track of potential losses in tourist attractions (and to act accordingly), related to correspondent losses in biodiversity, water resources and coastal erosion. Also, actions to fight climate change impacts might improve the islands security standards, quality of living and protect cultural and heritage assets. These elements may definitely shape the future of the country‟s competitiveness as a tourism destination. It is possible and necessary to decide about the options with good cost-benefit ratio and reasonable payback periods, notwithstanding that cost-benefit analysis requires more refined and accurate data to provide precise and locally adapted options.

An assessment of the economic impact of climate change on the tourism sector in Montserrat

This report provides an analysis and evaluation of the likely effects of climate change on the tourism sector in Montserrat. Clayton (2009) identifies three reasons why the Caribbean should be concerned about the potential effects of climate change on tourism: (a) the relatively high dependence on tourism as a source of foreign exchange and employment; (b) the intrinsic vulnerability of small islands and their infrastructure (e.g. hotels and resorts) to sea level rise and extreme climatic events (e.g. hurricanes and floods); and, (c) the high dependence of the regional tourist industry on carbon-based fuels (both to bring tourist to the region as well as to provide support services in the region). The effects of climate change are already being felt on the island. Between 1970 and 2009, there was a rise in the number of relatively hot days experienced on the island. Added to this, there was also a decline in mean precipitation over the period. Besides temperature, there is also the threat of wind speeds. Since the early 20th century, the number of hurricanes passing through the Caribbean has risen from about 5-6 per year to more than 25 in some years of the twenty-first century. In Montserrat, the estimated damage from four windstorms (including hurricanes) affecting the island was US$260 million or almost five times 2009 gross domestic product (GDP). Climate change is also likely to significantly affect coral reefs. Hoegh-Guldberg (2007) estimates that should current concentrations of carbon dioxide in the Earth’s atmosphere rise from 380ppm to 560ppm, decreases in coral calcification and growth by 40% are likely. The report attempted to quantify the likely effects of the changes in the climatic factors mentioned above. As it relates to temperature and other climatic variables, a tourism climatic index that captures the elements of climate that impact on a destination’s experience was constructed. The index was calculated using historical observations as well as those under two likely climate scenarios: A2 and B2. The results suggest that under both scenarios, the island’s key tourism climatic features will likely decline and therefore negatively impact on the destination experience of visitors. Including this tourism climatic index in a tourism demand model suggests that this would translate into losses of around 145% of GDP. As it relates to coral reefs, the value of the damage due to the loss of coral reefs was estimated at 7.6 times GDP, while the damage due to land loss for the tourism industry was 45% of GDP. The total cost of climate change for the tourism industry was therefore projected to be 9.6 times 2009 GDP over a 40-year horizon. Given the potential for significant damage to the industry, a large number of potential adaptation measures were considered. Out of these, a short-list of 9 potential options was selected using 10 evaluation criteria. These included: (a) Increasing recommended design wind speeds for new tourism-related structures; (b) Construction of water storage tanks; (c) Irrigation network that allows for the recycling of waste water; (d) Enhanced reef monitoring systems to provide early warning alerts of bleaching events; (e) Deployment of artificial reefs and fish-aggregating devices; (f) Developing national evacuation and rescue plans; (g) Introduction of alternative attractions; (h) Providing re-training for displaced tourism workers, and; (i) Revised policies related to financing national tourism offices to accommodate the new climatic realities Using cost-benefit analysis, three options were put forward as being financially viable and ready for immediate implementation: (a) Increase recommended design speeds for new tourism-related structures; (b) Enhance reef monitoring systems to provide early warning alerts of bleaching events, and; (c) Deploy artificial reefs or fish-aggregating devices. While these options had positive benefit cost ratios, other options were also recommended based on their non-tangible benefits: an irrigation network that allows for the recycling of waste water, development of national evacuation and rescue plans, providing retraining for displaced tourism workers and the revision of policies related to financing national tourism offices to accommodate the new climatic realities.

Bridging innovation, nature and tradition: assessment of strategies for rural tourism development in Maramureş (Romania)

In the frame of EU rural policy, always more oriented towards environmental concerns and green livelihoods, Romania stands out for the predominance of rural areas and high nature value farming. The country has to face the challenge of joining the modernization process of rural farming systems with the valorization of local assets. Tourism has emerged as one of the main drivers of change and contributors for a sustainable exploitation of local resources. Rural tourism (RT) can foster the enhancement of the territorial capital (TC), the preservation of public goods (PGs) and the promotion of a more environmental oriented livelihood. The research focuses on a case study area, two valleys from Maramureş, where environmental approaches as diversification strategies are partially explored. The work investigates the role of tourism initiatives for the promotion of green oriented practices. The first part of the work is based on a literature review and interdisciplinary analysis of secondary data to identify the key issues: from rural development policy, to the concept of TC, of PGs and RT. The Romanian development programmes and related strategies are investigated; afterwards the characteristics of the County and the role of RT as diversification and valorisation policies is considered. The second part is based on the collection of primary data through interviews to different local stakeholders (farmers owners of rural guesthouses, local administrators, networks and artisans). The main frequencies are analyzed, a cluster analysis is computed to evaluate the similarities within the most representative groups and a comparative analysis is carried out between the two Valleys. The frame of the analysis is based on a set of indicators following the dimensions of the TC, to assess the characteristics of the local stakeholders and to outline the perception about the local PGs and on the adopted strategies to manage the territory. Final considerations are elaborated and few scenarios are outlined, giving relevance to the importance of improving awareness and creating embeddedness among public-private local stakeholders and resources as a tool for a socio-economic and environmental development of the area.

When Wells Run Dry: Water and Tourism Along the Western Coast of Nicaragua

This dissertation uses a political ecology approach to examine the relationship between tourism development and groundwater in southwest Nicaragua. Tourism in Nicaragua is a booming industry bolstered by ‘unspoiled’ natural beauty, low crime rates, and government incentives. This growth has led to increased infrastructure, revenue, and employment opportunities for many local communities along the Pacific coast. Not surprisingly, it has also brought concomitant issues of deeper poverty, widening gaps between rich and poor, and competition over natural resources. Adequate provisions of freshwater are necessary to sustain the production and reproduction of tourism; however, it remains uncertain if groundwater supplies can keep pace with demand. The objective of this research is to assess water supply availability amidst tourism development in the Playa Gigante area. It addresses the questions: 1) are local groundwater supplies sufficient to sustain the demand for freshwater imposed by increased tourism development? and 2) is there a power relationship between tourism development and control over local freshwater that would prove inequitable to local populations? Integrating the findings of groundwater monitoring, geological mapping, and ethnographic and survey research from a representative stretch of Pacific coastline, this dissertation shows that diminishing recharge and increased groundwater consumption is creating conflict between stakeholders with various levels of knowledge, power, and access. Although national laws are structured to protect the environment and ensure equitable access to groundwater, the current scramble to secure water has powerful implications on social relations and power structures associated with tourism development. This dissertation concludes that marginalization due to environmental degradation is attributable to the nexus of a political promotion of tourism, poorly enforced state water policies, insufficient water research, and climate change. Greater technical attention to hydrological dynamics and collaboration amongst stakeholders are necessary for equitable access to groundwater, environmental sustainability, and profitability of tourism.

The evolution of mass tourism destinations: new approaches beyond deterministic models in Benidorm (Spain)

Although deterministic models of the evolution of mass tourism coastal resorts predict an almost inevitable decline over time, theoretical frameworks of the evolution and restructuring policies of mature destinations should be revised to reflect the complex and dynamic way in which these destinations evolve and interact with the tourism market and global socio-economic environment. The present study examines Benidorm because its urban and tourism model and large-scale tourism supply and demand make it one of the most unique destinations on the Mediterranean coast. The investigation reveals the need to adopt theories and models that are not purely deterministic. The dialectic interplay between external factors and the internal factors inherent in this destination simultaneously reveals a complex and diverse stage of maturity and the ability of destinations to create their own future.

Great Himalaya: Tourism and the dynamics of change in Nepal

Based on extensive field work and years of personal experience, the authors discuss the development of tourism in the Great Himalaya of Nepal from the early days of mountaineering to present-day trekking. Tourism and its potentials, drawbacks, and risks are illustrated with a focus on the Khumbu/Everest and Annapurna regions, the most popular mountain destinations in the country. The themes addressed include: growth and expansion of mountain tourism; employment and income generation; wealth, poverty, and livelihood as reflected in statistics and personal accounts by local people; the revival of trade with Tibet; tourism and the role of women; the crucial role played by institutions, policies and political stability; and environmental issues such as forest degradation, garbage management, and trail damage. With its numerous illustrations, text boxes and quotes, the book is intended for a broad readership of policy- and decision-makers in tourism and development, scholars, and tourists and mountaineers who take an interest in mountain development in the Great Himalaya and elsewhere.

Regional development rhrough domestic and tourist event policies: Gold Coast and Brisbane 1974-2003

Governments, as key stakeholders in the development of events, produce policies to facilitate the growth and potential of events as a platform for industry and economic development. To date, however, there has been a paucity of research undertaken to determine the appropriateness and the consequences of government policies pertaining to events. This paper studies the event policies of two Australian local government authorities, the Gold Coast City Council and Brisbane City Council, from 1974-2003, as measured by four development paradigms: Modernisation, Dependency, Economic Neoliberalism, and Alternative. The analysis revealed that these policies were predominantly underpinned by the Alternative which has a strong socio-cultural focus. Increased awareness and utilisation of the various development paradigms will assist local governments in producing future event policies to promote growth of the event industry and concomitantly, appropriate development within their region.