The Invisible Burden of Tourism & Sustainable Financing

The Invisible Burden of Tourism & Sustainable Financing

“The Future of Tourism” Interview Series

 

Disclaimer: The views and opinions expressed in the interviews are those of the interviewee and do not necessarily reflect the official policy, position or views of the Pacific Asia Travel Association (PATA) or any of its employees. The aim of the interviews is to assist with the rapid, robust and responsible rebuilding of the Asia Pacific travel industry.

Investment and financing play a pivotal role in supporting the transition to low carbon, resource efficient and inclusive tourism development. According to WTTC, every dollar spent on travel and tourism generates over three dollars of economic output.[1] In 2019, investments in travel and tourism represent 4.3% of total investment value worldwide.[2]

The Covid-19 crisis has caused severe disruptions to our global financial system. This is also a reminder of the need to strengthen the preparedness and resilience of our society. We need immediate and strong recovery packages that can deliver sustainable socioeconomic and environmental outcomes.

So, why do we need to keep up with the sustainable finance agenda during the Covid-19 era? What is needed to integrate sustainability in tourism investment decision-making? How do we channel tourism investment and financing into sustainable projects?

PATA SSR talked to Megan Epler Wood, Principal of EplerWood International (EWI), to examine the importance of sustainable financing for tourism development and discuss the opportunities arising from the Covid-19 crisis to refocus on sustainability and responsible investment for recovery from the pandemic.

Megan Epler Wood is a conservationist, ecotourism pioneer, research leader and consultant on managing sustainable tourism for destinations, business, and civil society.  Since 2010, her research and teaching with Harvard and Cornell universities has vetted a wide range of solutions to help protect destinations using advanced business management, environmental health, social science, technology, landscape design, and environmental science.

Q: Good morning. Megan, thank you so much for your time. We are very excited to have you with us today. To get started, would you please introduce yourself, your area of focus and expertise so that our audience can know a bit more about you?

Megan: It is great to be here and it is wonderful to have this opportunity to explain some of the work I have been doing. Originally in 1990, I started in the field of ecotourism. I was one of the original pioneers that helped to define the field of ecotourism and ultimately make it a practical profession. Since that time, I have focused on the larger industry worldwide and how to make it sustainable. And I did that by joining both Harvard and Cornell universities to help me with all of the expertise required. As a result, we continue to push forward on all those fronts.

Q: Last year, EplerWood International released a very groundbreaking report called: “Destinations at risks: The Invisible Burden of Tourism” together with Cornell University and the Travel Foundation. Can you tell us a bit more about what this “invisible burden of tourism” is actually about?

Megan: I think for any traveler who has been almost anywhere in the world, they may have noticed that there are infrastructure problems when tourists arrive on site en masse, essentially, destinations where you go as a traveler are designed for local people. Therefore, whatever infrastructure they have was designed for the people that live there. So, when a lot of travelers come in, and especially if that escalates very quickly, that is when the invisible burden appears. Because basically, the infrastructure is not there to accommodate a lot of foreign or even domestic travelers. So, it is this uncovered and unmeasured burden on local society. And it includes a lot of things; not only the protection of the ecosystems, but also basic infrastructure, like water. Zanzibar, one of our examples in the report, started to run out of water for the local people. In Greece, we saw that the amount of energy that was being used on the island of Rhodes was so high that the Greek citizens had to help pay for it. And ultimately, they built a power plant that was coal fired in order to cover that, which locked them into dirty emissions for 20 years. These were unanticipated outcomes of tourism that we have come to call the invisible burden.

Q: We all know that COVID-19 has recently shut down tourism at a global scale. So why is “the invisible burden of tourism” still relevant and important in the time of COVID-19? And why will tourism continue to suffer if we do not take into account the “invisible burden” and adjust from there?

Megan: I like to think of it as a kind of a simple way of thinking about when you need to build a new road, right? You have to reroute everyone, you have to tell them to go elsewhere while you are building the new road, right? Well, that is what is happening right now. Actually, we are in a time period where no one is traveling, or very few. That is the perfect time to undertake what I would call sustainable infrastructure work, which I just mentioned, is a very big part of the invisible burden.

For any destination, anywhere in the world, if they have seen that their visitor numbers are overwhelming their infrastructure, there is no better time. There is no better time to address that than now. Without question. Just think about trying to fix infrastructure. When your town is just mobbed with tourists, you can’t do it. It would be very disruptive, and the tourists would complain. Now is the time to fix everything while people are no longer visiting, and so that it will enable a wonderful green regrowth and also serve local people. Think of Zanzibar, think of these places that didn’t even have enough water during the high season of tourism. This is clearly a human right. The time is now to put in those water pipes, right? So, for the local people, what they were doing was actually tapping the water pipes that were going to the tourists with their buckets. We don’t want that, right? We don’t want that anywhere. We don’t want that for anyone. And here is the moment to actually fix it.

Q: We are now in one of the biggest global crises of our time. With that going on, we can see different opportunities arising like you have actually mentioned. What should be the lessons learned here for different tourism destinations?

Megan: I think obviously, the pandemic is bringing on a lot more than just shutting down places. It is bringing poverty. It is bringing a very high-risk environment for people that are living as entrepreneurs in small businesses and tourism regions worldwide. And I really believe our hearts have to be moved by this. We have to be thinking about this. And we can’t just respond by thinking we’re going to bail out the industry.

To me, that is the other primary consideration for all of us right now. How are we going to finance the recovery? Yes, we should be looking for infrastructure finance, that is critical. The other area is how are we going to help these entrepreneurs worldwide from falling into poverty? And we have to think about how to finance their businesses, just the way we were thinking about financing airlines. It takes a lot harder work, because we have to do that in funds that help. Not just one big business, but hundreds of small businesses. But nonetheless, if we don’t, if we don’t work hard on that now, we won’t have the solutions for people when they want to go back in and start up their businesses again.

Q: With that being said, what do you think should be needed to integrate sustainability in the tourism investment decision-making?

Megan: There is so much potential for that. And that is where my Marshall Plan for Tourism paper brings out the research that we did at Cornell University. What we found was that there is a lot of extra money around actually. And it comes from a couple of different places. It is obviously not in the communities themselves, or where the tourism destinations are being hard hit. They are the ones that don’t have the money, right? We understand that.

But what we do know is that in the larger world of finance, there has been more and more money being allocated to impact finance, climate finance and conservation. Those are three huge amounts of monies that are worth trillions of dollars. It is fascinating because in the impact finance world, there are so many new funds now that are looking towards really helping people to emerge from poverty, or to respond to challenges, just like what we are having with COVID-19. So that is why in my position at Cornell, as the Head of the Sustainable Tourism Asset Management Program, I am looking at how we can tap those finance sources for this purpose.

Q: So, the COVID-19 crisis actually has the potential to become a turning point for us right now to rethink and rebuild the future. Looking forward, how should we actually use investment and finance to recreate tourism more sustainably?

Megan: We have been thinking a lot about that. And of course, we want to do more of it, with local people’s imagination. I think what is so important right now is for local authorities not to just tell other people what to do. So, what I like to do is tap people’s imagination locally. And that is why I’m recommending “Innovation Hubs”. I think that is so exciting, because it’s a next generation opportunity for young people. And I really want to tap that energy.

Just think about it throughout Asia, you have these destination hubs. And we are going to have to do a number of things in order to build back better. You can’t build back better unless you have good data and data sounds boring. But it is not because in this case, it will guide us towards the exact places we need to invest and then ultimately, also help entrepreneurs to figure out the best market niches to go after during these downturn periods. And I think with these innovation hubs, if we establish a few, it could attract finance, it could attract innovation. And it could bring young people to work in these destinations using advanced data management. I think it’s an exciting concept. And that’s what I’m suggesting.

Q: How do we channel the tourism investment and financing into sustainable projects, while businesses are struggling to survive?

Megan: We’ve got to raise capital. So that is never an easy project. But we need capital in order to create these sustainable destination finance hubs. And then each hub would have two funds, that is my vision. It could change but my vision is one for SMEs and small businesses and those would be loan funds and enabling small businesses to apply without having to go through tremendous red tape. And then the other fund would be the sustainable infrastructure fund. The data management hub would be where the office is located, to make it the central location for young and old and business people to come and brainstorm around what they need for their future. I’m sure they lack that. I find that everywhere I go. I arrive and everyone wants to do what I recommend and just bottle it. Because as soon as I leave, the ideas won’t remain. I believe we need to embed these visions and the thinking process locally.

Q: Talking about visions, in one sentence, how would you envision the future of tourism after COVID-19?

Megan: I think that it will come from creative entrepreneurs, who will have a vision about what their place can be, not what it has to be based on, you know, the recovery, but what it can be based on a vision of the future. Because if we envision that, we can make it happen; if we don’t go through the process of envisioning it, it won’t happen.

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