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Conference Summary: Part 4
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NEWS: Ten years after the Earth Summit that was supposed to
save it, Rio bay still stinks - Michael Astor/Associated Press
"RIO DE JANEIRO -- When world leaders were flying
into Rio for the 1992 Earth Summit, their nostrils were assailed
by a particularly nasty example of the ills they were here to
debate: the dense, putrid stench of Guanabara Bay. Ten years
later, after a huge internationally funded cleanup, and a week
before another Earth Summit opens in Johannesburg, one thing
hasn't changed: Guanabara Bay still stinks ... The Inter-American
Development Bank and Japan's Overseas Economic Co-operation
Fund have poured nearly $800-million (U.S.) into cleaning up
the bay. But a recent audit by the Japanese fund found the program
ineffective and behind schedule."
Response
Bill Hinchberger
One reason Bahia is displacing Rio as Brazil's primo tourist destination:
state capital Salvador has begun to clean-up its act - both on
and off shore. To be a top-notch tourist destination, a place
must offer good quality of life to the locals. Doing some out-of-the-box
brainstorming, I wonder whether foundations might be more likely
to fund tourism projects that include broader social and/or environmental
aims. Anybody know the answer? |
Weaving the Web
Ron Mader
As background to this short essay, I would ask readers to consult
Crawford Kilian's essay "Why Don't Government Sites Speak Your
Language?" -- http://www.content-exchange.com/cx/html/newsletter/3-8/ck3-8.htm
-- in which he says that most government sites have predictable
errors: "An absorption with the originator, clumsy navigation,
and not much opportunity to respond. The intent is clearly to
overwhelm the visitor with one-way information." The same is true
in this niche.
Trying to find detailed information about specific tourism
projects, upcoming contracts or evaluations is next to impossible
on most finance institution, development agency and conservation
group websites. A few weeks ago I attended a review of a World-Bank
funded survey of ecotourism in Oaxaca. I asked at the meeting
whether or not I would be able to find details about the contract
online their website -- http://www.worldbank.org.
The WB anthropologist said probably not. My opinion -- when
such work is conducted in secrecy, the chances for synergies,
coordination and success diminish.
A good example is the Organization of American States. A couple
of years ago I was contracted by the contractor to develop a
website for Central American tourism. It was to be part of a
regional "Destination Management Service." -- http://www.oas.org/tourism/TC_DMSCA/Bolet2.htm
-- It failed. Though nowhere on the OAS website will you find
a review of what happened, or -- looking forward -- what type
of tourism work will be funded in the future.
It is easy to play the "what if" game, of course. But if the
Central America DMS has been developed from the ground-up, with
open communication among stakeholders, I have no doubt that
the website project would have been a great success. Instead,
it was developed (and funded) in a top-down manner that could
not feed the base support of the companies and visitors.
The Interamerican Development Bank -- http://www.iadb.org
-- has a fairly confusing website. IDB work in this field is
notable, but articles about its ecotourism projects do not link
to any background documents, nor is there a section about tourism.
For those who can pay, the bank provides detailed information
about upcoming projects http://condc05.iadb.org/idbprojects
-- shouldn't this information be freely available?
Looking at foundations -- http://www.planeta.com/ecotravel/links/foundations.html
-- we often see lists of projects that have been funded. Information
is usually kept to the basics. Rarely do we see evaluations
or even links to the grantees. And since foundations seem to
change their mind quite frequently, we don't see any long-term
commitment to sustainable tourism financing.
Suggestions: Institutional websites need to learn to speak
the language of their visitors -- stakeholders who are not only
consultants but also those affected by policy. These websites
ought to provide more timely information and be more interactive.
I would love to see public forums based on topic or region.
And I have no doubt that big changes are under way. Frankly,
I could not be more optimistic. This year I have had more positive
contacts with executives and other top-level decision-makers
who are using the Web for the first time. We might also consider
forming a working group to provide a sounding board to evaluate
the websites and provide practical suggestions.
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Response
Oliver Hillel
One response to Ron's evaluation of the inability of development
agency websites to share the experiences they fund is that, most
often, the agencies themselves do not coordinate (even among their
own program officers) in specific areas such as sustainable tourism.
The Interamerican Development Bank only has a working group
on tourism because some officers refuse to let go of this opportunity.
The bank never created any exchange mechanism, nor does the
existing informal group get any official recognition (imagine
if they were given a few coordinating assignments, how much
more efficient future programs would be...). The World Bank
produced a few papers on the subject, in specific geographical
regions, but no coordination between regions, or across main
theme areas, exists. Same with USAID. The OAS's tourism team,
so efficient in the '70s and '80s (when they produced absolutely
groundbreaking work in the Americas - the network of experts
from those times still moves this field) is not functional anymore.
What about Europe? Nothing much better. With the possible exception
of DFID, who consulted with all its peers for the (now inactive)
Tourism Challenge Fund, there is no real coordination among
tourism experts from bilateral and regional organizations. People
at GTZ, SNV, or the various Directorates of the European Union,
have a hard time exchanging experiences in their own organizations,
let alone international coordination. There still is a barrier
across the Atlantic in terms of exchanging experiences in sustainable
tourism projects.
The usual suspects meet with certain regularity (as they did
in Quebec), helped by external agents such as Universities,
NGOs and trade associations - informally. The institutions themselves
are impervious, resistant, and suspicious of those coordinating
activities, for various reasons explicit or not. One of the
efforts of various IGOs and NGOs, using the opportunity of the
IYE and the WSSD, is to coach and nudge these organizations
into closer cooperation, joint standards to avoid past mistakes,
and pooling of resources for increased efficiency. Little wonder
that the websites do not share information and experience on
sustainable tourism: the organizations themselves do not do
it, and websites can at their very best only be as good as the
institutions producing them...
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Lessons Learned
Ana Garcia Pando
From my point of view, the report Survey
of Ecolodge Economics and Finance is one of the most clarifying
documents about what actually is this business. I would like to
emphasize a few points that are key to future development:
First: the lack of data. It is very difficult to fill in the
information gap with so little international agreement on statistics,
and regulations and standards and so on. We need good information
and accurate data on actual performance of this companies, good
and bad practices, and mistakes not to be repeated.
Second: these businesses are outside of traditional capital
markets. We guessed, but we are afraid to recognize it, lest
it means that our business is not serious. It is, even if it
is not attractive to huge investment or relies in non formal
investors, such as family savings, mortgages or friends and
relatives financial support through good and evil.
Third: surviving the first two or three years is as difficult
as surviving the second two or three years. The financial fragility
of these businesses makes it very difficult for them to grow
at the needed pace. It is difficult to get more investment when
most of your business belongs to the bank, and the return of
the investment is uncertain within a reasonable deadline. So
it is difficult to increase the number of beds, or strengthen
the marketing campaigns or being competitive in rates and discounts
against bigger companies.
So, before entering this business, there are some questions
that need to be answered honestly:
First: What do I expect from this business? A way of living,
or big fast money? Second: Do I have the financial capacity
to build it up, to market it and to operate it for the first
three to five years? Third: Do I understand that this is going
to be a self demanding activity, with lots of personal dedication
and little economic compensation (compared with regular jobs?)
The answer to these questions lies in an accurate business plan,
which depends on reliable market information, (accurate international
data) a great deal of personal commitment. and a bank loan which
should never be higher than 65% of the total amount of investment
(at least in my experience, and considering average occupancy
rates between 35 and 60% at rates ranging from USD $60 on)
In our experience with EU-funded rural development programmes,
training of prospective entrepreneurs was very important. Most
of the times, grants were conditioned to obtaining a certain
minimum level of training, which was completely or partly funded
and provided by the local agencies which were promoting rural
and ecotourism. When funding programmes were assessed, technical
support offered by these agencies and training were items mostv
valued -- over financing and grants. The fact is that providing
people in the same region with the same tools allows them to
speak the same language and naturally start networking and developing
a similar standard of product, and environmental consciousness
which is key to prevent mass developments and its disadvantages.
Our training was devised the following way:
"Starting a Tourism business": 100 hours course comprising
tourism legislation, financial issues, environmental and ethnological
resources in the area and the approach to sustainable tourism.
Product and service design. Sociology of modern tourists among
others. A feasibility study was carried out for free for each
participant, in order to evaluate each idea before it became
an investment and help them devise the best approach with their
own resources. Some other courses were carried out including
technical exchanges with similar regions with higher levels
of tourism development, and more specialized modules including
traditional cooking, how to solve conflicts with guests, tourism
distribution channels and once again, financial issues.
With at least 200 hours of basic training, people were ready
to opening their businesses. As funding programmes lasted al
least four years, some other courses were carried out, in response
to expressed needs. Another useful experience was developing
a distance- learning course for rural tourism start ups. It
was financed by a Foundation and it combined written materials
with classroom lessons (the least) in a highly depopulated area
where transportation was very difficult. The public being rural
women, most of which did not have their own car, distance learning
proved a very useful tool, and also meant the only chance for
these women to have access to some kind of education. In my
opinion, non political or ideologically biased training is key
to this. Next question is: who is/should be financing this training?
When training became a big business, many problems arose. The
lesson learned is that training people to managing their businesses
really help sustainability both in the short and long run.
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Lessons learned
Carol Patterson
As it's been my experience that banks can be very unfriendly sources
of financing for ecotourism businesses, many people turn to family,
friends or private investors to find money. When soliciting funds
from private investors it is important to think carefully about
how much money you ask for. Now the obvious reply to that question
may be "As much as I can possibly get!" Of course, that would
be ideal, but when deciding on how much to solicit from individual
investors, the amount should be determined to some extent by the
management control that an ecotourism business is willing to give
up.
It's been my experience that it's better to solicit a little
bit of money for a whole lot of people or, a whole lot of money
from a few. Trying for medium size amounts of investments from
a medium size number of investors doesn't work. People may have
$5,000 to put into an high risk investment (which is what most
startup ecotourism ventures are) and they can convinced to contribute
without placing too many strings on the business owner. Conversely,
people who you ask to put in more money, say $100K+, often want
greater assurance that the business will be well-run (and therefore
pay their money back). They will often expect some input into
the business management, at the very least asking for some control
over key decisions. It is very difficult to work if the middle
ground. If you ask people to contribute more than "play money"
(say $25-50K) they are often nervous about risking that size
of investment without some type of say in ongoing operations.
If you trying to raise enough for even a medium size ecotourism
business, this will result in an unmanageable level of investor
involvement/expectations. On a somewhat related note, I've found
that creative approaches are needed when seeking financing.
Although you need cash investments for many expenditures, you
can often barter for services. Architects, engineers, lawyers,
accountants, etc can sometimes be convinced to trade their time
in exchange for use of your ecotourism facility or reduced rates
on tours. Many professionals perceive ecotourism projects as
fun and interesting; they can be very accommodating if they
think your project will have some unusual benefit to them. One
startup company I know was very successful in getting time from
a retired architect for lodge construction at a significantly
reduced rate in exchange for use of the lodge facilities when
they were completed. I know from my previous experiences that
accountants don't get enough fun (apologies to any accountants
reading this). So if you as a business owner put forward an
ecotourism concept supported by a well-crafted business plan
you might be pleasantly surprised at how many people will be
willing to help out without chewing up precious cash.
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Lessons Learned
Isabel Sebastian
I would like to share with you some insights that our company
has gained over the past four years being involved in the adaptive
re-use of one of Australia's largest heritage sites (European
settlement heritage that is, from the early 1900s).
The site is the former Quarantine Station, which is a 30 hectare
site within the Sydney Harbour National Park that features 65
heritage buildings and stunning views of Sydney Harbour and
neighbouring bushland reserves. The site is only 7 miles from
Sydney, but it feels like it is a world away. The Station was
used from 1828 to 1984 to isolate ship-loads of passengers who
may have been infected with infectious diseases during their
voyage to Australia. Of the 13,000 people that have been quarantined
there over the life of it's operation some 500 died but the
rest were healthy and went on to live their lives in Australia.
Since 1985, the National Parks and Wildlife Service (NPWS)
of New South Wales has been managing the site and realised very
quickly that the up-keep of the buildings and surrounding grounds
was way beyond what their budget could afford. The NPWS started
operating guided tours and a conference centre using some of
the buildings, however the return was still only enough to maintain
the buildings that were in use (about 12). The rest of the site
and its beautiful heritage buildings has been falling into disrepair
and only recently two of the oldest buildings burned down (one
due to suspected arson and the other due to an electrical fault).
In recognition of the need for an on-going solution, the NPWS
called for tenders (in 1993) from tourism operating and development
companies to come up with proposals for restoring and using
the site. After a lengthy selection process a company was chosen
as the preferred tenderer in 1998, who we have been working
with ever since to develop the proposed tourism product and
operation and to finalise the Environmental Impact Assessment.
The proposed operation is using all existing buildings (no new
buildings are being constructed) as a hotel, conference centre,
guided tours, sound & light tour, education centre and restaurant.
The terms of the pending lease are still being negotiated, which
is likely to be a 21 year lease and further 10 + 15 year options.
The aim of the project is to run the Station as a private-public
sector partnership setting up a tourism operation to generate
enough funds to conserve the site for the long-term, while providing
public access and offering experiences that appeal to a wide
range of visitors. The project will require a AUD$14 million
investment (approx. US$ 7 million) for refurbishment and fit-out.
The Proposal features some of the latest vistor management techniques
and an integrated monitoring and adpative management system
- one of the world's first to be produced by the private sector!
While the process seems straight forward to provide a 'win-win'
solution for financing a eco/heritage tourism site, there are
a number of lessons that we have learned that any private-public
sector partnership should take into consideration before embarking
on a leasing process of public land:
1) The public agency that is leasing a public site needs to
be prepared with all necessary planning and management documents
and needs to undertake extensive community consultation PRIOR
to calling for tenders from the private sector.
2) It is unrealistic to expect a tourism development/operating
company to go through a 9-10 year process before the operation
can commence.
3) A combination of private investors and bank loan seems
to be a good mix if a sound product and business case can be
presented.
4) In the case of the Quarantine Station, the public/private
partnership process would have not been able to be drawn to
a conclusion unless the tourism operating/development company
had the commitment to stick with the vision for the project.
The company has invested over AUD$1.5million over the 9 year
period without any certainty of a return, which is a commitment
(or risk) that most tourism development companies would not
take.
5) Finding the right private sector partner is a crucial element
for the public sector in such a partnership and there are very
few companies around the world that offer the right mix of sustainable
tourism philosophy, creative tourism development and operations
expertise, preparedness to partner with the public sector and
a commitment to operate AND actively conserve.
One of my suggestions for this forum would be to establish
a database/directory of similar organisations to ours, along
with a set of criteria that identifies potential private sector
organisations (worldwide) that have the 'right' philosophy,
business expertise and creative problem solving ability to establish
cutting edge viable ecotourism projects. Anyway, that's a brief
overview and I hope it provides some food for thought.
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Lessons Learned
Ron Mader
I am surprised we have not heard more in this conference about
what we learned during the World Ecotourism Summit or what events
are planned in the upcoming Earth Summit. Reflecting on the Quebec
Summit, the sessions on financing seemed a bit bland. Foundations
and development banks announced what they had funded, but were
reluctant to provide details about the type of work that would
be funded in the future. I recall one conversation with a rep
from a Canadian development agency. She complained about the quality
of projects they receive. I asked if they explained how to apply
on their website. "That's a good idea," she said (and I haven't
heard from her since...) If institutions could simplify the process
and show us what they are willing to fund, we'd see great progress.
If we keep the process secret, then we will simply repeat the
same mistakes.
Traditionally, development agencies and banks have funded
infrastructure. The result -- abandoned visitor centers and
hotels. In Mexico, the directors of Balam Consultants complain
about the "cabañazation" of the country. Why is infrastructure
easier to fund than training, evaluation or promotion? I receive
hundreds of requests each year for free promotion or training.
I do what I can, but the fact is this work is under-funded.
We may talk about "pro poor tourism" or "bridging the digital
divide" but little is done in the field. I would like to see
this changed ASAP.
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Priorities
Desmond Kaplan
An ecotourism business that does not know how to function in a
business like way is certainly not sustainable. There is often
a very good case for subsidizing or otherwise assisting business
where the overall cost benefit is clear. I would like to quote
too mechanisms used in Israel to assist small scale tourism businesses.
Professional advice and business plans: The ministry of tourism,
in combination with several NGO's, runs a program known as the
"tourism incubator". Essentially it is a small business development
promotion framework. A tourism operator wishing to start a new
business or develop an existing one can apply for assistance
through this framework. He ("he" could of course just as readily
be "she") will be given a list of recognized consultants relevant
to his business, be it a restaurant, lodge, b&b or whatever.
He can then interview whoever he wishes from the list in order
to choose the person that most suits him. The operator will
pay 25% of the consultant fee, the rest is paid by the "incubator".
The amount is set by a committee that monitors the process.
For example an operator may be offered 20 hours of consulting
services by the "incubator". This is usually enough for a basic
feasibility examination and the production of a business plan
for a small characteristic business. The consultant gets $40
an hour of which the tourist operator pays $10. In this way
he is able to have a professionally processed business plan
for $200. With this he can go to lending institutions for financing.
The system is made very efficient through the use of business
plan computer programs developed for the purpose. One feeds
in the data for the project and the program provides the analysis
including pay-back scenarios, sensitivity checks and so forth.
I have very positive personal experience with this system having
once being on the receiving end of the advice when examining
the feasibility of tourist businesses for the village in which
I live (some 12 years ago). Later, after I gained more experience,
I was taken on by the "incubator" as a consultant myself.
Subsidized financing or grants: The ministry of tourism and
the ministry of agriculture both run programs of grants to tourism
businesses in rural areas. This is based on recognition of the
fact that the agricultural sector is not always sufficiently
strong to fully support rural economies. A farmer or villager
who is interested in building b&b facilities for example can
have up to 30% or more of the capital outlay covered by grants,
providing he implements the project according to agreed and
supervised standards. A farmer who wishes to develop part of
his farming operation as a tourist enterprise will also receive
grant funds to subsidize his capital outlay; for example he
may build a farm stall from which he sells produce to visitors.
While these mechanisms or tools are good for any tourism activity,
they obviously do not exclude ecotourism businesses. The ministry
of agriculture is now actively involved in trying to encourage
ecotourism in the agricultural sector through running seminars
and conferences on the subject for the agricultural community.
I recently lectured on the subject of ecotourism at two of these
meetings. One was to farmers who produce organic products and
are interested in expanding their horizons to include tourism.
The other was to a group of agricultural economics field advisors
employed by the ministry of agriculture to assist farmers.
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Comments
Paul Sanchez-Navarro
Thanks for the excellent discussions this week. I would like to
add just two basic comments, both on tendencies (of perspectives
and policies).
1. The tone of the discussion is heavily business based, as
well it should be because we are talking about financing. However,
we need to find a middle road where the perspective of the business
side begins to recognize and respect that business must be done
in an innovative and way, where it takes into account historical/cultural
differences and tries to "learn" something from the local culture,
just as so many of us expect the local culture to have realistic
business plans, accounting, management, etc. realities of the
Anglo-European economic culture. A sort of blending of perspectives
must occur if ecotourism is to work for all parties involved
and not end up as just nature tourism.
2. Perhaps we could begin to think of some of the limitations
ecotourism has regarding country-level legal and policy frameworks,
which might also be hindering elements of financing and project
success, especially in a business sense. Many fiscal systems
for example, do not allow for money earned locally to stay local,
or land tenure systems don't foster good management at the local
level, along with all the other resulting problems, which inherently
produce poor project or business management from local people.
I know these problems vary according to country but am sure
they affect the success of ecotourism plans.
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An interesting discussion
Oliver Hillel
Paul from WWF makes two very valid points, which were a clear
conclusion in Quebec at the Summit:
1) While standards for the economic component of ecotourism
are easy to find (we have the whole field of managerial accounting
for this...), the social and economic aspects are much more
difficult to manage: how much contribution to conservation and
to local communities is enough for a project to be called ecotourism?
Our vision should be that, in the near future, some clear and
practical benchmarks for distribution of benefits and participation
of host communities, and for biodiversity conservation, should
be part of most funder's decision before a project is deemed
acceptable. Indicators would have to be easy to measure by project
managers regularly.
2) You are right - in Quebec I was under the impression that
the private sector in ecotourism is doing quite a lot - most
leaders in the field seemed to think that it now fell on the
public sector's shoulders to do the most significant work. No
amount of private sector contributions can substitute the sanitation
infrastructure, access, credit facilities that can indeed be
used by SMEs (in Brazil we say that credit is available only
to those that do not need it...), and the flexibility in the
usual red-tape, the inter-agency cooperation, and the policies
that deal with the kind of bureaucracy that either closes SMEs
or forces them to the so-called "informal" sector... Providing
communities in rural areas with basic needs should not be the
responsibility of those pioneers trying to do their best - at
least, not all by themselves and often AGAINST the public sector's
will.
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How much financing is directly about money?
Antonio Suárez
Reading the forum posts, the main concern focuses on two issues:
1) Who is going to give me the money? and 2) The money has to
come from abroad.
The real questions are 1) How much financing ecotourism is
directly about money? and 2) How can we create local and national
priorities that can focus on the developing of ecotourism without
depending on the big players from abroad (NGOs, WB, IDB, etc)?
If we are at the core of ecotourism expecting sustainable
business creation from local communities our main effort should
enable these communities to create a minimum of self maneuvering,
at the end base groups are the powerful players setting the
countries priorities agenda. If we are trying to avoid the bad
experiences of the past where multinational institutions gave
money for conventional mass tourism infrastructure we should
involve our existing country programs in to community ecotourism,
in many countries there are some programs related to forestry,
agriculture and other social issues.
In Mexico where already three government programs finance
ecotourism -- in addition to many NGOs -- the main problem continues
to be how these groups access to the funds since the idea they
have is closely related to infrastructure such as hotels. Training
is the most important tool to build capacities among
locals. How do we get this message across?
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Alternative Currencies
Ron Mader
On the conference center home page, you may have noticed a book
titled Money:
Understanding and Creating Alternatives to Legal Tender published
by Chelsea Green. It explores how communities can create sophisticated
bartering/exchange systems -- particularly useful where access
to loans and money is limited. I have corresponded with author
Thomas Greco who wrote the following: |
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Private currencies have the potential to empower, not only
local communities, but also "communities" that are not geographically
defined. I can envision an association of operators of ecotourism
facilities and services (booking, lodging, transportation, schools,
parks, attractions, etc.) issuing a common currency as a way
of financing their development, improvement, and expansion costs,
as well as their working capital. The currency, up to some reasonable
limit, would be spent into circulation by the participating
businesses, which would redeem it (at par) by providing the
services they customarily offer.
The basic outline plans provided in the second half of my
book could be readily adapted to this situation. Ideally, a
small group of operators in your industry should study that
material and then discuss specifics of how to best implement
it. I would be happy to answer questions once such a process
is underway. To get things moving in the right direction, I
would offer the following. Properly issued, such private currencies
should be self-correcting, if the issuers are obligated to accept
them at par in payment for their goods and services. If the
currency should begin trading at a discount from par in the
market, that would put pressure on the issuing business to reduce
the amount issued until the discount disappears or is minimized.
If they fail to do so, they lose out by the amount of the discount.
The key principle is to match the issuance of currency or
credit to the delivery of goods and services to market. Timing
is very important in applying this principle. Ordinarily, long
term projects to bring new facilities on line would not be a
proper basis for issuing new currency or credit into circulation,
but by associating, the excess capacity of existing operations
would allow for timely redemption while the new facilities are
being built. Best wishes for a productive conference.
Thomas H. Greco, Jr., Director
Community Information Resource Center
http://circ2.home.mindspring.com
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Final thoughts
Ed Sanders
Thanks to the group for lots of interesting postings. As someone
primarily involved with private sector ecotourism developers/entrepreneurs,
the focus of much of the discussion on financing community ecotourism
projects has been especially illuminating for me.
I have not, however, seen any explicit discussion of the advantages
and disadvantages of community versus privately sponsored ecotourism
ventures in terms of financing (or other aspects). As a general
proposition (reinforced by experiences with a few Native American
tourism projects) community run ecotourism projects seems to
face some additional hurdles, especially in terms of financing,
when compared with private ventures. Part of the challenge is
that project management is often complicated by community/tribal
politics that can adversely affect decisions on where to place
facilities, how many people are involved in executive decisions,
who and how many people get hired, and the like. These considerations
not only affect potential project survivability but also the
willingness of traditional lenders and investors to get involved.
More fundamentally, and at the risk of belaboring the obvious,
in my limited experience the usual challenges of financing a
project apply with particular force to communally-owned projects.
For example, banks have a fiduciary responsibility to the people
who have entrusted them to manage their money to make sure that
they are repaid. As a result, most lenders will require collateral
to cover the amount of their loan in case the project is not
financially successful and cannot repay the loan. Most ecotourism
projects provide relatively poor collateral in case of bankruptcy.
Raw land is not attractive to most lenders because it can be
hard to sell and most ecotourism facilities do not have good
alternative uses if the venture fails. Accordingly, most bankers
will only lend as much as can be covered by assets that can
be readily sold (e.g., equipment) in case the venture fails.
For community/tribal projects, there is the additional political
risk and transaction cost of trying to foreclose on community-owned
property (especially in cases, such as the United States, where
indigenous peoples have sovereign rights).
Similarly, most equity investors want a high rate of return
commensurate with the risks involved and want a say in the management
of the project commensurate with their investment. They also
typically want a way to get their money out (i.e., an "exit
strategy") after a relatively short time, so that they can consider
other investments that may appear more attractive at that time.
Traditional exit strategies include selling stock or finding
another buyer. This is difficult enough for privately held ecotourism
projects. It is, of course, much more difficult for community
ecotourism projects where the only politically-acceptable alternative
buyer may be the community itself, which may not have the resources
to buy out the investor within a reasonable time period.
The conclusion is clearly not that community ecotourism projects
do not make sense. My only point is that going back to the basics
of project financing suggests that community ecotourism projects
will usually be even more difficult to finance from conventional
debt and equity sources. As several commentators have indicated,
the implication is that these projects will typically have to
start small, seek technical and financial support from non-traditional
sources, and expand through re-investing cash flow. Even private
ecotourism projects have found it extremely difficult to access
traditional sources of financing with the result that our study
for The International Ecotourism Society found that 58% of the
financing for ecolodges came from the owner's own funds and
another 6% from friends and family, and over 80% had to grow
incrementally, largely because of lack of start-up funding.
Thus, an important question that this conference has not really
been able to answer is how quickly alternative sources of financing
for community/tribal ecotourism projects have been developing
and how quantitatively significant they are.
More generally, the clear need in my view, is to develop new
sources of funding that explicitly recognize the contribution
that good ecotourism (and other) projects can make in terms
of protecting and adding to environmental and social as well
as financial capital. Good progress is being made in measuring
contributions to environmental capital formation (or depletion)
through environmental accounting methodologies and a great deal
of effort is being made to measure social capital as well. The
challenge is to create new financing programs that effectively
combine financial, environmental, and social accounting methodologies
to make investment decisions based on a project's ability to
add to (or at least maintain) existing levels of economic, environmental,
and social capital (i.e., to fund projects that truly are "sustainable").
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SRI & investment guides
Bill Hinchberger
As everyone in this discussion surely knows, investment in ecotourism
is a subset of a larger universe called socially responsible investment.
By chance, I came across the website of a nonprofit called the
Social Investment Forum: http://www.socialinvest.org.
The site contains a wealth of information, including something
called a Community Investment Guide. I haven't had time to download
and scour the PDF files, but the concept of a guide for this sort
of thing seems very interesting. Ron compiled a list of resources
for this conference, and I'm sure that they will find their way
into the permanent Planeta archives. But perhaps there is room
for something more systematic, perhaps even an Ecotourism Investment
Guide. Or maybe the ecotourism financing gurus should just make
more noise within the socially responsible investment universe
and coordinate more closely with that movement.
Real Support
Deborah McLaren
Oliver Hillel kindly pointed out that real ecotourism projects
need sound infrastructure and possibly a monitoring agency in
a region to make sure they are living up to their loan agreements,
etc. If we are talking about "sustainable" tourism, then do we
really want to go through loans and the euro-model of business
development for indigenous communities? Is this undermining some
of the traditional economies they want and depend on? For example,
in Alaska there is a state-wide movement in support of subsistence
economies. While "subsistence" is an ugly term for those of us
who think it means barely surviving, in Alaska it means a long-term,
sustainable economy in balance with nature. It is something so
important, and so endangered that the Native Peoples and Eskimos
are launching a well-publicized campaign to support it. Isn't
it again euro-minded to think that sustainable or eco means to
bring the communities into the globalized economy? Is there no
way to get past this?
To respect local economies or work for some kind of common
ground? Ana Garcia Pando suggested "Why not create a database
of failed projects?" There is a vast amount of knowledge and
models of unsuccessful projects within the Indigneous networks.
In fact, at the International Forum on Indigenous Tourism in
Oaxaca (March) there were over 120 community surveys/background
papers that explored both the pros and cons of ecotourism. It
is unfortunately that the euro-version of ecotourism continues
to look at successful models only. Since there have been relatively
few successful models, it is time to consider why there are
repeated unsuccessful models. What is wrong? Again, I would
like to volunteer that the top-down, euro frame of development
does not necessarily ensure "sustainable tourism" over the long
term. In fact, as Ana Garcia pointed out, sustainable is often
in the best circumstances considered to be successful if it
survives 3-4 years.
And regarding comments from Rengyu at Bangladeshecotours.com,
who said "I did like Paul's suggestion that perhaps the question
be seen on a local and indigenous level and we could "learn"
other paradigms of business and finance, which seems to me to
be an integral part of ecotourism. "Unfortunately, in many rural
settings finding such people to lead ecotourism projects is
one of our major challenges." Rengyu, despite efforts of Indigenous
Peoples in Asia, Africa and the Americas (again I point to the
Forum in Oaxaca) where hundreds of Indigenous leaders met to
draft policy input for the World Ecotourism Summit and the WSSD,
their comments were virtually ignored. There are good leaders,
and more every year as they quietly, but determinedly move forward
with training, technical assistance, forums and dialogues, participation
in the international treaties, and raising their voices.
Antonio Suárez mentioned that "we should involve our existing
country programs in to community ecotourism, in many countries
there are some programs related to forestry, agriculture and
other social issues. Training is the ** most important tool
** to build capacities among locals. How do we get this message
across?" I could not agree more. Truly sustainable tourism/ecotourism
would be interconnected and inter-dependent on sustainable agriculture,
sustainable forestry, sustainable fisheries, and consider local
environmental, social and economic issues. The top-down ecotourism
financing seems to often ignore this. It also fails to see that
training is really the most important tool... especially training
by local and indigenous community leaders and technicians themselves.
I don't know, Febo, how do we get this message across -- especially
to those promoting ecotourism globally and those who are genuinely
interested in financing or in other ways funding these community-based
programs?
In sum, I believe that the well-structured financial loan
package can work in some communities, but is certainly not a
model of sustainability. Real support for long-term community
goals, respect for local economies, and incorporating other
bioregional sustainable plans can help when a community is in
control - and has assistance and support from similar communites.
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Comments
Oliver Hillel
A few points:
* on think big but act small with continuity: ahh, if only
more NGOs and donor agencies listened to you... The problem
with acting small is that only committed local agents can do
this, and most big projects a)never involved small local agents
from the start, and b) want to impose outside goals on them...
I can tell you that much more money was invested in building
Chalalan ecolodge in Bolivia (an IDB projct), even if you only
consider the lodge-building investment, than in building the
Posada Amazonas in Peru with Rainforest Expeditions, a truly
community-based venture (whatever that is in the end..). Efficiency
is always higher if locals have a say - although not all locals
are efficient...
* On the control point, I beg to differ: control is necessary,
no doubt, and as you say, many project managers and community
leaders lose sight of the original goal. In view of concrete
experiences, we should not always believe that communities and
local governance bodies do things better, or manage ecosystems
in a wiser way - and corruption exists in Brazil as much as
it exists in France or the US. On the other hand, one often
forgets how much of a project's objectives are set (and imposed)
by centrally located development agencies, by international
experts, or by national governments (and authoritarian local
authorities). Then we denouce local communities for not taking
ownership of those assets, objectives and projects... If only
these objectives would have been set from the beginning through
careful, somewhat more expensive and longer processes of local
consultation and capacity building...
Achieving local ownership is closely linked to: - choosing
the right potential "owners" from the start out of the local
stakeholder group (a group of local investors, even if this
investment is work, representativeness/contacts and know-how,
rather than financial). You need a deep knowledge of a community's
structure, who's really influential and trustworthy, whose goals
more or less match the project's - you don't get this understanding
overnight... Long live good community extensionists, preferably
local ones...
- going into deep negotiations with the potential owners,
really being flexible on what they want out of the project -
not only "selling" the original objectives to the local stakeholders...
Very difficult for an outside donor to do from a distance.
- building trust, exchanging lessons, discussing values, and
building the local investor's capacity to understand the business
of tourism (risk, markets, capital, etc). Being very clear on
the future (and current) benefits and risks is essential. It's
unfair to leave an unfeasible business and assets at the end
of their useful life for locals to "manage", and then complain
they do a bad job...
- developing a contract with them - careful with written documents
(especially ones written by project managers). In many cultures
I know, the written word is less influential than an unwritten,
verbal "word-of-honour" agreement. This also means ongoing and
open communication, as the terms of the agreement may change
over time as governance structures and circumstances evolve
(hey, they do as well at the UN with the Kyoto Protocol...),
even if it's not changed in the written text.
Then, if all these steps are taken, there will be ownership,
and there is a good chance that someone will do the long-term
maintenance. On this topic, a good example is the Conservation
International project in Ghana, where ownership of a total of
US$ 750,000 in assets (the canopy walkway, a visitor center
with restaurant and souvenir shop, etc) close to Kakum National
Park, resulting from a USAID investment, was transferred to
the Ghana Heritage and Conservation Trust over a 2-year long
complex negotiation, along with the rights to manage the businesss
(entry to walkway, concessions of shop, etc). The GHCT is managed
by a Board of local scientists, tribal chiefs, park management
authorities, NGOs, businessmen and other relevant local authorities.
Participating in this was a great learning curve for all involved.
Alan's case on the ecolodge network in Bolivia is a Catch-22:
starting with independent ownership of a network of ecolodges
will make it more difficult to maintain quality and ensure ethical
behaviour of each unit (as locals might react only to their
own interest - who says communities are always cooperative??).
It will, though, get buy-in from the start - and will force
project managers to build capacity from the very start... Putting
them under a common, more "outsider-driven" management will
make overall quality better, might even create a higher-paying
market that individuals would never achieve, but on the other
hand may reduce ownership feeling from the start, creating a
dependence from the project that will be difficult to get rid
of at the project's end... I would still take the fist option.
On Desmond's suggestion of a case study collection to convince
state investors that community-based ecotourism is ALSO a tool
to support, that's a good idea, we're trying to set this up.
I will indeed get back to Ana Pando if we get the seed funds
to start (as Ana says, unfortunately UN funds are rather scarce
these days... maybe Joburg will bring us some relief...).
Finally, a word of caution on Renguy's heartfelt statement
that either ecotourism conforms to what communities want, expect,
and can offer, or it will be greenwashing. The basic and irrefutable
reality is that the benefits of ecotourism depend on one basic
action: a traveler with some money to spare has to be willing
to spend it in the eco-destination of choice. While I understand
(really, deeply) the frustration and anxiety in changing the
perverse ways most of the tourism industry works, the reality
is that, if communities want to receive visitors, to exchange
views, learn from each other, and also to receive a contribution
(financially or otherwise) to their well being, the offer has
to be formulated in the spirit of hospitality - and commerce
as well. Ecotourism will have a business side as long as host
communities decide to receive some money from visitors. This
is not necessarily "western" - caravansarais in Afghanistan
many moons ago did the same. But I get your point, of course.
Also, there is no travel without learning, and no learning
without travel, says my guru Michel Serres, the French philosopher.
Ecotourism will change tourists and hosts alike, but communities
will change culturally and economically, whether ecotourists
arrive or not. TV, in this sense, is doing far more damage than
any cruise line will ever do... What real ecotourism needs to
ensure is that:
- communities are aware of the risks, changes and rules of
the game, and - that they decide in full sovereignity to do
it their way - also by compromising and negotiating with the
realities of the market, if they so prefer. Native people do
not have to change into western clones, but they have to be
able to cross the cultural (and technological) river, to visit
guests on the other side, to manage ecotourism. Don't we also
want ecotourists to be deeply changed by their travels?
Donor Database
Kristin Lamoureux
As I read Ron's final notes, particularly regarding the need for
a single directly of tourism projects (failed and successful),
I thought it might be prudent to share a summary report of the
International Donor Agency Tourism Project Database which we are
currently working on at the George Washington University. As I
mentioned earlier in the conference, at present we have collected
information regarding approximately 220 projects throughout the
world that have been funded by donor agencies that involve a tourism
component.
I thought I might highlight a few key findings here. I will
note that all of these findings are in the preliminary stage
and have not yet been validated. Of the 220 projects we have
currently identified, there are only 30 projects where tourism
is found as a stand-alone project. However, tourism components
embedded in other areas such as environmental protection, social
equity, among others, are often found. Environmental protection
represented almost half of the tourism projects identified.
In the LAC, Africa and Asia/Near East regions, tourism as a
component of environmental protection projects dominated the
other sectors.
Although the region of Asia and the Near East had the highest
level of funding, with 47 identified projects, the region had
almost half the number of projects as the Latin America/Caribbean
region at 85 projects. In Africa and Europe/Eurasia, 54 and
30 projects were identified respectively. As this is an ambitious
project, GW will seek to collaborate with additional universities
or NGOs. At present, GW is working with the International Institute
for Peace through Tourism (IIPT) Educators Network in building
the Donor Best Practice database. From this collaborative effort,
we plan to identify principles of "Best Practice", "Success
Stories", and "Lessons Learned" and prepare a portfolio or guidelines
manual for future projects.
In the relatively near future, we hope to convert the existing
database to a web-based format so that this information can
be viewed by a wider audience, including those directly involved
tourism projects so as to maximize the utility of this tool.
Several members of this conference have mentioned the need
to create a "clearinghouse" or directory of projects (failed
or successful). As we have developed this database (and struggled
to acquire information from donor agencies!), it has also become
evident to us that a single source where those of us involved
in tourism development could locate good and bad practices,
examples, benchmarks, etc may have tremendous utility. Therefore,
we are continuing to develop this database tool. As we move
forward with this project, we welcome any thoughts/suggestions
anyone might have on the best ways in which to continue to acquire
information for the database, as well as appropriate avenues
for the dissemination of the information.
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The 00s
Ron Mader
Please try the following thought experiment. Can you imagine all
of these people in the same room? ... I would love to see an event
in which we have Ed Sanders and Deb McLaren are at the same table.
I imagine Rengu, Antonio Suárez and Mary Finn discussing community
ventures in the hallway. I see the project leaders from World
Bank and IDB asking how to make project applications relevant
to economic development, health and conservation work. And, of
course, we're hearing different languages. It's not just English.
I can dream. It's the 00s, after all. We're at the beginning.
One of the advantages to online conferencing is that we've
created a virtual commons by our very presence -- active participants
and "lurkers" alike. Even if we do not agree, we've had a civil
discussion and probably been introduced to some new ideas, be
they equity finance or community ownership. Plus, there's been
far less carbon emissions and trash! ... though I hasten to
add, I know that computers and the digital infrastructure are
not quite green either. I agree with Ana Garcia that we need
a directory of failed projects. Why is it easier to find movie
reviews than assessments of development loans? That said, I
am not seeking to sensationalize the failures. We do need a
directory, or to paraphrase Bill Hinchberger, a Sustainable
Tourism Investment Guide. Again, if I can imagine something
that does not exist, the Guide would be written for investors
at global AND local levels. We ought to get away from writing
one thing for NY investors and Beltway consultants and providing
glossy brochures and posters for the locals. I'd like to use
the conference center home page -- http://www.planeta.com/ecotravel/tour/ecotourism_financing.html
-- as a starting point for a Sustainable Tourism Investment
Guide.
I would remind participants that this conference -- with no
registration fee -- has no financially underwritting. Your support
is most welcome -- you can buy a book, become a sponsor and
promote your tours or simply say good things about Planeta.
Finally, I want to thank everyone who has shared insights via
private email for ideas toward financial sustainability. We're
all on the learning curve!
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