Climate change, tourism and services in small island developing economies

1 December 2008

The climate change literature and debate so far has largely focussed on mitigation actions by the main contributors to greenhouse gas (GHG) emissions and global warming - developed market economies, as well as large industrialising economies like China, India and Brazil. Small Island Developing States (SIDS) are not large contributors to the problem of climate change, but constitute the most impacted group of countries. While the key issue for SIDS is adaptation, these countries are also highly dependent on the tourism and travel industries, which are considered to be major emitters - and so are vulnerable to the effects of international climate mitigation policies in these sectors.

This article examines the challenges and opportunities for SIDS within the climate change process, with an emphasis on tourism and travel, as well as relevant policy tools and instruments to address this issue.

Adaptation challenges and costs

SIDS are considered to be climate change "hotspots." According to predictions by scientists, SIDS are highly vulnerable to the impacts of global warming, particularly in terms of sea level rise, temperature rises, rainfall changes, coral bleaching and increased storm frequency. For example,

sea level rise will exacerbate inundation, erosion and other coastal hazards, threaten vital infrastructure, settlements and facilities, and thus compromise the socio-economic well-being of island communities and states.

Warming seas threaten the livelihood of commercial and artisanal fisheries and coral reefs. This, by extension, has the potential to result in widespread unemployment of fishermen and tourism-related service providers (e.g. scuba tourism), the incomes of which depend upon the existence of healthy coral reefs. In addition, if climate change does result in changing rainfall distribution patterns, then many SIDS will be forced to find new and innovative ways to establish a consistent and reliable water supply. Moreover, the absence of a consistent water supply can also lead to a severe decline in agricultural production (subsistence and commercial), thus threatening food security within these island states along with the competitiveness of the tourism sector.

Adaptation costs can be devastating. This predicament is exacerbated by the fact that many SIDS are dependent upon mono-crop agricultural production and export, as well as tourism for foreign exchange earnings, employment and contribution to GDP. They are also highly dependent on the importation of food and energy for domestic consumption and for the tourism sector.

Tourism - a double-edged sword

The travel and tourism sector is the key economic sector for SIDS in terms of earnings and jobs. Indeed, many SIDS are highly dependent upon revenue earned from tourist arrivals and through tourist-related activities. Tourism earnings account for a significant share of the foreign exchange earnings in most SIDS. With regards to the Caribbean, travel and tourism accounts for 14.8 percent of GDP, 12.9 percent of employment and 14.6 percent of total exports. Oceania has a similar economic profile with GDP shares of travel and tourism at 11.7 percent, employment shares at 12.4 percent, and export shares at 16.9 percent of GDP. However, for both regions ten-year forecasts (2018) by the World Travel and Tourism Council (2008) suggest declining contributions from travel and tourism to GDP and employment, but not to exports.

SIDS, which generally are long-haul destinations from key source markets like North America and Europe, have raised concerns regarding the potential adverse impact of prospective climate regulation of the air travel and shipping sectors and consumer preferences shifting in favour of short-haul destinations. Some governments and companies have also adopted environmentally friendly charges, levies and technologies, some of which have caused the cost of travel and transportation to increase. Such cost increases will likely have adverse effects on travel and tourism to SIDS. On the other hand, the cost of inaction on climate change could be even more dismal. According to a recent study[1]:

1.       The cost of inaction would amount to 22 percent of gross domestic product (GDP) for the Caribbean as a whole by 2100;

2.       The costs of inaction will reach an astonishing 75 percent or more of GDP by 2100 in Dominica, Grenada, Haiti, St. Kitts & Nevis and Turks & Caicos;

3.       The Caribbean's largest island, Cuba, faces a nearly 13 percent economic hit by mid-century, and a 27 percent loss by 2100, unless there is swift action to address climate change;

4.       Losses from inaction would be less severe but still significant in Puerto Rico, reaching nearly 3 percent by 2050 and 6 percent by the end of the century;

5.       The nation of Colombia, with its long Caribbean coastline, faces permanent flooding of 1,900 square miles in low-lying coastal areas, affecting 1.4 million people.

Thus, the intersection of a number of factors makes for a critical scenario for SIDS in the evolving context of climate change and trade in international services, especially tourism.

Policy responses

At the international level, developing countries, and particularly SIDS, recognise their state of vulnerability to climate change and therefore urge a focus on adaptation and support from those parties responsible for climate change, which need to take a lead on mitigation. At the same time, SIDS are also advancing a proactive agenda looking at adaptation and mitigation in tandem, urging the development, dissemination and transfer of efficient energy technologies that can assist developing countries in mitigating the effects of climate change. Overall, developed and developing nations tend to respond to the threat of climate change in a way that is consistent with international consensus (as expressed through the UNFCCC), where nations take measures to protect the earth's ecological system through policies and instruments that reflect their common but differentiated responsibility.

SIDS also acknowledge their responsibility to collect data on the effects and implications of climate change and sea-level rise, to improve public understanding of the issue, to promote more efficient energy use and to formulate their own comprehensive adjustment and mitigation policies to be able to cope with and respond to climate change.

Further, SIDS cooperate at the regional level to respond to the climate change challenge, and work with the international aviation and cruise line industries. For example, the Caribbean Community Climate Change Centre serves to provide research and information to the Caribbean Community. At the industry level, the International Air Transportation Association (IATA) has adopted a four-pronged approach to reducing greenhouse gas emissions, focusing on technological advancements, improved operations and infrastructure, and economic incentives. The cruise ship industry has also started taking its own steps to improve sustainability. SIDS also work with NGOs that seek to promote sustainable tourism, in order to improve their climate profiles. WWF, for example, recognises that tourism and conservation are compatible and seeks to give tourists useful hints on how they can enjoy their vacation in an environmentally friendly way.

Only a handful of measures to address climate change also seek to safeguard the interests of the tourism industry. However, some multilateral environmental agreements (MEAs) have the potential to serve the interest of the tourism industry, particularly in SIDS. These include MEAs that focus on conservation, such as the Convention on International Trade in Endangered Species, which helps preserve valuable tourist attractions and the basis for eco-tourism.

From vulnerability to resilience

In order to move from a position of vulnerability and dependence to one of resilience, policy tools within the international trade arena can be used to boost the capacity of SIDS. The services sector, and in particular tourism, represent a genuine opportunity for SIDS to expand their economic activity while earning foreign currency.

In addition, SIDS can seek to liberalise trade in energy efficient goods in a bid to decrease their collective carbon footprint. This policy could include both tax incentives and zero-tariff measures for the import of environmentally friendly products. The trade arena could also facilitate the transfer of technologies that contribute to the development of capacity among service providers. This can indeed be particularly useful as practitioners from SIDS within the tourism industry (and other industries as well) sometimes find the cost of technological devices to be prohibitive.

Technology transfer can also be important for environmentally-friendly technologies for local industries, and meteorological technology to inform tourists and industry officials of impending bad weather, especially severe natural hazards, enabling officials to take pre-emptive action to ensure the safety of citizens and tourists.

Perhaps one of the most direct and legally-binding approaches that a group of nations can adopt is to sign a trade agreement that addresses issues closely related to climate change. An example can be found in the Economic Partnership Agreement (EPA) between the Caribbean Community and the Dominican Republic (CARIFORUM) and the EU. The EPA represents a comprehensive trading arrangement between an archipelago of SIDS and a group of developed nations. In addition to expressing the overall objective of trade for sustainable development, the agreement contains a chapter on the environment. Additionally, the EPA contains provisions pertaining to environmental cooperation through technical assistance, trade in natural resources and public education campaigns to foster trade in environmental goods and services.

Keith Nurse is Director of the Shridath Ramphal Centre for International Trade Law, Policy and Services, University of the West Indies, Barbados.

[1] Ramón Bueno, Cornelia Herzfeld, Elizabeth A. Stanton, and Frank Ackerman. The Caribbean and Climate Change: The Costs of Inaction. Tufts University, May 2008. Available at http://ase.tufts.edu/gdae/Pubs/rp/Caribbean-full-Eng.pdf.

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