Managing Sustainable Tourism in the Small Island Caribbean*

 

 

 

 

 

 

Jerome L. McElroy

Professor of Economics

Department of Business and Economics

Saint Mary’s College

Notre Dame, Indiana 46556

TEL: 219-284-4488

FAX: 219-284-4716

jmcelroy@saintmarys.edu

 

 

 

 

 

*Submitted to the Journal of Ecological Economics (September 2000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract

Recent research suggests the practice of mass tourism in small Caribbean islands has sacrificed environmental stability for rapid growth and prompted a call for more sustainable alternatives.  This paper reviews three types of small-island planning problems: (1) general limitations -- trade dependence and export concentration, declining aid and currency volatility, internal factionalism and policy impotence; (2) special natural resource management problems -- fragility, propensity for natural disasters, colonial history of invasive monoculture; and (3) the peculiar difficulties of controlling tourism -- mass scale, sun-lust coastal character, resort cycle dynamics, and measurement problems. By way of response, the paper develops and applies an early impact warning signal, the Tourism Penetration Index, to 30 Caribbean countries.  Results allow policy makers to assess roughly where their destinations lie along the tourist-environment continuum.  The paper also discusses the key planning challenges at each stage of the resort cycle and how they can best be addressed to improve sustainability.  Key Words: Caribbean, islands, planning, tourism penetration index.

 

 

 

 

 

 

 

 

 

Introduction

Three forces have shaped the postwar history of the insular Caribbean: decolonization, economic modernization and the globalization of tourism.  Since 1960 a dozen Caribbean countries have achieved political independence.  They include: Antigua, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts/Nevis, St Lucia, St. Vincent, Suriname, and Trinidad/Tobago.   On the other hand, 16 separate island microstates continue to exhibit a propensity for dependence.  These include Aruba and the Dutch Antilles (Bonaire, Curacao, Saba, St. Eustatuis, St Maarten/St. Martin), six British Overseas Territories (Anguilla, Bermuda, British Virgins, Cayman Islands, Montserrat, Turks/Caicos), the two American Territories (Puerto Rico, U.S. Virgins) and the two French Overseas Departments (Guadeloupe and Martinique).  Such dependent territories (DT’s) define much of the small island Caribbean. 

            With the gradual dismantling of colonial preferences, both island groups have restructured their economies but along distinctly different paths.  The larger, more resource-rich independent island nations have diversified the colonial base with some emphasis on manufacturing and import substitution, and tourism to a lesser extent.  The smaller, more vulnerable dependent microstates have opted primarily for a strategy of export substitution, i.e. replacing traditional staples with mass tourism, related services and construction.  Both have benefitted from the buoyant growth of international tourism.  Since 1950, the visitor industry has grown five percent a year into the largest global industry accounting for a quarter of all international trade in services, ten percent of world GDP and employment and over seven percent of capital expenditures (Vellas and Becherel, 1995).

 

 

The Setting

Tourism developed across the Caribbean in three waves.  First, in the late 19th and early 20th century, a few steamship lines carried a small stream of wealthy North Americans to Bermuda, Jamaica and Cuba.  The real take-off took place, however, during the 1950's and 1960's with the fortuitous confluence of a favorable set of factors that produced a threshold of sustained growth.  These included the advent of jet travel, the U.S. embargo of Cuba, rising affluence in North America and Europe, aid-financed air and sea transport infrastructure, and the expansion of foreign hotel investment lured by tax incentives.  Within two decades, the Bahamas, Puerto Rico and Virgin Islands in the north, and Aruba and Barbados in the south became established popular international resort destinations.  After the 1973-1975 OPEC crisis, growth resumed including expanded cruise traffic and engulfed the rest of the Lesser Antilles as well as the Cayman Islands and Turks/Caicos (Wilkinson, 1997).

            As a result, within the space of a generation, the landscapes, coastlines, economies and social structures of the small-island Carribean have been transformed.  In these microstates with less than a million population, tourism represents a third of all foreign exchange, a fourth of employment and a fifth of GDP (Holder, 1988).  According to Mather and Todd (1993, p.11): ‘There is probably no other region in the world in which tourism as a source of income, employment, hard currency earnings and economic growth has greater importance than in the Carribean.’  This archipelago, along with the Mediterranean and the more developed Pacific destinations (Hawaii, Guam, Marianas, Polynesia), has become an integral part of the so-called ‘Pleasure Periphery’ of North America, Europe and Japan respectively (Turner and Ash, 1976).

 

 

The Problem

            However, recent research suggests that the practice of mass tourism development in small islands has sacrificed environmental stability and disrupted the native genius of place and natural pace of island life (Briguglio et al., 1996).  Construction of condominium clusters and road networks on steep mountain slopes has damaged upland forests and watersheds and silted over streams and wetlands.  Resulting erosion has polluted lagoons and damaged reefs already weakened by sand mining, dredging and cruise ship and yacht anchoring (McElroy and de Albuquerque, 1998).  The placement of large-scale beach resorts, marinas and infrastructure along delicate coastlines has altered shorelines and depleted endemic species and archeological artifacts.  As a result, nearly 30 percent of the reefs across the Caribbean are at high risk because of runoff and untreated hotel and municipal sewage (UNEP, 1999a).  The worst threats to endemic birds and fisheries appear to be in the Lesser Antilles, islands most dependent on mass tourism (UNEP, 1999b). 

            These tourism-induced intrusions have prompted calls for a more sustainable tourism in the region and stimulated the search for alternatives to mass tourism (Edwards, 1988;  Smith and Eadington, 1992; Conlin and Baum, 1995; Pattullo, 1996; Briguglio et al. 1996; and Wilkinson, 1997).  A variety of writers have attempted to define the key components of sustainability (Innskeep, 1994; and Stabler, 1997).   To borrow loosely from this growing literature, a sustainable tourism style embraces two core elements.  The first is a relatively permanent income stream sufficient: (1) to satisfy the profit criteria of travel interests, (2) to improve host quality of life, and (3) to manage and protect the insular bio-cultural assets.  The second is a relatively permanent flow of satisfied visitors, the size and timing of which is largely controlled by the local community.  In short, sustainability means satisfying the demands of tourism’s four major stakeholders: hosts, guests, entrepreneurs, and future generations.

            This paper focuses on the problems of satisfying these demands in the Caribbean context.  It contains three major sections.  The first outlines the general problems of planning in small island systems.  The second reviews the special difficulties of natural resource management in fragile island terrestrial and marine ecosystems.  It further examines the peculiar control and measurement constraints imposed by a pervasive and dynamic tourism industry.  By way of response, the third section develops and applies an early tourism impact warning signal to 30 Caribbean countries to allow policy makers to gauge in broad brush where their destinations lie along the tourist-environment continuum.  The paper concludes with some brief contours of a comprehensive, integrated planning approach to address the constraints outlined.

Planning Problems

            Small island economies are characterized by resource scarcity, thin domestic markets and intense openness.  Because the engine of growth is propelled by a small range of exports, island economic performance can be seriously disrupted by income and taste changes in major overseas markets as well as by actions of competitors.  The conversion to artificial sweeteners in the US soft drink industry in the 1980's caused severe unemployment in some Caribbean sugar producers dependent on the North American market.  Small islands also suffer from export market concentration and become hostages to policies of their major trading partners.  NAFTA has caused a steady loss of textile manufacturing investment from the region to Mexico.  The consolidation of the European Union is severely limiting preferential banana exports from Windward Island producers.

            Local “room to maneuver” is further constrained by heavy dependence on basic and intermediate imports (liquor, luxury gifts).  Because they are often at the end of the shipping chain and suffer expensive break-bulk charges, islands experience magnified oil-price and transport shocks.  All essential imports carry a high freight premium.  As a result, sometimes the cost of living and the destination’s competitiveness are largely determined by external forces.  Because islands usually tie their currencies to their major trading partners, the insular price level is vulnerable to the vagaries of metropolitan foreign exchange policy.  The U.S. dollar’s fall in the late 1970's sharply curtailed the profitability of some Caribbean textile and watch exporters dependent of European inputs (McElroy et al., 1990).  The dollars’s rise in the early 1980's blunted plans by Caribbean destinations attempting to attract long-staying Europeans.

            To exacerbate matters, policy makers have few effective stabilization defenses against these external trade and exchange shocks.  Keynesian fiscal and monetary policies are relatively inoperable.  Compensatory fiscal stimulation to counteract export reversals is undermined by regressive tax codes/compliance, thin capital markets, the balanced budget mandate for dependent territories, and off-setting cutbacks by large-scale multinational hotels and enterprises.  Even where deficit spending is implemented through external borrowing in the larger island nations (Guyana, Jamaica, Trinidad), the results are usually rising debt and trade imbalances and slower growth (Looney, 1989).  Since the money supply in very open economies is largely determined by the trade balance, counter cyclical monetary policy is weakened.  The supply of credit tends to rise during booms and fall during recessions.  Morever, in the post cold war era, traditional sources of aid have become uncertain.  Since 1989 U.S. aid to the Caribbean has declined over 80 percent (McElroy, 2000), especially difficult for those DT’s reliant on external funding to upgrade transport and communication infrastructure.  Because of these policy constraints, small island economies are among the world’s most vulnerable (Crowards and Coulter, 1998). 

            In addition to these external constraints, planning for sustainability is also hindered by several internal limitations.  Many microstates are dualistic with a large technologically progressive export sector alongside a small-scale, fragmented domestic sector.  Such imbalances promote monopoly and welfare losses particularly in archipelagic states, weaken the formation of consistent national economic policy, and stimulate the migration of resources away from renewable uses.  Rapid tourism growth, for example, has displaced much of traditional agriculture, fishing, and handicrafts across the small-island world (Beller et al., 1990).  Planning is also made difficult in emigrant-prone microstates by the human resource constraints of a small labor pool and limited expertise as well as by bureaucratic shortcomings.  Tourism planning specifically is problematic because of overlapping jurisdictions (natural resource, wildlife and coastal zone management, cultural affairs, zoning legislation, tax incentives, etc.) in combination with the general lack of interagency coordination.  Morever, all these problems are intensified by the subjective personalism, kinship ties and multiple conflicts of interest that characterize small-island decision-making (Benedict, 1967).

            Planning is also complicated by demographic and labor force shifts associated with the longer period boom-bust cycles common in island economies.  Establishing infrastructure and social service needs with these parameters in transition is difficult, and the self-reinforcing dynamic of these fluctuations threatens sustainability.  In stagnant emigrant islands, the decline in skills, saving, entrepreneurship, population growth and social participation reduce the ability to restructure, diversify and resume growth (McElroy and de Albuquerque, 1988).  In booming immigrant islands the reverse is true.  Rapid population and labor force growth and rising rates of family formation, housing and social service demands multiply resource use conflicts and reduce community capacity to achieve more moderate, sustainable development.  These dynamics are further aggravated by the difficulty of gaining consensus in island societies plagued by racial cleavages since the colonial era and by center-periphery factionalism in archipelagic states.

Ecosystem and Tourism Challenges

            The history of natural resource degradation and neglect, a propensity for natural disasters, and the fragility of interlocking terrestrial and marine ecosystems circumscribe environmental planning in small Caribbean islands.  Since the 17th century, the region has experienced rapid deforestation, intrusive sugar culture, erosive agricultural practices and general resource neglect (Watts, 1973).  The post emancipation era has been marked by over grazing of hillsides, habitat destruction and species loss, and depletion of near shore fisheries (McElroy et al., 1990).  Since the tourism take-off, hotel developments have defaced mountains, damaged watersheds, caused erosion and lagoon pollution.  Beach resort construction has destroyed mangroves and shoreline vegetation and filled in salt ponds (Pattullo, 1996).  In addition, the large number of pleasure yachts and cruise ships that ply the Caribbean directly inject waste into the sea because of inadequate port reception facilities (UNEP, 1999b).

            This poor record of resource management is aggravated by periodic hurricanes, droughts and other natural disasters (Barker and McGregor, 1995).  For example, a fungoid in 1938 destroyed the Bahamian sponge beds.  Hurricanes in 1955 wiped out the nutmeg industry in Grenada.   In 1979 storms destroyed most of Dominica’s housing stock; in 1980 they ruined most agricultural production in St. Lucia.  Volcanic activity in Guadeloupe (1976) and St. Vincent (1979) caused widespread temporary population evacuations.  Eruptions in Montserrat beginning in 1995 rendered roughly half the island uninhabitable and virtually destroyed the North American retirement tourism industry established there in the 1960's.  Such disasters involve costly infrastructure repair and slow recovery and divert resources away from strategic tourism planning.

            Planning is also constrained by the fragility of island biota (high endemisms and sensitivity to introduced species, and low diversity) as well as by the delicate linkage between terrestrial and marine ecosystems.  In volcanic islands, the natural operation of the fresh and salt water buffer systems stabilizes the ecology (OTA, 1987).  In the former, upland forests and lowland marshes slow runoff and erosion and protect marine life and reefs.  In the latter, reefs buffer coastlines against waves and storm surges and produce habitats and food.  Such closely coupled relationships must be internalized in the siting and design of infrastructure and facilities to avoid degradation.  Hillside resort and road construction accelerates runoff and erosion and can pollute lagoons and stunt coral growth.  Reef blasting and dredging can erode beaches, destabilize coastlines and choke coral growth.  These interdependencies limit planning options and suggest a more integrated comprehensive approach that respects the protective action of these stabilizing buffers.

            Tourism itself presents a handful of major planning challenges.  First, the mass-market character of island tourism in practice imposes a large-scale, consumption-biased international throughput economy on top of a tiny, delicate closed insular ecology.  This almost guarantees that insular natural and social carrying capacities will be overrun over time (McElroy, 1975).  This scale discrepancy is partly due to the high-volume profit imperatives of heavily capitalized airline, cruise ship, and hotel interests that create mounting waste and crowding from on-site visitation and the loss of traditional sustainable resource activities associated with rapid mass tourism growth.  Small-island tourism exemplifies the scale discontinuity often emphasized in the writings of Herman Daly and Robert Costanza.

            A second and related problem is the sun-lust nature of tropical tourism because of the large-scale and tranformational character of resort enclaves and transport infrastructure concentrated along fragile, amenity-intensive shorelines (Cohen, 1978).  In many cases siting such facilities has permanently altered the environment, damaged wildlife habitats, and displaced or disrupted other coastal activities (agriculture, fishing, shipping, etc.).  The most delicate island assets are under pressure from the highest concentration of visitors, activities, and facilities.  In addition, large scale usually demands foreign ownership and links with transnational travel and tour suppliers who favor price discounting and extending the season (Baum and Hagen, 1999), strategies that tend to increase stress and reduce capacity for renewal.

            A third problem is the peculiar high-growth political economy of many tourist-dependent microstates.  Policy makers with short electoral time horizons are often preoccupied with increasing visitor volume and preserving market share instead of maximizing net expenditure.  In the dependent overseas territories, belief in the untrammeled free market is bolstered by the package of incentives associated with political affiliation that are conducive to rapid mass tourism growth (McElroy and Mahoney, 2000).  These include aid-financed transport infrastructure, ease of entry for metropolitan capital and entrepreneurship, and a host of concessions that facilitate the expansion of center-to-periphery tourist traffic: common currency and language, familiar customs and regulatory regimes, duty-free allowances and so on.           

            In addition to the above challenges, tourism demand is particularly volatile because of a variety of factors.  First, international currency fluctuations can noticeably impact visitor flows since transport cost is the major expense of long-haul travel to the island periphery.  Second, tourism demand is highly sensitive to recessionary episodes in the major origin markets.  Third, visitor demand is also especially influenced by political and civil unrest and real or perceived threats to tourist safety.  Finally, natural disasters can deflect visitor demand as well as reduce access and the supply of hotel capacity.  These periods of instability breed uncertainty, focus decision-makers on the short-run scramble to regain markets, and deflect their attention from long-run considerations of sustainability.

            Finally, tourism is a dynamic moving target, clearly the result of the scale discontinuity mentioned above.  Destinations tend to pass through successive stages of increasing visitor density, scale, external control and bio-cultural damage until their appeal declines (Butler, 1980).  As a result, specific planning challenges change as destinations move up the resort cycle.  For emerging islands, establishing infrastructure to access attractions is paramount.  Managing growth is imperative for expanding destinations while preserving assets and vacation quality is necessary for mature resort areas.  New markets, attractions and activities must be sought to avoid the decline stage.

            The implications of tourism’s dynamics is that planners require some idea of their destination’s position in the resort cycle to design effective strategies.  However, this location may not be obvious because tourism’s impacts are difficult to measure for at least three reasons.  First, they include hard-to-quantify cultural and ecological externalities.  Second, they tend to occur asymmetrically with linear economic benefits accumulating quickly and visibly while non-linear socio-environmental impacts surface later and often after sustainable thresholds have been violated.  This benefit-cost discrepancy partly explains why sustainable tourism is problematic since the needs of visitors and travel interests take precedence early on while host priorities and asset protection are postponed until “business as usual” threatens profitability (Lawrence, 1990).  A related problem is that until recently there have been no commonly accepted comprehensive measures of overall tourism socio-economic and environmental impact to help assess where destinations lie along the resort cycle.

New Approaches

            As a partial response to these planning constraints, two new directions are suggested.  The first is to apply the recently developed Tourism Penetration Index (TPI) to a sample of Caribbean countries to better determine where destinations lie along the resort cycle and, indirectly, along the tourism-environment continuum.  The second is to sketch out the broad outlines of a comprehensive integrated planning framework that addresses some of the problems island planners face in designing a more sustainable tourism.

            The TPI was developed because of the absence of an overall impact measure of mass tourism on the economy, social structure and environment of small islands.  It is a simple three-variable index that was first applied with 1993 data to 20 small Caribbean islands (McElroy and de Albuquerque, 1998) and later extended to a more heterogeneous group of 35 islands (McElroy and de Albuquerque, 1999) and to a world sample of 47 islands (McElroy, 2002).  This study employs the same three variables using 1997 data: visitor spending per capita to measure economic impact, average daily visitor density per 1,000 population to measure socio-cultural penetration, and the number of hotel rooms per km2 of land area as a proxy for environmental pressure.  A sample of 30 Caribbean countries was selected based on two criteria: (1) tourism data availability, and (2), for comparative purposes, a broad definition of the region including Bermuda and the traditional mainland countries (Belize, Guyana, Suriname).

            Because of its simplicity and aggregative nature, the TPI suffers from a number of weaknesses.  It does not account for the spatial concentration of visitors, an important omission in island destinations since most tourism infrastructure and activity occur around delicate coastal amenities.  Similarly, the TPI does not account for temporal crowding, important in the Caribbean since most tourists vacation during the high season winter months (Nov. 15-Apr. 15).  In addition, the index is based on one-point-in-time cross sectional data and fails to measure the duration of a destination’s experience with and adaptation to tourism.  Finally, it tends to perform better with countries roughly of similar size and tourism style.

Results

            Table 1 provides 1997 background indicators for the 30 countries.  Table 2 presents calculations of the three impact variables, their respective standardized indices, and the resulting TPI rankings from most to least penetrated.  Despite its rudimentary nature, the TPI does yield the expected results.  The small, highly tourist-dependent and popular resort destinations in the Lesser Antilles populate the top of the scale while the much larger, more diversified economies in the Greater Antilles and on the mainland populate the bottom.  Based roughly on the TPI scores, historical observation and past research (McElroy and de Albuquerque, 1992), the 30 countries fall loosely into three impact groupings: (1) the most penetrated, (2) the least penetrated, and (3) intermediate destinations further clustered into high and low subgroups.

Table 1:  Selected Tourism Indicators for Selected Caribbean Countries, 1997

 

Country

Land Area

Population

Tourists

Day

Avg. Stay

Rooms

Total Spending

 

(km2)

(000)

  (000)

(000)

(nights)

 

(US $ mil)

 

 

 

 

 

 

 

 

 

Auguilla

91

11

43

71

9.5

915

57

Antigua

440

64

232

309

7.0

3,185

269

Aruba

193

69

646

297

7.5

7,233

666

Bahamas

10,070

284

1,618

1,782

6.0

13,288

1,416

Barbados

430

259

472

518

10.5

6,069

717

Belize

22,963

230

146

159

7.0

3,905

87

Bermuda

50

62

380

182

6.1

4,135

478

Bonaire

311

11

63

18

8.3

1,120

44

British Virgins

150

19

244

105

8.0

1,587

210

Cayman Islands

260

39

381

867

6.9

4,501

493

Cuba

110,860

11,120

1,153

19

11.3

31,837

1,354

Curacao

544

144

209

218

8.3

2601(1)

202

Dominica

750

65

65

234

11.2(1)

623

40

Dominican Republic

48,520

8,230

2,211

271

10.4

38,585

2,107

Grenada

340

97

111

257

7.4

1,775

59

Guadeloupe

1,706

421

660

470

5.7

8,530

372

Guyana

214,969

850

76

-

19.0

730

60

Haiti

27,750

7,950

149

-

9.6(1)

1,758

57

Jamaica

11,425

2,540

1,192

712

10.8

19,359

1,131

Martinique

1,060

412

513

387

13.0

5,690

400

Montserrat

100

5