Sustainability Now Equals Profitability

I am honoured to have been invited to deliver the address at this important conference and congratulate the officials of St Eustatius on your choice of theme and topic. I must confess, that I had absolutely no hesitation or reservation in accepting your gracious invitation because your conference and topic married two things for me […]

By Liz Thompson

December 8, 2017

I am honoured to have been invited to deliver the address at this important conference and congratulate the officials of St Eustatius on your choice of theme and topic. I must confess, that I had absolutely no hesitation or reservation in accepting your gracious invitation because your conference and topic married two things for me – first, a long held desire to visit your beautiful island and second, the opportunity to engage with people in our region on issues in development and sustainability. The topic and timing are made all the more important by the United Nations having declared 2017, International Year of Sustainable Tourism for Developmemt.

With this combination of location and conversation, you in fact ensured that I could not resist. So I thank you for bringing me to St Eustatius and by so doing, fulfilling what has been for me a dearly held wish. I can only hope that when I have finished speaking you will have reason to be glad I came. I must add too, that a sense of admiration brought me here, based on the fact that after the recent hurricanes, you were determined to have life return to normal and to host this conference despite the challenges. I salute your determination and your resilience.

Tourism In The Caribbean

The Caribbean has been a tourism destination since the 18th century, when famous Europeans and Americans, including George Washington, came to take the salutary air and waters of these islands. The modern tourism product, is a 20th century phenomena on which large hotel chains, cruise ships and airlines, recognised and cashed in, based on the popularity of the region. Driven by changing international trade preferences and rules, Caribbean islands have transitioned from monocrop agricultural economies to financial services and tourism as the region’s major foreign exchange earners.

Since we are going to discuss sustainability, I suggest that before we go further, we should consider a few working definitions. Since the Brundtland Commission and the Rio Earth Conference of 1992, the expressions sustainability and sustainable development have come to mean, “development which meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” Sustainable Development is considered to have three interdependent and equally important pillars of society, economy and environment. This crucial definition and the importance of the three intersecting pillars are often lost in the exclusive concentration on environmental matters.

In the context of tourism, it is my view that sustainability must mean the development of a product that has at its core, growing the economy, protecting the environment on which the economic growth is predicated and creating opportunity and decent work for citizens. In that context, the tourism product must reflect domestic culture and be as much concerned with the views and comfort of nationals who call ‘Statia and the Caribbean home, as it is with the comfort and entertainment of the tourists.

The St Eustatius tourism product should not be some sort of Dutch knock-off, but must have a distinctly Caribbean DNA and identity, as it is for this unique blend that your visitors come. How then, does the island create a sustainable product that serves the delights of visitors and the desires of nationals? I really should not ask, “How does the island create this?”, but, “How do all of us, working together in our various specialties evolve such suggestions, strategic approaches and best practices that enable the development of such a product?” It is such pivotal policy and philosophic considerations that are the focus of this conference.

Let us start our conversation by making the point that the primary objective of traditional tourism policy in the Caribbean has been to bring as many tourists to the islands as possible. In pursuing this policy, the Caribbean has become one of the world’s most popular tourism products for visitors arriving by cruise ships, yachts and aircraft.

Let us also recognize and concede, that within this success however, lies the seeds for economic and environmental unsustainability of the Caribbean tourism product. And I very much hope that there is no one in the room who is in any doubt that environmental and economic sustainability are inextricably and symbiotically linked.

As tourism destinations that attract people from every part of the globe, Caribbean islands are disproportionately dependent on tourism revenues for foreign exchange and economic survival. These tiny islands play host to around 25 million tourists every year, from whom they derive approximately US $49 billion, or some 15% of GDP and about 11% of direct employment. Statistics also show that because of the high degree of foreign ownership of hotels, the region retains only 20 to 30 cents in every dollar, with the bulk of the tourist dollar for rooms, resorts, recreation, and even food, going to companies outside the Caribbean. It would be good to know the precise figures for Statia.

The model of “bring more tourists” which the islands pursue is putting pressure and pollution on fragile ecosystems which the tourists come to enjoy. It is a classic “catch 22.” The belief is that if we bring more tourists, we will make more money, but this thinking is flawed. The more tourists who come, the more environmental harm is done and the greater the level and rate of environmental degradation, thereby compromising the quality of the product and putting the product at risk. Moreover, unless we change the fundamentals and have more local ownership and investment, regional earnings will continue to be minimal, relative to the revenues generated on the islands, but banked elsewhere.

Social Sustainability

You will recall that in defining sustainable development, I suggested “that creating opportunity and decent work for citizens” was a fundamental element of sustainability. Far too often in the region our focus is on receiving tourism revenues, hence the needs preferences and comforts of the tourists are given precedence over those of the very nationals, who must welcome, entertain, serve and service the tourists. The all-inclusive hotel, now so popular in the Caribbean allows money to remain on property while domestic shops and service providers are shut out from the benefits and financial receipts.

This is just one example, but there are others. If Caribbean citizens are expected to play host to visitors, they must receive benefits for doing so. Tourism and other programmes intended for national development can often alienate local populations and lead to a measure of social disharmony. Continuous upgrade of infrastructure and housing stock, strengthening and expansion of authentic indigenous cultural offerings and incentivisation of local micro and medium enterprises and services for the provision of goods and services to the tourism sector, is of importance in ensuring social sustainability. Rarely are local businesses extended any where near the concessions, tax rebates and incentives given to foreign investors, although local contribution to the tourism product and the tourists’ experience is of high value.

Environmental Sustainability

The Caribbean tourism product is built on the sale of a beautiful and close-to- pristine natural environment. This natural environment is now under threat from a number of sources. The bring-more-tourists model militates against maintaining a pristine environment. Typically, islands host significantly more visitors than the size of their resident populations. High usage places stress on the physical environment. It increases pollution. It accelerates the rate of environmental degradation. It turns the islands’ fragile ecosystems into commercial commodities which are in many islands rapidly becoming the worst for wear.

We seem to believe that these ecosystems will last forever, or remain pristine no matter how, or by how many people they are used. My questions, therefore are – Are we conducting assessments of the carrying capacity of our islands? How many tourists can each island support in a 365/366 day period, without the ecosystem becoming overwhelmed? What is the recovery rate of the ecosystems during the periods we regard as “low” or “off” season? Given current tourist arrival numbers and usage levels, what rate of degradation can be expected an over what time frame?

Based on the answers to these questions, how long do we expect our tourism product to last? Further, should we move to approaches in which we are selling quality and exclusivity and limit access to the numbers we allow in every year so as limit the burden on island ecosystems? I was very impressed to learn yesterday that Turks and Caicos is doing very well in yachts and cruise tourism but only allows two vessels of this type in their port at any given time. TCI is selling exclusivity and as a result they are yielding high profitability.

There are a plethora of other environmental issues that island states are facing and impact their environmental sustainability. These include finding affordable environmentally friendly options for solid and liquid waste disposal, noise pollution from entertainment in the tourist sector, discharges of poorly treated sewage from hotels and other tourism facilities as well as the discharge of ship engine oils, lubricants and cooking oils, the overbuilding of the physical environment to facilitate hotels and tourism facilities, inadequately regulated jet skis and disruptive whale watching.

Add to this list, bilging by cruise liners and other vessels which traverse the Caribbean Sea and the nearshore of the islands and introduces invasive, non- native or alien marine species into the environment where they have no natural predators. In the islands we can also point to damage to sea grasses, sea beds and the wrecking of reefs by the anchors of cruise ships and other ocean going vessels, overfishing of marine species and loss of juveniles to replenish fish stocks, as we seek to satisfy the demand of menus for fresh and exotic species of fish.

Caribbean islands are also significantly impacted by the devastating consequences of climate change which has now been referred to in the UN system, as “the most significant development challenge of our generation.” These consequences include sea level rise, loss of biodiversity as well as loss of beach and marine habitats, coastal and beach erosion, sea temperature increases, damage, coral bleaching and other damage to reefs which is of particular concern to “Statia” given its status as an exceptional dive site. It is not widely thought of as a sustainability issue, but changing ambient temperatures with the resultant increases of habitats for mosquitoes and other vectors, are making diseases such as Dengue Fever and more recently, Chikungunya and Zika effective deterrents to tourist arrivals.

There are two further issues without which an assessment of the tourism product could not be undertaken, energy and water. It is a cruel and bitter irony that the island states, surrounded by water, tourism dependent, the economies of which and the lifestyles of whose citizens revolve around beaches, should be amongst the most water stressed and water scarce in the world. Antigua and Barbuda, Barbados, Bahamas, Dominica, Jamaica, St Lucia and St Vincent and the Grenadines all show water scarce or water stress profiles more in line with what one would expect of Sub-Saharan Africa than an exotic island destination.

In addition, the prices we pay for petroleum products are within the top 20 highest in the world. Water and energy are used in cooking, air conditioning, transport and numerous other activities and energy and water resource activities are often mutually reliant. Take for example airconditioning systems which use both water and energy and the extraction, treatment and distribution of water resources, which require energy. It is not just the environmental aspect to this which is of concern, but the high and unsustainable costs to regional economies of water and energy supply, purchase and usage. Each of these poses a severe threat to sustainable development, jeopardising all three pillars.

Economic Sustainability

We cannot get to the point of economic sustainability unless the issues of social and environmental sustainability are first addressed. Nonetheless, there are economic issues which do warrant our attention on their own. Small Island Developing States (SIDS) have been defined by the United Nations systems as having characteristics which make them peculiarly vulnerable at the economic level.

These characteristics include small size, openness on the international market, extreme vulnerability to exogenous or external environmental and economic shocks, long distances from the centres of production resulting in high import costs and small populations and size preventing the realisation of economies of scope and scale. For those to whom this definition was philosophical, academic and theoretical, one only now has to say the names Irma and Maria and immediately the definition assumes a powerful reality of how environmental systems over which one has no control, systems made more powerful and frequent by climate change, disrupt society and economy, wipe out up to 200% GDP in a matter of hours and decimate the environment, requiring rebuilding for generations to come.

New Trends In Tourism

Caribbean tourism destinations have faced many threats in the past and fought off new market entrants and tourism products. We have developed niche products and services, such as yachting and all-inclusive hotels. In some countries, however, the product, souvenir offerings and entertainment are not sufficiently differentiated. Facilities are tired and worn and need injections of capital to modernize, refurbish and revitalize what is being offered to visitors.

We have witnessed the democratization of tourism. Today, the empowered citizen with a computer or smart phone can compare countries, accommodations, restaurant menus, tour options, or optimal flight and room rates. The travel agent primarily now services organisations and not individuals. More recently, the development of what is being referred to as the shared or “sharing economy” has introduced new offerings into the tourism market. AirBNB and similar services have allowed the individual, rather than the hotel to offer her house or his room to anyone on the internet who likes it. Services such as Zip Car, Lyft and Uber have revolutionized ground transportation. How else will the sharing economy impact tourism and are we either preparing for those changes or creating our own new trends that will help reshape the market and maximize revenues? The growth of the sharing economy which is likely to deepen not diminish, provides an opportunity for the Caribbean to strengthen community based, heritage, food and immersion tourism as tourists seek to have more reality type and authentic island experiences. We can cash in on the popularity of reality TV and the desire for less managed, less structured, less mass based hotels and tourism experiences and use this trend to keep more tourist spend on island, in addition to putting more money in our citizens pockets.

I do not propose to discuss every new trend, but I felt that these were worth highlighting since they are redefining the traditional market and product and how users access them.

The Way Forward

I have sought to raise a number of issues which I hope and which I imagine will be discussed over the course of the next two days. In this regard, I am seeking to create the landscape for an open dialogue on which other speakers will then set up and on which discussions will elaborate.

I would wish however, to also make a few suggestions and point to some possible solutions to some of the issues in sustainability that I have been raising.

Some of my suggested approaches have been touched on in my earlier comments, but I want to explore additional ideas, although not in detail as I expect the Conference to do this.

Scientists tell us that we are now living in the era of the Anthropocence, the period in which man’s activities and technologies can cause irreparable harm to the natural environment. Our first responsibility as a Caribbean people is to develop a resilient economy and society, revisiting building standards, recognizing that powerful hurricanes are no longer a rarity, but the new norm. Since people will invariably be stranded on island, or hotels may have to act as hurricane shelters or residential facilities. Our general building standards and codes will have to become higher and more stringent. Building standards must be commensurate with the nature and degree of the threat.

Citizen and tourist demands for energy and water from the social, economic and environmental perspectives require us to roll out policy and programmes at the level of government and the private sector that will ensure security, security of these resources and security of our economies. It is common place for hotels internationally to recycle, to reuse to use on-off sensors for rooms and taps or low flow taps, to reduce the use of environmental goods and services, protect environmental resources and contain costs. In the Caribbean many hotels are still not following these models, nor are they pursuing international environmental certifications which enhance market appeal and value added. They are two benefits to this, cost savings over the long term, although the initial outlay may be high and as a marketing tool to potential visitors, many of whom are living in countries where such practices are legislated and where it is already part of their social, environmental and economic culture.

Integrated water resource management policies and strategies are not coordinated between ministers such as environment, agriculture, finance, economic affairs and education. The result is a fragmented, siloed approach that now requires intraministerial coordination and public education if it is to be successful.

The transition to green energy, given regional potential for water, wind and solar energy, has been much and long talked about, but must now be a priority. Despite the high costs of energy, the risk to national security and the significant percentage of GDP that goes toward importation of fossil fuels, few island states are actively working toward a green energy agenda or have set truly ambitious targets for such a transition. I congratulate ‘Statia on its efforts in this regard. Fewer islands have appointed champions or project mangers who come to work every day to lead this transition. This is so despite two very encouraging factors. The experience of the Barbados solar water heating industry which has generated jobs, household and foreign exchange savings and points the way to how policy and entrepreneurship can transform the energy landscape as well as the fact that global investment in renewable energy is far outstripping investment in traditional energy.

At the governmental level we need to formulate and implement policies and stringent regulations and penalties for discharge of wastes into the environment, solid and liquid waste management and the harmful practice about which we complain but do not sufficiently target with policies and programmes.

The use of Environmental Impact Assessments and Social Impact Assessments as tools for tailoring investment projects so as to reduce their adverse impacts and maximize the economic impacts, are not being sufficiently used.

Climate Change mitigation and adaptation policies are still not integrated into national development planning and strategies. Nor do we pursue and utilize nexus planning and approaches to get the benefit of intersecting solution to intersecting problems such as water, energy, food, climate, and waste management. The creation of policies which will close or create virtuous cycles is a critical approach, not currently being pursued.

Protection of the Caribbean Sea as a zone of special significance and protection, even if not fully recognized within the UN system and member countries should be a key point of policy and cooperation amongst those who live in the Caribbean Sea or derive a living from it. What features should such a policy have and what measures and mechanisms for cooperation and coordination are needed to give full effect to such a policy?

I recognize that funding is a challenge all over the region. The multilateral system is increasingly talking about “innovative financing” to mean – strengthening the tax base, stamping out corruption and stopping the hemorrhaging of tax and governmental revenues, as well as using private sector financing, particularly BOOT and BOLT arrangements for development activities. While I understand the underpinning rationale for this approach and consider that it has legitimacy and relevance, I also recognize that the concept of innovative financing being pushed by the UN has limited meaning in the Caribbean, SIDS and small developing states for two reasons. Transparency International identifies the Caribbean as one of the cleanest regions in the world. Hence there are no revenue loops to be closed on corruption that will yield large revenues. Moreover the tax bases of the populations of the microstates, our microbusinesses and SMEs which are indigenous enterprises and limited FDI, cannot yield significant taxes or generate the level of revenues to support BOOTs, BOLTs and the level of development financing required by regional governments. Frankly, I am really unclear why regional policy makers are part of this discussion rather than putting something on the table that is more relevant to our reality, our experience and our capabilities.

We do not often take up funds available in the development pool. Far too often international funding available for development activity is limited or access to it, imposes too stringent access arrangements for our human resource base limited in number and skill to mange. I am keen on the Caribbean pushing for a funding mechanism, similar to what REDD+ is to countries with forests, that utilizes our maritime space which far exceeds our terrestrial space as the basis on which access to funding should be assessed and accessed, as there is no doubt that the Caribbean Sea is a very effective carbon sink, in the same way that forests which qualify under REDD+ are.

Participating in and implementing The Paris Agreement, international climate change negotiations and relevant COPs and pressing the developed world and major carbon producers for carbon neutral policy and a 2 degree centigrade cap, is an area in which the Caribbean presence has made a difference to the multilateral dialogue and outcomes. Now we must access funding and implement and this last issue of implementation is one of our particular weaknesses in the Caribbean.

The link between almost all seventeen of the SDGs, from gender, to innovation, from economic growth to SCP, from ending poverty, decent work and liveable wages, to building infrastructure and improving resilience, from protection of the marine environment, oceans, seas, and biodiversity loss to energy and water, have a tourism connection. In seeking to attain the SDGs we will be forced to consider at the level of policy and programming how we further define and develop our tourism products.

Exploration of sustainable new niches such as ecotourism and other new market trends from which ‘Statia and the region can benefit should be standard. Sustainability now equals profitability. Consider how consumer demand and market drivers have given rise to whole foods, vegan products and restaurants, a range of non-animal tested products, fair traded goods, organic products and the censure of companies that exploit the labour of children and women.

I have not heard any discussion in the tourism sector around how robotics, artificial intelligence, increasing automation and related issues will drive the reshaping of the tourism industry. Unless the Caribbean can anticipate and get in front of trends to influence how they will impact us we will forever be in reaction mode, buffeted by development changes and trying to play catch up. In a world where people have avatars and more of an online presence, cyber existence and larger numbers of social media “friends” than they do in real life, I am amazed that no Caribbean island or company has sought to create a virtual island experience or game for the market. This could yield substantial revenues. Many of you are familiar with Farmville which generates billions of dollars in revenues, the age of the average player of which is 45 years old and incidentally female, who spend their time and their money watering make believe plants and collecting fake eggs. Where is the Caribbean version of this game? Why are we not making people pay to buy umbrellas to shield themselves from a sun that exists on the virtual version of our islands, where they will collect rocks and exotic sea creatures and check into virtual hotels and restaurants and trade e-passes for one island or another? Just a thought, but if any of you try this and become a billionaire, I am suing for my cut.

Your topic is a wide ranging one on which much more could be said. I fear that doing so, however, would trespass on your patience and politeness. I hope therefore, that I have achieved what I have set out to do, which is to frame the skeleton on which the conference discussion will now add muscle. Yes, the search for sustainability has a price and creates pressures, but without it the pressures will be greater and profitability compromised. Sustainability undoubtedly creates profitability and a path to environmental protection, social and economic growth for present and future generations of nationals.

Liz Thompson

Liz Thompson is a former Minister of Energy and Environment of Barbados. She is an attorney at law and consultant and a 2008 winner of the prestigious UN "Champion of The Earth" Award. Senator Thompson also holds an MBA and a Postgraduate Certificate in Oil and Gas Law with a minor in Renewable Energy. An elected Parliamentarian from 1994 to 2008, she has previously served as Minister of Health, Housing and Lands and Physical Development.