Towards a green economy

value added results in US$ 2.87 total income. This large multiplier is due to strong backward linkages in terms of demand for local food products as well as forward linkages of household spending from tourism income. This gain results from consumer spending effects as incomes earned in various activities are spent in the domestic economy. In comparison, multipliers are smallest (1.30 to 1.64) in sectors such as the Panama Canal, mining and textiles where there are few production linkages (as much of the inputs are imported). In contrast, the multipliers for fruit, shellfish and other agricultural exports are especially large because much of the income earned accrues to rural households who spend a high proportion of their incomes on non-tradable goods and services in the local economy.

There is an increasingly convincing body of evidence indicating that more sustainable tourism can increase both the local contribution and multiplier effect. Within a given (or similar) destination, local contribution and multiplier increase the more the local community is involved in the tourism value chain, through the supply of products, labour, tourism services and, increasingly,

“green services.” The few available meta-studies indicate considerably higher multipliers for natural and culturally- oriented destinations (Chang 2001). Destination-specific studies, such as Brenes (2007) for Costa Rica indicate similar effects. The logic is sound – more local purchases (substituting imports) will increase local contribution, and the income effect will be greatest when local actors are the beneficiaries of those linkages.

Poverty reduction When tourism-related income grows with a substantial reorientation in favour of the poor, poverty can be reduced. Thus, in 2002 the UNWTO launched the Sustainable Tourism for the Elimination of Poverty initiative (ST-EP), aimed at

reducing poverty levels

through developing and promoting sustainable forms of tourism.10

Increased tourism, local contributions and

multiplier effects can accrue to wealthy, middle income, or the poor. Therefore, interventions must be made to help poor people become part of the processes that drive the industry (ILO 2010a). Investors and developers, as well as local and national governments, play a critical role in determining the role poorer populations play in the tourism industry. The local industry can also help by engaging in and encouraging the use of local companies

10. ST-EP has identified seven different mechanisms through which the poor can benefit directly or indirectly from tourism: (1) Undertaking measures to increase the level of the poor working in tourism enterprises; (2) Maximising the proportion of tourism spending that is retained in local communities and involving the poor in the supply process; (3) Promoting the direct sales of goods and services to visitors by the poor from informal businesses; (4) Establishing and managing more formal tourism enterprises by the poor, either individually or at a community level; (5) Using taxes or levies on tourism income or profits with proceeds benefiting the poor; (6) Supporting the poor in money or in kind, by visitors or tourism enterprises; and (7) Investing in infrastructure that offers local communities the chance to gain new access to available resources (UNWTO 2004b).

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for the provision of transport, services and food in order to generate local income and employment multipliers and contribute to alleviate local poverty:

■ In the case of Malaysia, Tourism Planning Research Group (TPRG 2009) describes the case of accommodation businesses and the shares of income generated and distributed across the chain. The final impact on local communities depends on the business structure and the economic activities related to tourism. In the case of the accommodation sector, most income is captured by hotel owners. However, an important share is received by small- business owners and local people involved in informal activities (Figure 2). From all tourism expenditure, 28 per cent is captured by hotels, while craft artisans obtain 5 per cent and local small businesses get 11 per cent.

■ In Zanzibar, Tanzania, Steck et al. (2010) estimate that only 10.2 per cent of total tourism income is captured by poor local people. The study found that the industry is heavily dependent on imports for both primary supplies and staff of suitable quality, both of which are normally avenues for participation of locals.

■ In Panama, households capture 56 per cent of total local tourism income (Klytchnikova and Dorosh 2009). Which households benefit the most, however, depends on the region in which the tourism revenues are generated. In the Colón Zone, most of the gains in household incomes (63 per cent) go to urban non-poor households and only 20 per cent of the income gains accrue to poor households. In contrast, in Bocas del Toro, where poor households account for a larger share of the regional labour force, 43 per cent of the total increase in household incomes accrues to the poor while the percentage gain in household incomes is nearly the same across household groups. The results for Chiriqui Province report household income gains received by the poor of 19 per cent, although the share earned by rural households is higher (46 per cent).

Empirical studies suggest that, at best, between one- fifth and one-third of total tourist expenditure in the destination is captured by the poor from direct earnings and supply chains (Mitchell and Ashley 2007). The impact of tourism on poverty depends on various factors including employment, the skill level of the labour force, changes of prices (goods and services and factors of production), ownership of micro and small enterprises and labour-market composition. As with income effects, there is increasingly convincing evidence that more sustainable tourism (particularly in rural areas) can lead to more positive poverty-reducing effects.

■ In Costa Rica, Rojas (2009) estimated the impact of tourism on poverty levels and found that without tourism incomes the local incidence of poverty would