March 2002

THE IDB AND TOURISM

IDB HELPS REGION CAPTURE GREATER SHARE OF TOURISM MARKET

Projects spur private investment and draw input from communities and civil society

Latin America can capture a greater share of the world's $476 billion tourism industry if it improves infrastructure, makes a greater effort to protect and develop its attractions, and forges a closer partnership among the sector's primary stakeholders, according to the Inter-American Development Bank.

The IDB has had extensive experience in the tourism sector, and is currently funding a group of operations throughout Latin America and the Caribbean that are aimed at maximizing economic benefits while minimizing negative social and environmental impacts.

How to further spur tourism development in Latin America will be the subject of a seminar at the Bank's Annual Meeting in Fortaleza, Brazil, on March 9. A major focus of the event will be the importance of establishing public-private partnerships to ensure both profitability and benefits to local communities.

The Fortaleza seminar will highlight recent experience in the states of Brazil's Northeast, the site for one of the largest IDB-funded tourism programs. Now nearing completion, the Prodetur program has focused on removing constraints to tourism development by improving infrastructure and public services in this poverty-stricken region. The program has improved and expanded eight international airports, built or upgraded over 800 km of highways and access roads, and provided water and sewerage to more than 1.1 million people.

In addition, Prodetur has made an important start in safeguarding the attractions that draw tourists by conserving 22 historical heritage sites and initiating actions to conserve more than 70,000 hectares of coastal ecosystems and protected areas.

The Banco do Nordeste do Brasil, which is carrying out the program with the help of a $400 million IDB loan approved in 1994, estimates that program investments have attracted an additional $6.5 billion in private investment to the region. In addition, they have directly or indirectly generated one million jobs in the region.

During the period 1994-2000, tourist visits to the Northeast have increased from 6 million to 12 million. During the same period, gross domestic product for the region increased by 53 percent, slightly more than the 49 percent increase for the country as a whole.

The IDB on February 27 approved $240 million in funding for a second stage of the Prodetur program that will complement the infrastructure development of the first stage with a greater participation of the local stakeholders: the private sector, state and municipal governments, and civil society. Through a series of mechanisms, such as open forum discussions, the Prodetur II program will ensure that future investments in the sector provide maximum benefits to the local communities while protecting the environment.

"Tourism can be a source of economic growth for the region, but it has to be done in a mindful way that takes into account its indirect impacts," says Raul Tuazon, team leader for the new project. Indirect impacts often ignored in the past include damage to the environment, such as destruction of valuable coastal ecosystems. In addition, new projects must make special efforts to ensure that tourism benefits go to the communities as well as to the private sector entrepreneurs.

Also in Brazil, an IDB loan for $11 million is helping to finance a long-term program to boost nature-based tourism in the nine Amazonian states. In the Proecotur program, the nine participating states are developing ecotourism strategies, strengthening regulations relating to ecotourism, assessing market demand, and devising management plans for protected areas.

Most Proecotur activities, which include training for the private sector and local officials, are being carried out in priority areas in each of the states. Each area has a steering committee composed of private sector and civil society representatives as well as local officials.

The Proecotur program is setting the stage for a major tourism investment program [..] that is expected to receive IDB funding.

"The IDB sees ecotourism as a way to aggregate a great deal of value, says Juan Luna-Kelser, the Bank's team leader for the project. "It gives us a vehicle for protecting the environment and at the same time providing jobs and preserving the cultural values of local communities."

In Bolivia, private sector entrepreneurs will be taking the initiative in an innovative IDB-financed sustainable tourism program. The program is inviting entrepreneurs to submit funding proposals that include a business plan as well as a nongovernmental (NGO) organization partner that will manage community-related activities. The projects are expected to turn profits within two years.

The Bolivia project draws lessons from an earlier project carried out by Conservation International, a worldwide NGO. In this project, which was financed with $1,450,000 from the IDB's Multilateral Investment Fund, a local community manages and owns an ecolodge in Bolivia's Madidi National Park. Considered a model for community-based ecotourism, the project turned its first profit in 2000 after seven years in operation.

Other IDB-financed tourism initiatives include a project in Belize that is helping to protect and restore Mayan archeological sites and protect the barrier reef. Another project in Central America called Mundo Maya is helping to develop tourism itineraries in the area of Mayan influence.

Tourism revenues in 2000 totaled $476 billion worldwide, according to the World Tourism Organization. The sector is growing at about 4.5 percent annually. Mexico is the Latin American country with the greatest world market share, at 3 percent, followed by Brazil.