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This study was carried out to learn about practical measures that might facilitate the financing of nature and heritage tourism in the Caribbean, which is broadly defined as tourism centered on a natural attraction, a historic site, or cultural event.

Nature and heritage tourism is a significant and rapidly growing segment of the tourism industry, seeking to capture a portion of the enormous global tourism market by attracting visitors to natural and historic areas. Exact statistics on the size of the market do not exist, as there is still disagreement on how to define it. However, the following statistics are revealing:

· U.S. tour operator surveys show that special interest travel is booming; the most popular of these tours are nature-oriented, outdoor activities.

· Tour operators report that each year from 4 million to 6 million people travel from the U.S. overseas for nature-related trips.

· Approximately 30 million people in the U.S. either belong to an environmental organization or have demonstrated an active interest in environmental protection.

· Reputedly, there were 500 operators specializing in the ecotourism market in 1990, and all indications are that the number has continued to grow.

· A 1991 study by the U.S. National Tour Association found that 94% of the mature adult population in North America is concerned about the environment.

For many Caribbean nations, tourism has become the most important source of business opportunities, jobs, and foreign exchange as the economic significance of such traditional products as sugar, bananas, bauxite, and oil wanes. Greater disposable income in the hands of consumers of international services also has been a contributing factor. The tourism product of the Caribbean is usually characterized by its sunny climate and white sandy beaches. However, in most of the islands the most significant attractions are the mountains, breathtaking landscapes, lush green forests, dramatic coastlines, and historic buildings. All of this combines to make nature and heritage tourism a promising new area for the region to explore. The key aspects of the market for this kind of tourism in the Caribbean island countries include the following:
· The Caribbean has a mature tourism industry; the area is generally regarded as a tropical beach, leisure vacation destination.

· The Caribbean land area, made up of relatively small islands, is a fraction of that of Central or South America, so that wild areas and natural attractions are smaller and fewer. What is not IX smaller is the sea itself, or the extensive coastlines and beaches of the Caribbean island nations.

· The tropical climate and geography favor the development of nature tourism, even on a small scale, and notable botanic and zoological gardens created by planned investment are attracting increasing numbers of visitors.

· Belize, Guyana, Suriname, and islands like Dominica, the Dominican Republic, Puerto Rico, Trinidad, and Grenada have relatively significant wild areas remaining.

The Caribbean also is the site of centuries-old colonial forts and naval stations. Although slowly decaying in the heat and humidity of the tropics, they can, even in ruins, kindle the imagination of visitors, given thoughtful interpretation and appropriate visitor amenities.

For now, and in the foreseeable future, only in a few Caribbean destinations will nature/heritage tourism account for a major segment of the market. The bulk of Caribbean tourism will continue to focus on tropical beach leisure vacations, with nature/heritage tourism added on, to an ever-increasing degree, to provide balance, variety, and relevance to the tourist’s stay.

Special Investment Needs of Nature/Heritage Tourism

Optimism concerning the marketability of the region’s natural and historical heritage is fueled by a growing worldwide interest in ecotourism and the environment. However, before the countries of the region can benefit significantly from this demand for nature and heritage tourism, the sites and attractions that would draw this type of tourism must be developed and marketed.

The development of these attractions has not kept pace with the overall development of tourism. Most new investments in tourism are still in the area of hotel development and other infrastructure to satisfy the traditional markets. The reasons for this are many, ranging from the lack of financial viability of some projects to a lack of awareness of the viability of nature tourism itself.

Investment in nature and heritage tourism development differs somewhat from investment in resorts because the needs are different:

· Access construction may be more costly, as nature/heritage sites may be more remote.

· The maintenance of the flora and/or fauna - parks, forests, wilderness - is usually a significant cost, both capital and recurrent.

· A visitors’ center is often needed, as are amenity facilities for day and overnight visitors to the nature attractions. This may entail bringing water, power, and other utilities to the site. The requirements in both cases may be quite different from those for traditional tourism.

· Unless the project is adjacent to a national park or other natural feature, a significant component of the financing may have to be earmarked for the acquisition of land.

The development of a natural area may require purchasing not only the land in the immediate vicinity, but also the surrounding area that makes up the “view-scape,” and, in the case of a unique fauna site, the area that defines the habitat.

Procedures and channels for financing are less well established in the case of nature and/or heritage tourism than in the tropical beach, leisure vacation tourism, although the former is estimated to be growing much more rapidly, at least in several countries.

Matching Borrower and Lender Needs

Potential borrowers for nature/heritage development proposals have complained about the lack of adequate financing. Potential lenders complain about the dearth of viable project proposals seeking financing. The factors involved in these competing contentions include the following:

· Lenders unfamiliar with nature/heritage tourism projects;

· Maximum loan terms set by lenders that are generally too short to ensure project success;

· Project proposals that are poorly presented or that do not match the potential lender’s requirements;

· Lack of successful models of nature/heritage tourism attractions in most destinations;

· Competition for financing from all other potential investments;

· The need for public infrastructure and for public sector involvement in operations, as steward of state lands, their natural resources, and historic national sites;

· The requirement in most countries for an environmental impact statement, which is an additional regulatory process involving additional cost to developers or assistance to them;

· The investors’ perception of a lack of/or limits on fiscal incentives and government backing of investment in nature/heritage tourism;

· The status and general direction of the economy as a whole, and the investment climate;

· The decreasing support governments receive from international development agencies.

Nature and heritage tourism projects in the Caribbean have been managed by governments, the private sector, or nongovernmental organizations (NGO’s). All three have been constrained in developing nature/heritage tourism projects: governments by lack of competitive managerial capacity; private developers by lack of capital, the absence of title or lease to the site, and the need for training in the preparation and presentation of feasibility studies; and NGO’s by the lack of capital and public support.

Financial intermediaries have also been constrained by concerns about risk, unfamiliarity with the sector, and the exigencies of the money market.

However, each of these players has certain strengths or assets: Governments usually own the site, have access to bilateral and multilateral funding, and have the power to enact policy. NGOs have a declared interest in conservation and preservation, have memberships dedicated to the cause, and have information and networks of knowledgeable contacts. The private sector has entrepreneurial drive of profit and possesses managerial skills.


The following recommendations are based on the review of various nature and heritage attractions and interviews with government officials and Caribbean and international financial intermediaries:

General Recommendation:

A commission or coordinating vehicle should be formed to draw on the contributions that each of the players described here can make uniquely, coordinating specific projects. Or, as an alternative to a fixed body, the formation of ad hoc joint ventures for individual projects is recommended.

Recommendations for specific participants:

A. Governments should:

1. Create environments more conducive to the development of nature and heritage attractions

2. Incorporate general objectives for the development of nature and heritage tourism into their national development plans

3. Apply the “user fee” principle to the full extent the market will allow, with the goal of enabling government-managed nature/heritage attractions to pay for themselves, and permit privately managed attractions to be financially profitable

4. Improve access to credit, and streamline regulatory procedures

5. Negotiate the operational control and business management of nature/heritage sites in return for the investment of management and technical capacity, under lease or other written, formal agreement

6. Award licenses for the reproduction of artifacts

7. Mount public education campaigns on respecting nature and heritage attractions, explaining how to protect the attractions and share them with visitors

8. Keep statistics on visitors to nature/heritage sites

9. Promote nature/heritage tourism to their countries.

B. The financial and banking community should:
1. Extend grace and repayment periods

2. Send specialized teams to target countries to give workshops on developing nature/heritage attractions to local financial institutions and entrepreneurs

3. Encourage corporations and large asset-holding institutions to invest in nature/heritage tourism development projects

C. Borrowers should:
1. Contribute enough equity up front to assure potential lenders of their commitment to the project and their ability to repay the loan

2. Prepare a thorough financial feasibility study, including a detailed demand analysis and cost estimates

3. Link small development projects for nature/heritage attractions with larger projects (e.g., beach hotels) or other small nature/heritage tourism projects into a cluster project that will be big enough to the investment minimum of development financing institutions

4. Give greater attention to marketing, and consider allying themselves with tour operators for marketing nature/heritage attractions

5. Emphasize the environmental aspects of the project

6. Incorporate the neighboring community into the design, implementation and operation of the project.

D. International assistance agencies should:
1. Provide special lending facilities for the development of nature/heritage attractions.

2. Participate in a fund to provide grant money to prepare feasibility studies for nature/heritage attractions.

3. Give greater emphasis to the economic rather than the financial rate of return in evaluating these projects.

4. Provide technical assistance and training for the preparation and presentation of feasibility studies.

5. Maintain a roster of tourism planning professionals, architects, economists, environmental planners and marketing specialists experienced in developing nature/heritage attractions, so that proposers of projects can seek professional assistance.

Although nature and heritage tourism as a concept is relatively new to the Caribbean, some of the region’s natural and historic sites, as well as cultural events, already attract thousands of foreign and local visitors.

The successes achieved in the development of nature and heritage tourism projects by some NGOs and private sector companies at commercial bank rates confirm the viability of some of these ventures.

The financial community and the governments of Caribbean nations should join these initiatives in order to promote growth in this promising area of economic activity.

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