MEMORANDUM OF UNDERSTANDING BETWEEN THE GENERAL SECRETARIAT OF THE ORGANIZATION OF AMERICAN STATES AND THE INTER-AMERICAN INVESTMENT CORPORATION FOR A STUDY OF FINANCING FOR NATURE AND HERITAGE TOURISM
This Memorandum of Understanding between the General Secretariat of the Organization of American States, hereinafter referred to as GS/OAS and the Inter-American Investment Corporation, herein referred to as IIC is intended to enable collaboration in preparation of a study of financing for nature and heritage tourism. This is not to be considered as a binding international agreement, and is limited to the cooperation herein described.
ARTICLE I - OBJECTIVES OF THE STUDY
1) An analysis of actual and prospective needs for financing of nature and heritage tourism in the Caribbean.ARTICLE II - BACKGROUND
2) An analysis of adequacy of current sources, costs, terms, and procedures for such financing.
3) Recommended measures for facilitating financing nature and heritage tourism in the Caribbean.
The Department of Regional Development and Environment (DRDE) of the Economic and Social Executive Secretariat, OAS, is engaged in a study of nature and heritage tourism in the Caribbean. Nature and heritage tourism is defined here as tourism which is primarily attracted by natural resources, such as scenic sites, flora or fauna. The DRDE has extensive experience in natural resource base management and its inter-relation with the main economic activities in the several countries of the Caribbean, particularly tourism development.
Increasing awareness of the potential of tourism for the economies of the Caribbean as well as the growing recognition of the inter-relation of natural and heritage attractions and tourism gave impulse to the DRDE/OAS study of nature and heritage tourism in the Caribbean. Caribbean member countries are seeking to identify their potential for nature and heritage tourism and strategies for exploiting that potential in ways that contribute simultaneously to economic development and environmental conservation.
One crucial aspect of the study is financing the development of nature and heritage tourism. Financing the development of more traditional tourism during the 1970s and 1980s encountered persistent difficulties, that, in becoming more familiar to investors, banks and government authorities, perhaps are becoming less daunting. The particular activities and context of nature and heritage tourism present different and in some ways more difficult financing requirements in relation to financing for more traditional beach/resort type tourism. A major difference is the need to acquire or secure the attraction for nature and heritage tourism and heritage. That is by definition a scenic natural or historical site, or some unique flora or fauna. To secure a scenic natural site, one needs to secure not only the immediate vicinity, but also the surroundings that go into making up the view-scape. In the case of unique fauna, and to some extent flora, it is necessary to secure the habitat of the species. Therefore, generally the development of nature and heritage tourism requires considerably more land, which usually requires the purchase of land, even in instances where the land has been declared a national park or protected area.
Another difficulty in financing the development of nature and heritage tourism is that the type of visitor facilities required are typically somewhat distinct and may reduce the profitability of the required investment, or along with the still novel character of the nature and heritage tourism market, raise the level of apparent risk to the investor. Typically, nature and heritage tourism takes place in small parties or excursion groups. Lodging accommodations are on a much smaller scale. Therefore, the lower investment cost usually expected in less luxurious construction is often outweighed by the cost of more environmentally friendly power and sanitary equipment, building materials, and techniques, as well as the premium paid for lower economies of scale. Infrastructure required may lack the supplementary justification from neighboring industrial or governmental welfare activity. While tourism attractions in national parks or in wild lands may not require the same level of infrastructure as a resort development, there is virtually always an irreducible amount of infrastructure required. For example, the practical access to some remote jungle lodges may be only by plane, which would require some form of airport, terminal, and navigational equipment.
The IIC is a multinational organization set up in affiliation with the IDB to facilitate financing to the private sector in Latin America and the Caribbean, especially small and medium sized-firms. Recognizing the particular aptness of small enterprises for nature and heritage based tourism, the IIC hosted a conference on the issue of financing such tourism in November 1992. Discussions between staff of the OAS and IIC at the conference led to the collaboration subject of this memorandum.
ARTICLE III - METHOD
The study will provide an understanding of tourism in the Caribbean, of the natural attraction endowment of the Caribbean, and of nature oriented tourism demand in the major nature and tourism generating countries. This research required is primarily empirical research.
The analysis of current nature and heritage tourism financing is also to be based largely on empirical research, i.e., reviewing operating nature and heritage tourism support facilities and nature and heritage tourism operations, and summarizing the experiences of different cases. Attaining the third part of the objective - recommending measures for facilitating the financing of nature and heritage tourism - will not only involve perceiving practical policy reforms for governments, but also innovative proposals for private and public sector cooperation, collaboration of the local financing institutions with tourism entrepreneurs, and a review of the possibilities for assistance in financing from a number of international development assistance institutions, as well as non-governmental conservation associations. Presumably, this will involve the drafting of innovative proposals and their review by the parties potentially affected by the proposals.
The study will need to be aware of the close nexus between financing the development of nature and heritage tourism on the one hand, and the conservation of natural tourism attractions on the other hand.
The research for this study will involve working with the tourism industry, particularly those firms specializing in nature and heritage tourism in the destination country and in the originating country. It would involve research of the sources of financing, primary and secondary, which presumably would mean national and international. What conceivably could be a relatively extensive research will necessarily be constrained by time and budget. The locus of international research may be limited to Washington, site of international financing and of conservation entities, and perhaps New York as the largest market for Caribbean tourism. The locus of destination country research would be a few selected case studies. Existing material and the representativeness of Jamaica, Guyana, Barbados and a small CDB member country justify consideration of them as case studies.
ARTICLE IV - SOURCES
Sources of information might include:
A. the files, data and officials of the national tourism authorities of relevant IIC member counties and of OAS member counties;ARTICLE V - PRODUCT
B. business leaders in the tourism private sector in the Caribbean;
C. studies and reports on tourism in the Caribbean produced in the international assistance agencies, e.g., OAS, CTO, IDB, CDB, particularly the reports of the other OAS consultants on the wider study;
D. national tourism sector development plans and national economic development plans;
E. natural resource inventories, national environmental profiles, descriptions and analyses of physical endowments of the countries and of the region and their evaluations as attractions for the nature tourist;
F. national park and protected areas development and management plans, and officials of entities charged with responsibility for those areas;
G. international tour operators and receptive tour operators;
H. international and national conservation associations and societies, particularly staff involved with tour planning;
I. officials of financial intermediaries in the Caribbean;
J. officials of international development financing institutions;
K. the plans, proposals, feasibility or pre-feasibility studies for future nature and heritage tourism development in the Caribbean.
The product of this effort is to be a study which concludes with proposals to facilitate the financing of nature and heritage tourism in the Caribbean, and which:
A. analyzes present nature and heritage tourism to the Caribbean and projects its trends in the future;
B. analyzes the amount and characteristics of the financing utilized in financing nature and heritage tourism thus far, as well as the constraints encountered or problems met in raising the financing required, separately analyzing the financing of the acquisition of nature and heritage tourism sites, i.e., land, and other costs such as lodging, tour operator investments, etc.;
C. distinguishes and describes the participation of the private sector in nature and heritage tourism development and financing, particularly the potential of nature and heritage tourism revenue generation;
D. estimates the financing likely to be required to facilitate the potential development of nature tourism to take place;
E. proposes specific measures for the governments to take in helping to develop financing for i) nature and heritage tourism site (land) acquisition, and ii) the financing of tourism facilities or services such as lodging or tour operations;
F. proposes arrangements between the international finance assisting agencies, the insurance/guarantee agencies, the local financial intermediaries, entrepreneurs, conservation associations, and the communities neighboring the natural tourism attraction to facilitate financing of nature and heritage tourism development.