Unblocking investment for climate resilient tourism
Gloria Guevara Manzo, President & CEO, World Travel & Tourism Council
Travel & Tourism matters. The sector is one of the world’s largest for economic development and job creation. In 2016, Travel & Tourism contributed US$ 7.6 trillion to the global economy, which was 10% of global GDP, and 1 in 10 jobs. Travel & Tourism will also matter in the future. By 2027, the continued growth of tourism is expected to create an additional 100 million jobs around the world.
In particular, the Travel & Tourism sector is a catalyst for economic prosperity in many less developed countries (LDCs), Small Island Developing States (SIDS), such as Fiji and Seychelles and vulnerable countries like Vietnam. In fact, US$ 79 billion was generated from tourism in these countries in 2016, including 7.8 million direct jobs. What is more, often these countries are significantly more dependent on tourism than other places. The sector accounts for 40% of GDP in Fiji for example, and 58% in the Seychelles.
It is well documented that LDCs and SIDS are highly vulnerable to the impacts of climate change, and it is not surprising, therefore, that so is their tourism sector. More frequent and extreme weather events, for example, such as the recent hurricane Irma in the Caribbean, can devastate tourism activities in the course of hours. Less sudden, but no less impactful, sea-level rises will threaten coastal tourism communities and infrastructure.
Even the most optimistic experts suggest we are on a pathway to average global temperature increases of 2 degrees or more. The frequency and intensity of extreme climate events will, in all probability, increase. This will impact Travel & Tourism and the people whose livelihoods depend on it.
But it is not all bad news. Travel & Tourism has an enormous role to play in helping tourism communities finance, adapt and build climate resilience. This can range from building new hotels further away from beaches, and higher up, or investing in sea defences, to soft infrastructure, such as preparing for hurricanes through water storage, first aid training, building supplies or disaster relief efforts.
For example, WTTC Members contributed $30 million aid post-Hurricane Irma, in September 2017, to help the relief efforts, and Royal Caribbean provided additional shelter and practical support.
Travel & Tourism accounts for 4.4% of the world’s investment, with $500 billion to be invested in the sector over the next 10 years. The question is, how do we make sure that climate resilience is a central part of this investment?
We see four opportunities:
- Defining a common agenda: Travel & Tourism companies need to properly understand the risks of climate change and the opportunities for resilience. In addition, those focusing on climate resilience need to understand the business perspective. In many cases, companies are already practicing ‘resilience’ but refer to it as business continuity or risk management.
- A multi-stakeholder approach: The sheer scale, speed and levels of funding needed to invest in climate resilience projects cannot be funded by just one party; neither the public, through multi-lateral funds like the Green Climate Fund, nor national governments, nor the private sector alone. Instead, lies an opportunity for funding, technical support, and business innovation, through scaling up multi-stakeholder collaborations and public-private partnerships, alongside strong public policy, encouraging transparency, longevity and certainty to investors (‘we are all in this together’).
- Investment ready projects: Whilst significant investment is needed to scale up climate resilience, at the same time, there is much private investment money available but locked-in, with only a few projects receiving funding. In the eyes of the investor, this is due to a lack of ‘investment ready’ projects, and is, therefore, a barrier. Again, encouragement of multi-stakeholder collaborations will help, for example, to provide technical support during the earlier application stage.
- Engage Travel & Tourism in the conversation: Many forward-looking Travel & Tourism companies are incorporating climate change risks and adaptation into their business strategy and investment decision-making. Whilst tourism is characterised by fragmented businesses, their cumulative impacts in building climate resilience, if investing, are large. We, therefore, encourage these fragmented businesses to be included in climate resilience debates. This is an opportunity to raise awareness of climate risks, allow them to hear about funding and enable them to gain an insight into new business innovation opportunities through helping build climate resilience.
The Travel & Tourism sector is a major player in many of the areas most at risk of climate change impacts. We are ready to work with stakeholders to help unlock investment to ensure the resilience of our communities and our businesses.