Tourism as a source of vulnerabilities ? The role of Islands ‘Heritage

Vincent Geronimi, Christine Le Gargasson, Natalia Zugravu, Jessy Tsang King Sang

Colloque « Spécialisation touristique et vulnérabilité : Réalités et enjeux pour le développement soutenable des petits territoires insulaires »,

CEMOI, 4-6 décembre 2014, Université de la Réunion.

Introduction

Under which conditions a tourism specialization can be sustainable for Small Island Economies ?• Ambiguous results on the connections between growth and tourism specialisation:

• Engine of growth (Lanza & Pigliaru, 2000 ; Pablo-Romero & Molina, 2013), and more specifically for small islands economic development (Hampton & Jeyacheya, 2013 ; Seetanah, 2010)…

• …Though with a decreasing marginal impact on economic development (Holzner, 2011 ; Adamou & Clerides, 2010).

• Our own results exhibit a non-linear connection between tourism specialisation and vulnerability (Economic Vulnerability Index, EVI):• Tourism specialisation increases economic vulnerability using a large sample of countries.• We also find that for limited and strong tourism specialisation, tourism specialisation increases

economic vulnerability, though intermediate tourism specialisation does not impact vulnerability, for SIDS and non-SIDS as well.

(1) (2) (3) (4) lnEVI

All lnEVI

only SIDS lnEVI

SIDS vs all lnEVI

SIDS vs all lnK -0.080* 0.025 -0.092* -0.056+ (0.030) (0.105) (0.030) (0.030) lnLabor -0.013 -0.096 0.018 -0.005 (0.031) (0.159) (0.035) (0.040) lnVoice&Account -0.272* -0.897 -0.217* -0.228* (0.074) (0.547) (0.077) (0.067) lnOpen 0.129* 0.012 0.088+ 0.095+ (0.044) (0.237) (0.046) (0.049) lnFDI -0.016* -0.001 -0.016* -0.015* (0.008) (0.034) (0.008) (0.007) lnEducation -0.062* -0.289* -0.070* -0.044* (0.019) (0.080) (0.020) (0.020) lnNatResRent -0.025 (0.028) SIDS x lnNatResRent -0.536* (0.134) lnTourGDP 0.214+ -6.421 0.254+ 0.006 (0.127) (4.453) (0.132) (0.082) SIDS x lnTourGDP -2.833 -1.066* (2.134) (0.214) (lnTourGDP)2 -0.119 2.991 -0.247* (0.087) (2.094) (0.117) SIDS x (lnTourGDP)2 1.283 (1.008) (lnTourGDP)3 0.013 -0.440 0.068+ (0.019) (0.317) (0.036) SIDS x (lnTourGDP)3 -0.215 (0.154) lnTourGDP x lnNatResRent -0.001 (0.015) SIDS x lnTourGDP x lnNatResRent 0.162* (0.072) SIDS 2.430+ 3.094* (1.451) (0.518) latitude -0.004* 0.009 -0.004* -0.003+ (0.002) (0.006) (0.002) (0.002) _cons 5.183* 11.521* 5.355* 4.832* (0.532) (3.662) (0.565) (0.628) N 214.000 38.000 214.000 172.000 r2_w 0.327 0.354 0.355 0.627 r2_b 0.489 0.793 0.531 0.454 r2_o 0.558 0.695 0.603 0.448

EVIRetrospectif EVI according to the 2012 definition

GDPcap GDP per capita (constant 2005 US$) [NY.GDP.PCAP.KD]

K Gross fixed capital formation (constant 2000 US$)

Labor Labor force, total

Voice&Account Voice and Accountability: Estimate

Open Trade (% of GDP) [NE.TRD.GNFS.ZS]

FDI Foreign direct investment, net inflows (BoP, current US$) [BX.KLT.DINV.CD.WD]

Education Labor force with tertiary education (% of total)

NatResRent total natural resources rents of gdp

TourGDP Tourism contribution to GDP_% share

latitude Latitude in degrees

SIDS =1 if SIDS, 0 - otherwise

Tourism contribution to Vulnerability

Results from a panel regression with random effects

List of variables

Introduction

• Thus thresholds affect the relationship between tourism, growth and vulnerability• Considering vulnerability as a risk of non-sustainability, we propose here

an analysis of these thresholds using a sustainability and total wealth approach (Hamilton 2006, Couharde et al.2010).

• Two proposals:• Tourism impacts on growth are shaped by the kind of tourist services supplied.• For Small islands with high costs of production (mainly due to remoteness and

limited size of markets), differentiated tourist services, based on heritage, are more likely to support weak and strong sustainability.

Outline

• Assets, weak and strong sustainability • The stakes of tourism for small islands sustainability• Tourist services: price competition vs heritage based differenciation• Conditions for the sustainability of tourism specialization.

Sustainability definition: an asset based approach

Weak and strong sustainability: New-Caledonia

Weak Sustainability: • Genuine savings > 0

• Investment in economic and human capital more than compensates the depreciation of natural capital

Strong Sustainability:• Limited rural migration

(Pestana, 2012)

• Preserved social and human capital (IAC, 2013)

• The question of public transfers (géo-strategic capital ) ?

1970 1975 1980 1985 1990 1995 2000 2005

25%

22.5%

20%

17.5%

15%

12.5%

10%

7.5%

Epargne véritable en pourcentage du RNDB Tendance

Weak sustainability vs vulnerability: the heterogeneity of SIDS

La diversité des petites économies insulaires (PEI), et des Small Islands Development States (SIDS) au regard des critères de soutenabilité et de vulnérabilité

Rents, assets and total wealth

• Following Hamilton (2006), the natural capital is valuated through rents (the difference between price and costs of production).

• Intangible capital is the most important component of total wealth. It encompasses all components that are not directly computed: human capital, social capital, cultural capital,…

• Each rents can be associated to a specific capital.

27%

57%

15%

Total Wealth composition, Average SIDS, 2012

Capital naturel Capital intangible Capital physique

15%

70%

15%

Total Wealth composition, Nouvelle-Calédonie, 2006

Capital naturel Capital intangible Capital physique

PEI: Assets, rents, risks and sustainability

Assets Assets / Heritage

Rents Risks Strong sustainability

Natural capital Natural capitalExports of primary

commoditiesFluctuation of

international prices Simultaneaous

degradation of different capitals: loss of human

capital and social capital (e.g. rural emigration)

Intangible capital

Human and social capital

Migrations Closure of boundaries and

"brain drain"

Loss of social and human capital with decreasing

remittances

Geo-strategic capital

Military, nuclear or strategic and

administrative

Volte-face and decreasing transfers

Decreasing geo-strategic stakes

Heritage based tourism and rents

Capital/ Heritage Rents Non sustainability risksSpecific intangible capital; Human, social and cultural Differentiation of tourist services:

Prices higher than average costs of production

Loss of differentiation: folklorisation, depreciation of social capital and traditionnal sectors (ex. Bali, île de Pâques)

Outstanding natural capital Over-crowding, environmental degradation

• Tourist services non differentiated, competition through price (sea/beach/sun):No rents and high costs (remotness,…)

• Differentiated tourist services (heritage based, on specific assets), sources of rents

Typology of SIDS’ tourist services: competition through prices or heritage mobilization

Tourism specialization Average 1988-2013

Weak/ Limited(<20%)

Medium/ Strong(>20%)

« Price » evolution(Tourists expenditures per capita (1988-2013))

<0

Limited tourism specialization

Guinée Bissau, Guyane, Haïti, Papouasie Nouvelle-Guinée,

Bahreïn, Seychelles, Singapour, Trinidad et Tobago

Non differentiated Tourist Services Maurice, République dominicaine, Fidji, Jamaïque, Sao Tome et Principe, Belize,

Cap-Vert

>0

Differentiated tourist servicesTonga, Saint Kitts et Nevis, Antigua et

Barbuda, Grenades, Bahamas, Vanuatu, Sainte Lucie, Dominique, Samoa, Saint

Vincent, Maldives

Perspectives

• Tourism and connections between different kind of capital. Some preliminary results:• Concerning the impact of tourism on the GDP per capita

• Substituability between tourism and economic / human capital for low level of the latters, complementarity for high level of human and economic capital

• Complementarity between tourism and natural capital• For SIDS, complementarity between tourism and natural capital

• Integration of heritage (e.g. Arezki et al., 2009, using World Heritage List) in the analysis of the connection between tourism and economic development. Measuring cultural capital.

Thank you !