Tourism Industry at Risk: The Economic Impact of Climate Change

Mr. Damani Thomas

Tourism Industry at Risk: The Tourism Industry at Risk: The Economic Impact of Climate Economic Impact of Climate

Change Change

Climate Change Conference: Impacts on the CaribbeanClimate Change Conference: Impacts on the CaribbeanJune 15-17, University of the West Indies, MonaJune 15-17, University of the West Indies, Mona

Damani ThomasDamani ThomasM.Sc. Economics Student, UWI, MonaM.Sc. Economics Student, UWI, Mona

Outline of PresentationOutline of Presentation

• The economic value of Jamaica’s tourism industry

• The climate’s contribution to tourism• Expected impacts of climate change• Climate change impacts on demand for tourism• Projected costs of climate change to the tourism

industry• Mitigation and Adaptation• Recommendations

The economic value of Jamaica’s The economic value of Jamaica’s tourism industrytourism industry

• Tourism has been the largest foreign exchange earning sector over the past decade, generating over US$1 billion per annum

• Tourism industry accounts for approximately 7% of GDP

• Tourism industry accounts for approximately 10% of the employed labour force

• Tourism industry provides an important impetus for growth in other sectors

• Each $1 spent in the tourism industry generates another $1 of output in the other sectors

Source: McCatty and Serju, 2006

Industry Change in output ($) Additional Employment

Transport 1.01 890

Hotel 0.89 2178

Manufacturing 1.27 479

Agriculture 4 2471

Construction 0.39 619

Electricity 0.08 41

Distributive Trade 0.14 415

Other Sectors 0.29 232

Multiplier Effect per $1 spent in the Tourism Industry on Other Sectors

Source:McCatty and Serju, 2006

Climate’s contribution to tourismClimate’s contribution to tourism

• Climate is an important component of the island’s tourism resource base

• Jamaica’s tourism product is based primarily on its tropical climate and coastal resources

• Tourism industry is therefore highly susceptible to the direct and indirect impacts of climate change

Expected impacts of climate Expected impacts of climate change change

- Sea level rise• Saline intrusion into freshwater aquifers• Coastal flooding and erosion

- Increased temperatures• Heat stress• Coral bleaching• Biodiversity loss• Increased emergence of vector borne diseases

Expected impacts of climate Expected impacts of climate change (cont’d)change (cont’d)

– Changes in rainfall patterns• Droughts or floods• Decreased fresh water availability

– Increased intensity of storm activity• Direct damage of infrastructure• Loss of lives

How climate change impacts will affect How climate change impacts will affect tourismtourism

• Direct damage to tourism plant and natural resources Hotels

Coral reefsBeaches

• Loss of attractiveness of the region as a destination

Impacts on health – emergence of dengue, malaria, etc. Reduced dive tourism if coral reefs are damaged

• Loss of employment in the industry• Increased insurance costs for properties in vulnerable areas

Climate change impacts on tourism demand

• Promotion of tourism based on sun, sea and sand• Climate change will lead to a deterioration of these resources• Visitors will be less attracted to island as a tourist destination• Climate change therefore puts a downward pressure on the island's tourism demand

• Jamaica’s major tourist market is north America• North America accounted for approximately 80% of tourist arrivals over the past 5 years• Rising temperatures as a result of ongoing climate change will lead to milder winters in north America• This in turn, will remove the need for some visitors to visit the island

Climate change impacts on tourism demand

Projected costs of climate change to Projected costs of climate change to the tourism industrythe tourism industry

Low Probability scenario up to 2050

• reduced tourism – US$44.2 • loss of beaches – US$23 • replacement – US$1.5 • lost dive-,eco-tourism – US$2.2

• Total expected losses – US$70.9

Figures: 1999 US millions Source: King, 2003

Without the necessary mitigation and adaptation strategies, expected losses for the Jamaican tourism industry are:-

High Probability scenario up to 2050

• reduced tourism – US$134.4• loss of beaches – US$199.7 • replacement – US$12.9 • lost dive-,eco-tourism – US$6.7

Total expected losses – US$353.7

Projected costs of climate change to Projected costs of climate change to the tourism industrythe tourism industry

Figures: 1999 US millions Source: King, 2003

Mitigation and Adaptation

-Sea level Rise• seawalls• preservation of natural sea defences (e.g. coral reefs)• prohibition of sand mining

-Water• de-salinization• water harvesting• drip irrigation

-Tourism Demand• diversification of tourism offerings (e.g. green and heritage tourism

Firstly, we must recognise that tourism is a major contributor to GHG emissions. Mitigation srategies must therefore include reducing the industry’s emissions.

-Physical Infrastructure• energy efficient building designs• facilities that incorporate future climate change• increased insurance costs should be factored into future profitability

-Government Policy• fiscal incentives for compliance• land use planning• coastal defence

Adaptation and Mitigation will require significant capital outlay and political will, however the long run benefits far outweigh the short run costs.

Recommendations

• A urgent need exists for sustainable tourism development that incorporates climate change mitigation strategies• Regional petition of the governments of developed countries to reduce GHG emissions• Promotion of green tourism• Energy savings by industry• Private and public partnership to formulate and implement tourism plan that takes climate change into consideration• Future promotions should be based primarily on increasing tourist’s spending and their average length of stay

Thank you