2.8 Ecotourism Impacts
2.8.1 Economic Impacts of Ecotourism
Fennell (2007) argues that tourism being a private sector activity capitalises on the market for the purpose of making a profit. Furthermore, Lew et al. (2008) suggest that there are many impacts that tourism may exert upon host areas, the processes of physical and economic development are the most prominent. These effects may be apparent in the physical development of tourism infrastructure (accommodation, retailing, entertainment, attractions and transportation services), the related creation of employment within the tourism industry and a range of potential impacts upon Gross Domestic Product (GDP) balances of trade and the capacities of national or regional economies to attract inward investment (Lew et al., 2008). Conservation of protected areas is costly and many governments have reduced their financial assistance to protect these areas (Bushell and Eagles, 2007).
Conservatively, Fennell (2007) refers to the management of Parks as not being subject to the same market principles and philosophies as the private sector. However, (Wunder et al., 2008) refer to tourism in a country as both an expression of its economic development and a medium to promote development. Bushell and Eagles (2007) view tourism as a means to
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replace funding that has been misplaced via donations, entrance and user fees, concession and rental fees and licenses, taxes on retail purchases by visitors, levies and increased tax revenues from economic activities relating to tourism. This creates increased pressure for visitation and the granting of more concessions and licenses (Bushell and Eagles, 2007).
While it is acknowledged that ecotourism in protected areas have positive economic development, such as direct employment, both on and off site, the diversification of the local economy, the earning of foreign exchange, and the improvement to transportation and communication systems. There are also related negatives such as the lack of sufficient demand for ecotourism, which could result in the loss of funds since ecotourism may not generate local employment opportunities rather supporting expatriates and the fact that it may not be socially and economically acceptable to charge fees in Parks (Browne-Nuñez and Jonker, 2008).
Sebele (2010) raises four questions which need to be asked when assessing the economic impact of an ecotourism venture in any community: Firstly, how do financial benefits reach the community in the form of rent, gate fees and profit sharing? Secondly, to what extent are earnings, wages or shared community income distributed across the rural community?
Thirdly, how successful have these projects been in creating employment? Finally, to what extent has tourism development encouraged the creation of secondary income generating activities such as laundry services, charcoal making, butcher facilities or taxi services?
To understand how tourism impacts upon an economy it is essential to understand a key theory of Keynesian economics, the multiplier concept. Fennell (2007) declares that the impact of money on the economy has led to economists further understanding the multiplier effect and the related concept of leakage. According to Cooper (2008), the underlying principle of the multiplier process is that a change in the level of demand in one section of the economy affects not only the industry that produces the final product or service but as well as other sectors of the economy that in turn supply it. In relation to tourism, as new money enters a local economy it changes hands many times resulting in a cumulative economic impact that is larger than the initial amount of tourist expenditure (Fennell, 2007).
Imports leading to leakages are referred to as import substitution and are an important issue in the context of ecotourism and sustainable tourism (Chirenje et al., 2013). There is much evidence that tourism in Less Developed Countries (LDCs) has been hampered because management control of the industry lies in the hands of external, multinational interests
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(Fennell, 2007). Tour operators are private sector businesses that operate under the system of capitalism and their primary target is to achieve optimum profits (Adriana, 2009).
Furthermore, tourists have a tendency to shop around for the lowest possible price; consumer loyalty is not often seen in the tour operating industry (Smithson et al., 2011). The tour operator serves as the sales office of individual tourism service suppliers since they have the knowledge of market trends and provides front-end and promotion budgets as well as accepts a part of the risk of primary suppliers (Strasdas, 2008). As an intermediary, tour operators have the authority to influence the consumer’s choice of destination and accommodation (Adriana, 2009). Tour operators buy tourism products in bulk, they benefit from scale economies and can offer packages at prices that are usually lower than consumers could negotiate individually (Strasdas, 2008). Apart from decreasing transaction costs, Strasdas (2008) mentions that tour operators bring convenience and experience through their local presence at the destination. As powerful intermediaries, tour operators must focus on good practices which can be understood as practices leading to a more sustainable form of tourism that enables tour operators to compete on the basis of more than just price (Schwartz et al., 2008). Furthermore, it is the tour operator who has the means to choose the suppliers who seriously try to recycle their ecological and social impact at the same time enhancing the multiplier effect (Strasdas, 2008).
Tourism is advocated by tour operators as a major employment generator due to its labour- intensive nature (Beaumont, 2011). It is common that the planning, staff and management of Parks is often done by developed country personnel or expatriates and this can have negative effects on the affected local communities as a result leading to homogenisation of cultures as well as the trivialisation of local and traditional methods of managing natural resources (Beaumont, 2011). A lack of skills and resources has resulted in many ecotourism ventures are owned and operated by expatriates (DongPing, 2008). In addition, the literature on women’s experiences of employment in the tourism industry is generally negative since women occupy the majority of low-skilled and low-waged employment (Thrane, 2008).
Holden (2004) argues that, theoretically, the initial tourism investment could flow into the economy. However, it does not because in each round of expenditure money will leak out leading to economic leakages thus removing it from circulation in the economy.
Subsequently, the foreign-exchange earnings do not disclose its true economic benefit to an economy, basically revealing what remains after deducting the foreign-exchange costs of tourism (Holden, 2004). Seetanah (2011) talks about over-dependence on tourism for
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economic growth and welfare just as depending on any other single product can make some countries defenceless to economic stability. The degree of factors that will influence the tourism income will be greatly determined by a nation’s or community’s level of economic development (Holden, 2004).