INTERNATIONALBANK FOR WORLD BANK R E T C N O E N STRUCTION PM AND DEVELO June 2003 No. 26 A regular series of notes highlighting recent lessons emerging from the operational and analytical program of the World Bank`s Latin America and Caribbean Region ECUADOR: FOSTERING ENVIRONMENTALLY SUSTAINABLE TOURISM AND SMALL BUSINESS INNOVATION AND GROWTH IN THE GALAPAGOS Jose Valdivieso, Bob Toth, James Hanna and Juan Quintero Well-managed tourism can be an important contributor to recognized the need to implement management practices sustainable development, providing incentives to protect the that would address environmental and conservation chal- environment and maintain biodiversity, and fostering small lenges facing the islands' vibrant but fragile ecosystems as business development. A recently completed subcomponent well as support local economic development. Factors that of Ecuador's International precipitated this recognition in- Trade and Integration Project1, clude the national and international supported by a World Bank importance of the Galapagos and Loan, demonstrates this win- increasing demands from tourists win situation. for environmentally friendly ser- vice. A particularly challenging Tourism in the problem is the serious threat posed Galapagos ­ pressures by the introduction and spread of non-native plants and animals, or on the environment "invasive species," which endanger native flora and fauna through di- Tourism is the fourth largest rect predation, competition for industry in Ecuador. In 2001, it food, and habitat destruction. Tour- generated more than $430 mil- ists and their transportation are the lion dollars and employed more major carriers of invasive species. than 72,000 people in formal tourism enterprises. The Voluntary Environmental 630,000 foreign tourists that Quality Standards year accounted for roughly 9 Certification For Tour percent of Ecuador's earnings The Galapagos Islands attract over 70,000 Vessels from exported goods and ser- visitors each year vices and 4.2 percent of the nation's Gross Domestic Product. Ecuador's most popular Specialists working to address these problems developed a tourist destination is the Galapagos Islands, and 11 percent of strategy that focused on the tourists and the 60 currently ac- tourism income and 14 percent of the sector's employment tive tour boats that shuttle people from island to island (see are directly related to the nearly 70,000 tourists who visit Table 1). Voluntary standards were established to minimize every year to admire the rich and rare biodiversity of these environmental impact by applying rigorous conservation unique island ecosystems. practices to the boats and requiring the boats to sensitize their clients to the need for environmentally appropriate be- As tourism pressure in the Galapagos has increased, govern- havior (see Box 1). Tour boats that demonstrate compliance ment agencies, conservationists, and the tourism sector have with the standards are certified. Certification enables tour- 1 ists, their travel agents, and tour operators (foreign whole- boat operators have faced a decline in tourism since 9-11- salers and packagers) to make informed, "green" choices 2000. among the tour boats. Conservación y Desarrollo (C&D)2 and the Rainforest Alliance (RA)3 were engaged to imple- With support from the World Bank-financed International ment this strategy. C&D is an Ecuadorian NGO that spe- Trade and Integration Project, C&D and RA were able to cializes in conservation and environmental programs. RA is test the applicability of the SmartVoyager standards to small an international non-profit conservation organization that boats. Through an intensive outreach effort, small boat op- works to protect ecosystems by implementing better busi- erators were made aware of the challenges and opportunities ness practices. C&D and RA have worked together in Ecua- afforded by SmartVoyager certification and how they could dor also on the certification of banana and cacao plantations. participate in reviewing the standards. A cross-section of small boat operators determined that 93 percent of the origi- Table 1 - Galapagos Tour Vessels, by Size nal requirements are applicable to all boats regardless of size. The remaining 7 percent did not apply mainly due to Number of Number of Size differences in the way large and small operators purchase Passengers Vessels and store supplies, and availability of space for desalination systems and holding tanks. These standards were then re- Large 40 - 100 10 vised so that they could be applied to small boats. Medium 21 - 40 2 This outreach effort enabled the small boat operators to Small Less than 21 48 learn what the standards required; how to comply with the requirements; and, most importantly, why the requirements Source: Ministry of Tourism were included in the standards. After this training and moti- vation, a number of boat operators began to implement prac- Representatives of all stakeholders, including government tices specified in the standards. C&D auditors assessed 34 agencies, conservationists, and local communities partici- small boats, and 24 were found to comply with all appli- pated in developing the "SmartVoyager" standards. The In- cable technical requirements. Six of these have been for- ternational Galapagos Tour Operators Association -- 33 mally certified. Of the remaining 18, eight have the re- North American travel wholesalers that provide most of the sources to upgrade equipment and can be certified after ad- package tours to the islands -- made significant inputs to ditional training and technical assistance in such areas as the standards and pledged to support the certification pro- documenting their environmental policies and performing gram. The wide range of stakeholders expanded the scope internal audits. of the standards development effort beyond conservation and biodiversity to include safety and health, socioeconomic The remaining ten small operators lack the funds to replace welfare, and quality of life of the crews, their families, and and upgrade equipment that does not comply with the Galapagos Island Community -- all of the elements of a SmartVoyager requirements. Examples include replacing air comprehensive and sustainable tourism program. conditioners and refrigerators using CFCs, replacing two- stroke outboards with four-stroke models, and installing SmartVoyager and the International Trade noise-abatement systems on propulsion and generator en- Project in Action SmartVoyager certification was launched in May 2000 and, in its first year, five boats were certified after as- sessment by C&D auditors. The largest boat carries 100 passengers, one is midsize (48), and the other three are small (20 each). Most small boat operators showed little interest at first in becoming certified. Small boats are usu- ally individually owned and family operated. As with most small enterprises, they have limited funds for upgrading equipment and little interest in changing procedures. The perception was that SmartVoyager standards were complex and rigorous, and that while certification might be worth- gines. It is expected that, as market recognition of while for large firms, it was neither achievable nor afford- SmartVoyager certification continues to grow, its competi- able for small, family-owned operations. In addition, small tive value will be broadly demonstrated and help stimulate 2 access to credit to enable the remaining small boats and Box 1 - SmartVoyager Certification Principles many mid-size boats to make the capital improvements needed to implement the standards and achieve certifica- tion. Company Policy : the Company must have a management policy that includes compliance with national legislation, Results and lessons to date international agreements as well as Smart Voyager Stan- dards Conservation of Natural Ecosystems: the tourist opera- The initial small boat certification initiative was achieved tion must support and promote conservation in the in 14 months with an investment of less than $66,000 and Galapagos National Park and the Marine Reserve has yielded a number of accomplishments. This modest effort has already yielded significant return on investment Lowering the Risk of Introduction and Dispersal of Ex- (ROI) in protecting natural and human capital and the otic Species: the tourist operation must prevent the intro- competitiveness of Ecuador's tourism industry. Local au- duction of species from the continent to the islands and ditors have been trained. Boat operators now understand to the dispersal of species between islands a far greater degree the impact of their boats and practices on the delicate environment of the Galapagos, and what Just and Proper Treatment of Workers: the tourist opera- they need to do to maintain biodiversity and protect the en- tion must improve the socioeconomic welfare and quality vironment. Local boat operators have been familiarized of life of workers and their families with the goals and methods of setting standards and verify- ing compliance, misunderstandings have been clarified and Employee Training: all personnel involved with the tour- interest in the program fostered. There has been wide- ist operation must receive environmental education and spread acceptance that SmartVoyager standards are appro- training priate guidelines for improving performance and becoming environmentally and socially responsible. Designers of Community Relations and Local Welfare: the Company new boats are applying the standards in their design pro- must make a commitment to the welfare and socioeco- cess. And with peer pressure and competition from certi- nomic development of the Galapagos Islands community fied operators, other boat operators are being motivated to ask for training and technical assistance so they too can Strict Control of Use, Supply and Storage of Materials: comply with the standards and secure SmartVoyager certi- boat operators must plan and control the consumption, fication. If funding for such assistance becomes available, supply and storage of materials, taking into consideration a much larger portion of the fleet will be certified. the well-being of tourists, workers, local communities and the conservation of natural ecosystems Finally, the SmartVoyager certification program has been Integrated Waste Management: boats must follow a promoted widely throughout the international tourism waste management plan, including the reduction, reuse, industry, enhancing Ecuador's reputation and the recycling and adequate final treatment and disposal of all competitiveness of its tourism sector. Other segments of wastes Ecuador's tourism sector see the SmartVoyager program as a model for their operations and for engaging small Commitment on the Part of the Tourist: tourists must be enterprises in environmental initiatives. guided in their involvement in protecting natural re- sources and local cultures, tread lightly and collaborate Some of the lessons from the initial implementation of the with the island conservation programs program include (1) small businesses need to be brought in to an initiative right from the beginning in order to gain Safety: the Smart Voyager Program does not guarantee acceptance and support; (2) all parties who benefit should safety but certified boats must adhere to international share in the costs including tourists, tour operators and the safety standards and have all the appropriate licenses and national park; and (3) certification appears to be approvals commercially advantageous enough to an enterprise to be self-supporting once its benefits are demonstrated. Planning and Monitoring: tourism operations must be planned, monitored and evaluated, taking into consider- ******** ation technical, economic, social, and environmental fac- tors. Source: Rainforest Alliance 3 Notes About Conservation and Development 2 - Conservation and Develop- 1 - The International Trade and Integration Project ment (C&D) is an Ecuadorian non- for Ecuador (US$21 million) aims to promote in- profit citizens' group that carries creased socio-economic growth using as an instrument out research and integrated conser- international trade development and integration with vation and development projects in the global economy. rural communities. C&D's philoso- phy is to promote respect for life There are two components. The first modernizes inter- and the correct use of natural re- national trade management and increases markets ac- sources. We conduct research into cess by building the capacity of the Ministry of Trade, new alternatives that seek to Industry, and Fishing(MICIP). It provides human re- achieve a model for ecologically balanced and socially just source training, and diagnostic and programming stud- sustainable development, either independently or in support ies, as well as upgrades workstations as part of a new of governmental or private initiatives. C&D has developed internal administrative and financial management sys- the certification standards for the SmartVoyager program tem, renovates office facilities, and implements unfair through several years of research. trade practices safeguards. This component also mod- ernizes customs administration, making regulations WTO (World Trade Organization)-consistent. About The Rainforest Alliance The second component facilitates entrepreneurial 3 - The Rainforest learning and innovation in smaller firms through pri- Alliance is a leading vate-public partnership institutions. It finances international conservation outsourced services to implement expositions, organization. Our mission roundtables, publications, and other campaign tools; is to protect ecosystems and funds information technology, communications and the people and equipment, consulting services, local and distance wildlife that live within learning seminars, an eco-export program to assist them by implementing better business practices for firms in export market penetration and environmental biodiversity conservation and sustainability. Companies, protection; a learning and innovation fund to co- cooperatives, and landowners that participate in our finance implementation of business services, a programs meet rigorous standards for protecting the grassroots growth fund, a pilot effort by nongovern- environment, wildlife, workers, and local communities. mental organizations to provide technical extension http://www.rainforest-alliance.org/ services to low-income micro businesses, and lastly technical assistance. About the Authors Get the Project Documents at: Jose Valdivieso is the Co-Director of Conservación y Desarrollo (C&D), an Ecuadorian NGO that specializes in http://www4.worldbank.org/sprojects/ conservation and environmental programs; Bob Toth is prin- Project.asp?pid=P040106 cipal senior consultant to the Program and this initiative in the Galapagos; Jim Hanna is the World Bank's Team Leader for the Ecuador International Trade and Integration Project; and Juan Quintero is a Lead Environmental Specialist in the Learn More About this Program World Bank's Latin America and Caribbean Region. For additional information on this initiative and the About "en breve" SmartVoyager standards and certification program, contact: Bob Toth 1-703-329-3083 bob.toth@erols.com "en breve" is published every two weeks in English and Jose Valdivieso 593-2-243-183 ccd@ccd.org.ec Spanish (occasionally in Portuguese). 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