Destination: Green Tourism
In an era of environmental consciousness, every locale that wants to remain attractive and competitive needs a strategy for sustainability.(originally published by Booz & Company)
For centuries, the tiny kingdom of Bhutan was sealed off from the world. Tucked into the misty crevices of the eastern Himalayas, the kingdom guarded its culture and natural resources so fiercely that it simply barred foreign travelers. That changed in 1974 when the government relaxed its isolationist stance and turned to tourism to raise revenue. Yet even as Bhutan sought to attract visitors, its tourism policy was carefully and strategically crafted to preserve local culture and prevent environmental degradation. By pursuing what it calls “high-value, low-impact tourism,” the small, Buddhist society (which measures its success in terms of “gross national happiness” rather than gross domestic product) established a strict sustainable tourism policy. Today tourism is a significant part of Bhutan’s economy, and the kingdom’s forward-looking policies ensure that its natural and cultural resources will be protected — and attractive to tourists — for years to come.
From Bhutan to Barcelona, from the Himalayas to The Hague, global tourism is a significant and expanding contributor to economic growth. Each day travelers spend more than US$2 billion; the travel and tourism industry accounts for 10.7 percent of the world’s GDP and employs more than 260 million people. By one estimate, 1.6 billion tourists will travel the globe in 2020 — nearly twice as many as do so today.
Although tourism offers undeniable economic benefits, it comes with a steep environmental price tag. Whether it’s huge carbon footprints generated by air travel or human footprints trampling pristine environments, travel can deplete or destroy local ecosystems and contribute to global climate change.
At the same time, environmental degradation and climate change have the potential to dramatically disrupt general tourism patterns and do considerable damage to particular destinations. Rising sea levels, desertification, and changing weather patterns have the potential to damage or destroy the very elements that attract tourists.
As a result, tourism and environmental sustainability are fast becoming natural partners, their agendas increasingly intertwined. No other industry has to walk the narrow line of environmentally responsible growth as carefully as the tourism industry; arguably, no other industry has as much to gain or as much to lose.
More and more, for example, environmentally savvy tourists are seeking out green tourist destinations — those that make a proactive effort to address critical issues such as carbon emissions, biodiversity conservation, waste management, and water supply. A 2005 survey by the United Kingdom’s Devon County Council found that 54 percent of respondents consider environmental issues when booking a trip and 82 percent are willing to pay more for green services and products. As a bonus, some 72 percent of respondents think a green business is more likely to be quality conscious.
Feeling the push from tourists, leading tour operators such as TUI and Thomas Cook Group are giving marketing and booking preference to environmentally sustainable destinations and demanding higher green standards from hotels and resorts. In addition, major global travel societies such as National Geographic now use environmental sustainability as a key criterion in their destination rankings. In short, if tourist destinations are to stay competitive, they will need to adopt sustainable policies or risk alienating an important and growing customer base.
To date, however, only a handful of destinations are rising to the green challenge; many others lag behind. Destinations that turn a blind eye to sustainable practices risk depleting their resources and shortsightedly under-investing in the preservation of their natural assets. By borrowing against their future, they trade long-term health for short-term gain. Other destinations that rely on empty marketing gimmicks — constructing, in effect, green facades — are missing opportunities to build solid foundations. Glossy brochures and vague “eco-speak” will neither attract savvy travelers nor protect valuable resources. Instead, destinations should strive for meaningful change by proactively pursuing sustainable environmental policies and practices. If they fail to do so, mounting environmental costs may soon outweigh tourism’s economic benefits — a daunting prospect in our increasingly interconnected world.
Four Elements of Sustainable Tourism
Capturing the economic benefits of tourism while limiting undesirable environmental consequences is the ultimate goal of a successful green strategy. The experiences of private- and public-sector organizations in many locales suggest that the most powerful strategies are those that take a holistic approach. These businesses treat each destination they oversee as a complete physical, cultural, and economic ecosystem. By crafting a sustainable tourism strategy through a multifaceted lens, policymakers and leaders in the tourism sector can ensure that the whole is greater than the sum of its parts, and at the same time make sure that no part of the system is neglected.
Building a comprehensive blueprint for sustainability begins with addressing four key environmental issues: reducing carbon emissions, conserving biodiversity, managing waste properly, and protecting and conserving water. The blueprint, however, also requires an analysis of the underlying systems and structures that a destination must have in place to enable change. These include regulations and governance, stakeholder participation, funding and financing, capacity building and education, and marketing and public relations. Once these environmental issues and enabling systems and structures are understood, policymakers and tourism leaders can develop a green strategy for their destination.
Any destination that aspires to succeed in the age of green tourism and to ensure its sustainability should focus on the above-mentioned four key issues:
1. Carbon emission reduction. For decades, a popular slogan greeting visitors at tourist sites was “take only pictures, leave only footprints.” Although this old motto is still relevant, growing concern over climate change has added a new dimension to it. Travelers must now be concerned with their carbon footprint — one far less visible on a dirt trail, but with far greater implications.
The tourism industry is responsible for approximately 5 percent of global carbon emissions, largely generated by air travel and lodging. A recent global study by the World Economic Forum and Booz & Company predicts that without intervention, these emissions will double by 2035. The good news is that because interventions that cut emissions also tend to save energy and materials, they are a cost-effective tactic.
By implementing green technologies and policies, destinations can contribute to the “double bottom line” of environmental sustainability and profitability. Slovakia’s popular AquaCity resort, for example, which was recently designated the World’s Leading Green Resort by World Travels Awards, prevents an estimated 27 tons of CO2 from entering the atmosphere every day by using geothermal water and solar energy — practices that have also saved the resort millions of euros each year.
To reduce emissions, Vancouver’s Fairmont Waterfront hotel implemented a heat-recovery system that captures condensate — steam that has been condensed back into water — from hot-water tanks, which then heats incoming city water. This technology has saved an estimated 305,380 kilowatt-hours of electricity per year, the equivalent of the annual energy needs of seven private homes.
Even small changes can yield tangible benefits. In a 12-month government-funded project, Tasmanian hotels reduced their energy use by a third by installing insulation, repositioning windows, and sectioning off rooms. Carbon emissions dropped by 104 tons, the equivalent of taking 24 cars off the road for a year.
In addition to the possibilities presented by on-site improvements, a unique opportunity exists for smaller tourist destinations to take a lead role in introducing advanced local mobility systems, capitalizing on the fact that customers are not just interested in sun-and-beach holidays, but also in being innovative with respect to sustainable local travel. Destinations should shift from environmentally destructive individual traffic habits to efficient mass transit and advanced automobile technology, including hybrids and electric cars. In countries where they are not prevalent, the introduction of cars with catalytic converters as well as new eco-friendly fuels should be promoted.
In the same vein, policymakers should encourage guests to choose energy-efficient methods of transportation for arriving at their recreational activities. In some locations, visitors can be steered toward smart mass-transit options such as electric trains and hybrid buses; other locations can offer innovative options for individual vehicles, such as bicycles and hybrid cars.
Paris, for example, implemented the Vélib bicycle co-op program in 2007, which allows visitors and residents to reserve, pick up, and return bikes at 750 locations. The city currently has more than 230 miles of bike lanes, with plans for expansion. Israel recently created a network of bike trails and walking paths as an alternative to bus transportation for Christian pilgrims going from Nazareth to the Sea of Galilee, and Switzerland has seen a boom in the new generation of e-bikes, powered by lithium-ion batteries, also for tourists.
Destinations can also reduce their environmental impact by integrating carbon-friendly principles into their supply chains, and purchasing sustainably sourced goods and materials. In addition, they can implement low-carbon waste management policies, including energy-efficient recycling.
Finally, destinations can create incentives for tourists to offset their remaining emissions through local donation programs that invest in renewable technologies. Tour operator Thomas Cook, for example, asks clients to donate £2 (US$3) that it matches and funnels into emissions-offset projects.
2. Biodiversity conservation. Whether scuba diving in the Red Sea, exploring hiking trails in the Pacific Northwest, or venturing into the jungles of Central America, a growing number of travelers are reaching out to experience a world beyond their own. Destinations with natural beauty offer tourists an escape from the pressures and sensory overload of urban life. Unique natural assets are therefore precious, and their preservation is a critical component of sustainable tourism. In the past two decades, tourism to biodiversity hot spots has increased more than 100 percent, making conservation all the more urgent.
If proper conservation measures are not in place, tourism can exacerbate the damage and destruction of flora and fauna. Unregulated wildlife viewing has disrupted feeding and nesting sites in such places as the Caribbean wetlands and New Zealand. Mushrooming tourism resorts in India have encroached upon tiger habitats, both reducing the tiger population and leading to dangerous encounters for humans. In addition, more than 35 million acres of coral reef has been obliterated during the past few decades, largely through contact with cruise ships, divers, and other human activity.
Policymakers eager to prevent this sort of damage should develop national parks and wildlife corridors, regulate access to potentially fragile areas, and protect indigenous species and control pests.
In Bhutan, known as one of the world’s biodiversity hot spots, more than 72 percent of the country is still forested. Parts of Bhutan have been declared wildlife reserves, and many mountains are closed to trekking for fear of littering and pollution. In recognition of more than 20 years of sustainable ecological development of sensitive ecosystems, UNESCO declared the Wadden Sea of Germany and the Netherlands a World Heritage site in June 2009. These countries’ traditional reverence for nature has helped them preserve their environment, even as they welcome more tourists each year.
3. Waste management. As a major pollutant, waste affects both water and soil quality and can detract from a destination’s image if treated improperly. The effective management of liquid and solid waste — from households and any local industrial processes — is therefore essential to the perception of a destination as clean and healthy. No traveler wants to worry about contracting a disease on his or her journey; a whiff of foul air can quickly change a tourist’s perception of even the most beautiful locale.
Unfortunately, the increasing presence of tourists themselves often adds significantly to the waste management problem — especially if untreated sewage from hotels and cruise ships is allowed to contaminate water and coastal areas. During the mid-1990s, cruise ships in the Caribbean Sea alone produced more than 70,000 tons of liquid and solid waste a year. The waste produced by the enormous influx of tourists to Venice over the last few decades led to pollution and flooding of the city’s iconic canals, which caused the city to withdraw its application to host Expo 2000, a global exhibition welcoming the new millennium, out of fear for its future.
Destinations must therefore invest in waste management early: following best practices by reducing sewage and industrial waste streams, minimizing the amount of waste that ends up in landfills and incinerators, and recycling whenever possible. Ideally, waste should be used to generate energy. Cutting-edge methods such as waste-to-energy conversion can enhance a destination’s reputation in the green playing field and attract potential investors in addition to bolstering environmental sustainability.
In many cases, creative solutions can minimize environmental impact while adding to a city’s reputation and attractiveness. During the 1994 Winter Olympic Games in Lillehammer, Norway, a waste management program was established to recycle or compost 70 percent of all trash generated. One million plates and 3 million utensils were produced out of potato-based starch, allowing them to be recycled into animal feed. In addition, 20,000 signs were recycled into cardboard boxes.
In Kenya, where remote hotels and lodges do not always have access to municipal waste-collection services, green waste is composted for use in vegetable gardens. Constructed wetlands may soon be used for recycling wastewater, and many camps and lodges are beginning to use biodegradable detergents to improve the quality of their gray water.
Israel has transformed a massive garbage dump on the outskirts of Tel Aviv into a 2,000-acre park that will soon feature a recycling plant, hiking and cycling routes, and picnic areas. In addition, Israel has plans for an education center where visitors can watch the recycling process and learn about its importance for the country’s environmental health.
4. Water supply protection. An adequate and healthy water supply is crucial to any destination’s long-term environmental sustainability. Severe water shortages continue to plague many parts of the world, and two major external trends — rising populations and the potential effects of climate change — provide added reasons for concern about this scarce resource.
Countries with water shortages that rely heavily on tourism face a double burden: Their citizens desperately need the water that keeps hotel swimming pools — and, by extension, the national treasury — full. A smart, conservative policy to guarantee water availability is key to keeping both pools and coffers full and both tourists and citizens satisfied.
Moreover, since water supply and desalination systems are typically significant sources of energy usage and emissions, sustainable water policy is important both for its own sake and as a way to contain carbon emissions.
For all these reasons, water consumption must be measured, controlled, and reduced to the minimum level necessary for adequate quality of life. Here too, investment in creative and technological solutions should be a priority. For example, by cleaning and reusing wastewater, a destination can increase its potable water capacity and reduce sewage, pollution, and cleanup fees. In addition, proper wastewater management reduces aquatic pollution and minimizes the risk of disease.
In many of Kenya’s semi-arid environments, lodges have begun to actively promote water conservation awareness and introduce measures such as restricting water pumping to certain times of the day, installing low-pressure showers, promoting the use of recycled water and rainwater, and encouraging guests to reuse towels. Many lodges and camps are also planting trees and woodlots, both as a sustainable source of firewood and as a protective measure for water catchment.
Structures and Systems for Change
Clearly, none of these environmental elements stands alone. Carbon mitigation, biodiversity conservation, waste management, and an adequate and clean water supply are all interconnected and interdependent — much like the ecosystems they aim to protect. Poor waste management can lead to the emission of harmful gases and can also lead to the contamination of the water supply, both of which have the potential to threaten biodiversity. A sustainable waste management program may require additional energy, thereby increasing a destination’s carbon footprint. For this reason, a holistic approach to sustainability investment is essential.
Furthermore, none of the key environmental issues can be addressed effectively by policymakers or business leaders unless systems and structures are in place that both regulate and promote sustainability. A destination may be deeply committed to embarking on a sustainable path, but without private- and public-sector systems and structures that enable environmental change, that path may be too chaotic to navigate. These systems and structures include the following.
• Regulations and governance. Legislation should be ambitious in breadth and specific in depth, protecting the environment and limiting potentially harmful development in addition to encouraging positive behavior. Destinations can implement measures including green taxes, park entry fees, and pollution penalties, and can also subsidize investments in sustainable projects. In addition, they can implement smart capacity-management principles that limit the number of tourists and optimize the yield per tourist in capacity-constrained areas. In the Maldives, for example, to protect the nation’s fragile ecosystem, tourism is limited to selected zones and a subset of uninhabited islands.
Similarly, in the Republic of Kiribati, a tropical nation in the central Pacific where unregulated fishing was decimating the island nation’s stock, the government introduced regulations to monitor and control fishing enterprises. These businesses are now required to provide the government with an annual environmental impact assessment.
As these examples demonstrate, the highest levels of government must sponsor sustainability programs, with appropriate bodies at the national, regional, or local level spearheading and facilitating implementation.
• Stakeholder participation. The term tourism sector is widely used, but tourism encompasses a wide variety of business sectors. With that in mind, any truly holistic sustainability program requires the engagement of many different stakeholders. It is absolutely vital that government, the private sector, and civil society collaborate to create and implement sustainable policy. Sustainability efforts can be driven by a wide range of stakeholders, including national, regional, and local governments; commercial or civil interest groups; and private players. (See “The Megacommunity Approach to Tackling the World’s Toughest Problems,” by Fernando Napolitano, s+b, Autumn 2010.)
At the government level, the ministry of tourism should collaborate with private- and public-sector entities responsible for the environment, energy, agriculture, transport, health, finance, security, and other relevant areas, as well as local municipalities. This type of collaboration plays a critical role in aligning national and local interests, and helps speed up execution.
For example, the Green Tourism Business Scheme (GTBS) is the U.K.’s only sustainable tourism certification program validated by the national tourism board. Businesses opting to join the GTBS are assessed against a rigorous set of criteria in areas including energy and water efficiency, waste management, and biodiversity. Those that meet the criteria receive a bronze, silver, or gold award based on their level of achievement.
As the GTBS example shows, the entire financial burden of sustainability does not have to rest on the shoulders of local businesses or the backs of taxpayers: Public–private partnerships can act as highly efficient sustainability program initiators. For example, a hotel can participate in a technology initiative by buying shares in a government-built solar plant.
As the stakeholder with the most direct access to tourists, the private sector plays a key role in furthering a destination’s sustainability. Hotel owners, tour operators, and transport services can influence tourists to make environmentally friendly choices. By offering accommodations with a smaller carbon footprint and sustainable waste and water policies, hotels can do much to protect the environment.
Private-sector institutions, such as NGOs and universities, can provide critical research and advocacy, educating locals and visitors alike. For instance, a university-produced interactive exhibition on a destination’s unique environmental challenges can be marketed as an activity for tourists.
• Funding and financing. Destinations contemplating a green initiative may be concerned about financing. However, many green programs, such as the implementation of energy-efficient technology, will have strong financial returns and can be easily and successfully implemented as private for-profit investments. Some of these initiatives pay off quickly through savings in operating costs. These savings can then be recycled into other green investment projects.
The ease and speed of recouping green investments depends on choosing the right investment plan and having appropriate political frameworks and local policies in place to support it. Setting the correct economic balance between the public and private sectors is key. If the incentives for attracting private investment are too generous, the result can be burgeoning but underfunded growth, with a high burden on taxpayers. On the other hand, if incentives are too low, the investment strategy will fail to attract enough businesses to be viable.
This balance is critically important for both small-scale, private incentive initiatives and larger infrastructure initiatives, and it can help determine the choice between them. Depending on a location’s climate and geography-driven opportunities, larger initiatives may make more economic sense — such as building a solar plant that can power an entire area rather than encouraging individual solar panels on homes.
Destinations can often generate revenue by leveraging their own unique resources, such as charging fees to visit protected sites. For instance, Belize has fixed entrance fees for its parks that it uses to maintain and protect these fragile areas. The fees are discounted for locals. Bhutan charges tourists mandatory tariffs to sustain its environment.
However, although many greening strategies do indeed bolster the double bottom line, not all are financially profitable. In addition, destinations cannot always generate the capital they need on their own. In these instances, external funding can provide seed capital for long-term sustainability efforts. Such funding includes global financing programs such as clean development mechanisms (CDM), which allow industrialized countries to invest in emissions-reducing projects in developing countries as an alternative to more expensive ones at home. For instance, in 1996 Costa Rica sold 200,000 tons of carbon offsets for $10 per ton to Norway. The $2 million Costa Rica received was used to finance reforestation initiatives.
In addition to CDM, public–private partnership financing models, biodiversity conservation funds (such as the World Wide Fund for Nature, also referred to as the World Wildlife Fund in the U.S.), and international tourism development funds (such as the U.S. Agency for International Development and the Tourism Sustainability Council) can all provide seed capital.
• Capacity building and education. Beyond theory and policy, the transition to sustainability requires a variety of local residents to be involved: lawyers, park rangers, and cleaning staff will all be needed. So will educators and advisors: A destination that is seeking private-sector investment should ensure that critical information about the benefits and opportunities of green initiatives is prepared carefully for them, often by enlisting local experts for help. The design of educational and capacity-building campaigns must contain a training program that allows locals to achieve best practices and encourages them to implement and promote green policy. For example, these programs can train tour operators to choose environmentally friendly modes of transportation, limit tourists’ contact with protected areas, and discourage littering.
• Marketing and public relations. A strong marketing and public relations campaign is essential for any green initiative. An effective campaign can encourage stakeholders to participate in the program and address potential investors. For example, New York City has created the “Powerful Green Map of NYC,” which guides visitors on a tour of the city’s energy-efficient resources. The map’s highlights include the biomass-powered Statue of Liberty, underwater turbines that generate low-impact electricity in the East River, and a warehouse of reusable building materials in the borough of Queens.
Three Steps to a Green Strategy
Addressing each of the environmental issues and enabling systems and structures requires prioritization and commitment, and they are all intertwined, making the creation of a coherent, environmentally sustainable tourism strategy a challenging endeavor. Moreover, each destination is different; Kenya’s history, culture, ecology, assets, and obstacles are vastly different from those of the Maldives, for example. Each strategy for sustainable tourism must be customized. How, then, should a destination begin to go about crafting such a strategy?
Step 1: Assess your environmental health. Policymakers must first conduct a professional and credible baseline analysis, probing both the strengths and weaknesses of their location as a destination ecosystem. Compare your locale’s current environmental performance to global best practices. Prioritize your needs, setting expectations for short-, medium-, and long-term results accordingly. This baseline analysis will be a starting point for understanding the issues you need to address immediately, as well as those that may become obstacles on the road to green transformation.
Step 2: Map out the green journey. The second step is to create a vision that encompasses your destination’s goals. This vision will help you map out your specific journey amid a spectrum of possibilities.
At one end, you can choose to simply “do no harm” — to prevent or avoid the destruction of natural assets and the environment, while focusing on proven yet affordable technologies instead of cutting-edge solutions. For countries or locations with political challenges or limited financial resources, this end of the spectrum may be most appropriate.
If you have more economic or political capital, however, you may aim for the other end of the spectrum: radical, innovative, pioneering options that stake a powerful claim to leadership in green tourism and reflect an aggressive, visionary desire to compete in an arena whose parameters are still being developed. As is the case with any spectrum, multiple options lie between these two extremes.
A scenario planning exercise can be a powerful way to shape the vision. Leaders — ideally from both the government and relevant businesses — can come together to develop a set of strategic green policy scenarios: full-fledged paths forward, each making a different trade-off among environmental benefits, the speed at which results can be obtained, and the associated costs. Make sure each of the scenarios reflects your destination’s unique strengths and resources, and tailor each to the specific needs and challenges of your locale, as defined in your assessment from Step 1. The scenarios should also be diversified enough to address the concerns of all relevant stakeholders.
You should then consider the commercial, ecological, and financial implications of each scenario. We recommend asking a set of questions that should, at a minimum, cover the following dimensions:
Environmental impact. How will the new programs affect key environmental dimensions? How will the results position your destination in the global arena? Will government and the private sector meet applicable regional or international mandates, or be eligible for existing or proposed incentives?
Demand and customer impact. How will reaching the target state affect current and future tourism demand for your destination? How can any potential negative short-term impact on the cost of tourism operators, and hence on demand, be mitigated? How much might you credibly expect associated revenues to increase?
Economic and financial impact. How much capital is required to achieve the desired results? Equally important, how much financial gain or savings might result from implementation? How would this scenario compare financially to a business-as-usual approach? What will the impact be on the federal budget and other government funds? How will the process of becoming a green destination affect the livelihood of local players, such as tourism operators? Do they have the skills to cope with such changes? Are the stakeholders making the initial investment the same ones who will benefit from the returns? If not, how can this gap be bridged?
Having these questions answered will make it much clearer which scenarios are viable. Once you choose a particular approach, the answers to these questions will also be critical to prioritizing programs and setting realistic expectations about targets. They can also act as a catalyst for change, arming policymakers with the information necessary to engage a broad range of stakeholders.
Step 3: Realize the green vision. A vision that has been built on such a strategic scenario planning exercise will lead to sustainable change only if it is implemented. How can you make the necessary leap from the hypothetical to the real? How can you ensure that your vision is implemented as planned — especially in light of practical restrictions such as financial restraints, limited resources, and current business priorities?
Start by writing out a sustainable master plan that frames specific strategic projects, aligns those projects with the proper investments, and sets up long-range planning steps. This plan must be linked to existing infrastructure and commercial initiatives, including property development.
Ideally, a dedicated governing body would oversee the implementation of identified sustainability projects, smooth and expedite the implementation process, and ensure that the master plan incorporates the needs and constraints of existing initiatives. The governing body can also be crucial in gathering concrete buy-in from relevant stakeholders and leading public relations, marketing, and education entities.
More than in any other stage, at the implementation stage, a multisector approach is critical. Destinations must get community buy-in, with the energetic involvement of the government, private sector, and civil society.
The Green Imperative
Destinations that under-invest in the preservation of their natural assets and trade their long-term health for short-term gain are squandering their most precious resources and chiseling away at their ecological and economic foundations instead of strengthening them. It is all too easy to forget that our most valuable resources are finite.
Ongoing trends will only increase the importance of sustainability efforts. The effects of climate change will continue to mount and become more visible; the growing middle class in emerging nations will create a larger tourism market. Competition will also increase, as leaders in the tourism industry realize that pursuing a policy of sustainability is essential for attracting visitors, and is also good for both environmental health and economic profitability. Stringent global carbon regulations will heighten the need for proactive, thoughtful, and swift measures.
Whether your location is a tiny, developing atoll or a sophisticated city, following this type of holistic, forward-looking road map will allow you to protect your most valuable assets, stay competitive, and build a sustainable green foundation for the future.
Reprint No. 10304
- Jürgen Ringbeck is a senior partner in Booz & Company’s Düsseldorf office. He focuses on strategy and transformation for companies in global transportation industries, such as airlines, tourism operators, postal and logistics companies, and railways.