Engaging Tourism Companies in Marine Conservation Sam Keller Projects Officer International Finance Corporation

Agenda  IFC  IFC’s Involvement in Tourism Industry  IFC’s Involvement in Ecotourism Sector  IFC’s Efforts to Engage Tourism Companies in Marine Conservation  Business Case for Supporting Marine Conservation

What is the International Finance Corporation?  Private sector arm of World Bank Group - owned by 175 governments  Provides equity, loans & advisory services (e.g., development of tourism concessions)  Committed loan and equity portfolio of $15.1 billion  In FY02, IFC approved $4.0 billion of financing for 223 new investments with a total project cost of $15.5 billion  As GEF Executing Agency, IFC is able to provide concessional funding for projects that help to conserve biodiversity IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives

What is IFC’s involvement in the tourism sector?  Since 1967, IFC has approved over $1.5 billion of investments in more than 180 tourism projects in over 70 countries.  As of June 2002, IFC held $461 million in the tourism sector, with the highest number of investments in Africa

What is IFC’s involvement in the ecotourism sector? IFC has supported two types of ecotourism projects: 1. Ecotourism companies that directly support conservation efforts Examples: Asian Conservation Foundation (Philippines); Eg-Uur Watershed (Mongolia); Boundary Hill (Tanzania); Save Valley (Zimbabwe); Pico Bonito (Honduras); El Boqueron Ecolodge (Guatemala) 2. Ecotourism projects that help manage & fund protected areas via private concessions Komodo National Park (Indonesia); Inka Terra (Peru); Vilanculos Wildlife Sanctuary (Mozambique) IFC supports ecotourism projects with loans, equity & grants, as appropriate

Asian Conservation Company Problem: Biologically rich marine areas in the Philippines are being damaged/depleted largely due to overfishing and destructive fishing Solution:  The Asian Conservation Company (ACC) is a private equity investment company that takes majority (or significant minority) equity stakes in for-profit ventures that can provide biodiversity benefits  The ACC will pass board resolutions or include clauses in its share purchase agreements that obligate portfolio companies to fund conservation activities  ACC investors will receive a financial return and a “conservation return”

Flyfishing for Mongolian Salmon Problem: The Eg-Uur Watershed in remote Mongolia is biologically rich, but threatenened due to unsustainable resource usage Solution: Mongolia-American joint-venture (JV) will receive long-term concession to exclusively operate fly fishing trips on a pristine river  In exchange, JV will pay concession fees, which will go towards biodiversity conservation and community development

Komodo National Park Problem: Komodo is highly diverse and very attractive to tourists, but Indonesian government lacks capacity to properly manage it. As a result, Komodo is being degraded due to destructive fishing, etc. Solution: A private concession will be awarded to Joint Venture (JV) consisting of The Nature Conservancy and Local Tourism Operator  JV will be authorized to:  determine carrying capacity limits  invest in Park infrastructure  set entry and other fees (e.g., diving, hiking)  collect revenues  market Komodo National Park internationally  Park authority will retain mandate for enforcement

Why should tourism companies support marine conservation? Tourism companies would like the following: Can it be achieved by supporting marine conservation? Exclusive user rightsPotentially yes Marketing assistance??? Cost reductionsNo Maintain resource baseYes Reputational benefits / PRPotentially yes Political & Economic StabilityNo Cheap financing???

Take-away points: For most tourism companies to give some of their revenues for marine conservation, there must be a business case for doing so. It’s difficult to establish a business case for giving $$$ for marine conservation. However, tourism companies may do so if they receive: a)exclusive user rights b)marketing assistance c)reputational benefits d)maintenance of resource base e)concessional finance