Global Assessment Report on Disaster Risk Reduction 2013
From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction

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142 Part II - Chapter 9
Globally, tourism is one of the most dynamic and fastest-growing business sectors, contributing 9 percent to global GDP (WTO, 2011

WTO (World Trade Organization). 2011.,World Trade Report 2011: The WTO and preferential trade agreements: From co-existence to coherence., Geneva,Switzerland.. .
; WTTC, 2012

WTTC (World Travel and Tourism Council). 2012.,Travel and Tourism Economic Impact 2012., London,UK.. .
). In 2011, the tourism sector was responsible for 4.6 percent of total global capital investment. The sector creates more jobs than the financial services, communications and mining industries and for every US$1 spent on tourism and travel, US$3.2 is generated in GDP (WTTC, 2012

WTTC (World Travel and Tourism Council). 2012.,Travel and Tourism Economic Impact 2012., London,UK.. .
In 2012, the tourism industry was expected to grow faster than overall predicted global growth (UNWTO, 2011

UNWTO (World Tourism Organization). 2011.,Compendium of Tourism Statistics Data 2006-2010., 2011 Edition.. .
i Its contribution to global GDP in the same year was estimated to be US$2 trillion, generating more than 100 million jobs (WTTC, 2012

WTTC (World Travel and Tourism Council). 2012.,Travel and Tourism Economic Impact 2012., London,UK.. .
). Most of this growth is occurring in China and India, where domestic tourism is expected to generate a sharp upturn in capital investment—contributing to an overall growth of 6.7 percent in Asia (Ibid.). This chapter, however, will focus on tourism in Small Island Developing States (SIDS), and how business investment decisions contribute to disaster risks, in turn affecting the economy of these countries.
Comparative advantages but
high risks
Small island states in the Caribbean, Indian Ocean and Pacific are increasingly popular tourist destinations, many of which are also highly exposed to hazards. Attracting investment in tourism development is one of the few areas where SIDS are competitive. However, it also poses risks, given their high economic vulnerability.
Many small island developing states (SIDS) are heavily dependent on tourism and a number of different tourism products along the tourism supply chain as the key source of investment (Zhang et al., 2009

Zhang, X., Song, H. and Huang, G.Q. 2009.,Tourism Supply Chain Management: A New Research Agenda., Tourism Management 30 (2009) 345-358.. .
). Although SIDS may be uncompetitive in other economic sectors, in tourism, many of them excel (WEF, 2011

WEF (World Economic Forum). 2011.,The Travel and Tourism Competitiveness Report 2011: Beyond the Downturn., World Economic Forum., Geneva,Switzerland.. .
(Source: UNISDR, based on data from UNCTAD, 2011

UNCTAD (United Nations Conference on Trade and Development). 2011.,Trade and Development Report: 2011 Post-crisis Policy Challenges in the World Economy., New York and Geneva.,. .
Figure 9.1 Contribution of tourism to exports of goods and services, annual average 2006–2010 (percent)

Small island states that have been most successful in attracting investment in the tourism sector have also experienced the highest losses relative to GDP and damages to uninsured public and private infrastructure.

Where the ownership of risk is not well defined, costs may be borne by those that usually benefit least. In these settings, tourism can create new risks, but also presents great opportunity for risk management.

The role of social demand for resilient investment is currently not a strong lever in the tourism sector, particularly in the context of demand for beach tourism. Value propositions for small island holiday destinations that meet current demand and yet promote resilience need to be articulated.

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