GAR 2013 Main Report

148 Part II - Chapter 9

for disaster risk is often diffuse. For example, as in the case of one large international hotel chain, separate investors or investment funds own up to 80 percent of its global hotel business (Honey and Krantz, 2007

Honey, M. and Krantz, D. 2007.,Global Trends in Coastal Tourism., Prepared for Marine Program World Wildlife Fund., Washington DC,USA. .

). In such cases, the premises of resorts are usually operated by another set of investors, including local investors (Ibid.). Thus, the risk for global chains, already spread across numerous operations across regions, is further reduced and instead transferred to local investors ( GAR 13 paper

Mahon et al., 2012

Mahon, R., Backen, S. and Rennie, H. 2012.,Evaluating the Business Case for Investment in the Risk Resilience of the Tourism sector of Small Island Developing States., Background Paper prepared for the 2013 Global Assessment Report on Disaster Risk Reduction., Geneva,Switzerland: UNISDR..
Click here to view this GAR paper.

). Even a major disaster in one region would affect only a minor percentage of businesses’ total global operations.

From a government perspective, the predominance of the sector in SIDS economies also implies high inter-country competition to attract investment. This in turn can potentially weaken the role of government regulation to reduce disaster risk, including through land-use planning.

For some small islands that turn down tourism investment, owing to disaster risk or environmental concerns, few other comparative advantages to attract alternative investment in other sectors remain. In contrast, large tourism investors can easily reorient their investments to other islands.

As such, stringent regulations to reduce disaster risk—for example, establishing non-building zones on coastlines—end up curbing total tourism investment and revenue and are difficult to justify or sustain from an economic or political perspective.

The tourism industry, however, is also a frequent recipient of investments made by international development and aid institutions. For example, about US$10 billion were provided in 2005 by 12 international donor agencies to fund 370 individual tourism-related projects (Honey and Krantz, 2007

Honey, M. and Krantz, D. 2007.,Global Trends in Coastal Tourism., Prepared for Marine Program World Wildlife Fund., Washington DC,USA. .

). In addition, tourism and related infrastructure investments from the United States of America and Europe into the Caribbean, in particular, is substantial (Lewsey et al., 2004

Lewsey, C., Cid, G. and Kruse, E. 2004.,Assessing climate change impacts on coastal infrastructure in the Eastern Caribbean., Marine Policy 28 (2004), 393-409.. .

). Although more could be done to proactively increase the disaster resilience of these investments, good examples

exist, such as the Inter-American Development Bank’s Tourism Sustainability Scorecard.^iv

In addition, much of the produced capital in the sector was built in the 1960s and 1970s—a time of relatively weaker planning and regulation and low environmental and risk awareness. During this period, many hotels were developed extremely close to the high water mark (Honey and Krantz, 2012; Mahon, 2007

Mahon, R. 2007.,The Role of Physical Planning in Linking Disaster Risk Reduction to the Development Process: Coastal Tourism Reconstruction in Grand Anse, Grenada., Paper presented at the 5th International Coastal and Marine Tourism Congress: Balancing Marine Tourism, Development and Sustainability., Auckland,New Zealand.. .

;

Mahon et al., 2012

). Many coastal tourism belts throughout the Caribbean have developed seaward of the coastal road owing to little recognition of the impact that future sea level rise many have on properties ( GAR 13 paper

Mahon et al., 2012

The imperative to attract investment in the tourism sector is not generally matched by corresponding efforts to manage and reduce resulting disaster risks (Mycoo, 2006

Mycoo, M. 2006.,Sustainable Tourism Using Regulations, Market Mechanisms and Green Certification: A Case Study of Barbados., Journal of Sustainable Tourism, Vol.14, No.5,2006: 489-511.. .

). The lack of coordination among the different departments concerned with attracting tourism investment, on the one hand, and with managing disaster risk, on the other hand, further leads to serious policy distortions and conflicting policy objectives and instruments.

The availability and pricing of insurance has yet to act as a disincentive to investment in hazard-exposed locations. Tourism investment represents a growing source of exposure for the insurance industry. Yet, there are only a limited number of assessments available of potential insured losses and the associated implications for insurance premiums and insurability in high-risk regions (UNWTO, 2012

UNWTO (World Tourism Organization). 2012.,Challenges and Opportunities for Tourism Development in Small Island Developing States., Madrid,Spain.. .

Although increasing losses could make insurance unaffordable, or unavailable, in the future—particularly for smaller tourism businesses—there is little evidence that the tourism sector has begun to systematically integrate disaster risk considerations into investment and operational plans (UNWTO, 2012

UNWTO (World Tourism Organization). 2012.,Challenges and Opportunities for Tourism Development in Small Island Developing States., Madrid,Spain.. .