Sunday, September 27, 2009

Top 10 Ecotourism Stories of 2009

A quick run-down of noteworthy news and emerging themes from a long and lazy summer:

1. Measuring environmental performance: Although we were involved in the global effort to establish a scorecard for the environmental and social performance of tourism development, we were never quite sure how these efforts would play out, and whether they would ever have a positive impact on development practices. How would it gain widespread adoption where other efforts had not? Nonetheless, perhaps the most important effort, among other worthy ones, seems to have come to fruition, and it will undoubtedly have an impact on a large portfolio of tourism investments. The Inter-American Development Bank developed the IADB tourism scorecard for their investments (typically projects greater than $100 million). Given that this bank invests hundreds of millions in tourism annually, this is a pretty big deal. (Kudos to Jorge and his team.) It remains to be seen what will become the standard for smaller projects.

2. Social media in ecotourism: It's a sign of the times when the Ecotourism Spotlight Awards is rewarding the best online presence of a government ecotourism organization, not some other worthy triumph in the tourism space. (Ecotourism Laos won the award, for the third straight year.)

Of course, examples of online ecotourism content abound. Indeed, social media is at the core of the integrated marketing strategies; it won't take you long to find a good example out there.

Future successes will likely include the use of content generated by users (enabling visitors and employees to get the word out about quality ecotourism) and, according to one emerging Web 3.0 definition, online interactions that lead to offline action: deal-making, positive impact, and so on. For now, we're trying to decide if Twitter Search is really a good way to follow ecotourism...

3. Ecotourism hitting the American West: Earlier this summer, New Mexico held a conference about ecotourism, and it struck as a novel headline. In this country, and especially in the West, tourism is heavily dependent on the 'wonders of nature,' and these assets are (usually) protected and stewarded. But ecotourism is a new term in the U.S. The result in New Mexico, announced last week, is a $250,000 initiative authorized by the governor. The work will include taking an inventory of ecotourism assets throughout the state and educating communities on ecotourism, including teaching marketing skills related to that sector. EcoNewMexico will work with state agencies and other public and private entities.

Increasingly, ecotourism is seen as a way of maintaining growth in tourism revenues in an economic downturn in ways that respect and sustain the natural assets that attract tourists in the first place. The New Mexico effort was undertaken largely because ecotourists appreciate that state's significant cultural and natural offerings. And they spend more. Similar stories are popping up in Colorado and elsewhere in the West.

4. New capital for responsible development: Ecotourism is an indirect way of paying for the environmental services (biodiversity, carbon sequestration) provided by our favorite tropical vacation destinations. While direct payments for these services may be a more economically efficient means of protecting the natural assets we care about, ultimately those are new tools that are inevitably difficult to do. Thus, ecotourism is seen as one of the next best things.

Although some established funds, notably Root Capital, have actively supported responsible development in the past, we are excited to hear about new sources. The newest fund, announced in early September, brings new focus to another established funding source: Verde Ventures will support new biodiversity-friendly businesses in and around World Heritage sites, in partnership with the UN Foundation and UNDP's Small Grants Program.

5. Portals: Aggregated information is important: the value of Rainforest Alliance's work in certification is a good example. So we really benefit from the established experts in ecotourism controlling the information overload. Planeta has apparently been around a while, and its site traffic is not insignficant. Importantly, it's a wiki, so so it's harnessing collective knowledge rather than relying on one person's narrow experience. New ones are popping up, too.

6. The science of ecotourism: Before we get too carried away with the virtues of ecotourism - remember, there's a not insignificant carbon cost associated with most of this travel - there's plenty of science to support the policy-making and business development. It can only be promoted more, in order to move this work beyond academic circles.

7. Agro-ecotourism: Anyone who's been to Napa Valley knows that a popular, lucrative product can get people very interested in farming. Two other foods that people tend to be zealous about - coffee and chocolate - grow in tropical countries, which presents a real opportunity given the overlap with ecotourism in these areas of the world. This overlap seems to be a somewhat growing area with real potential.

Coffee, it turns out, is a very important industry in these tropical countries, for economic livelihoods. For biodiversity, coffee's expansion into sun monoculture is a very real and recent concern. Unfortunately, the coffee tourism we saw in Panama was primarily sun monoculture. However, the increase in demand for shade-grown coffee, albeit within a pretty small niche of consumers, leads us to think there's an opportunity for the shade growers, with the bird habitat and other pluses they provide in addition to a quality cup of coffee, to differentiate their agro-ecotourism experience.

8. Tourism and biodiversity: Many successful (and genuine) ecotourism businesses have plenty of luxury amenities to go along with the nature. But, first and foremost, the biodiversity is the key to these businesses. And, in turn, the businesses can benefit the biodiversity, mainly by protecting the land from alternative development scenarios, and, secondarily, by promoting stewardship among visitors and local communities that benefit from the business. This phenomenon is not just in the tropics; and you can probably find plenty of other examples even farther north.

9. Understanding the investment issues: Triple bottom line performance is also being discussed at a major conference in this space. In the ESG domain, investors are increasingly recognizing environmental degradation as a major risk factor to realizing return on investments in tourism.

Again, there remains a major gap between supply of triple bottom line projects, demand for responsible investment opportunities, and the measurement tools to connect the two. We will be looking for, and working toward, mature tools moving forward.

10. Applying sustainable development lessons: Not a new concept in ecotourism circles, the needs of local stewards of the environment is seen as an increasingly important component of the success of responsible development practices. And gaining more funding and support every day. Our main concern is how well this approach will scale, relative to private-sector approaches and other alternatives.

3 good things about the new Verde Ventures fund

We anticipated an announcement from Verde Ventures on how they would re-double their efforts (and considerable funds raised) to support tourism businesses that benefit biodiversity. And here it is. Released earlier this month, Verde Ventures, along with UN Foundation and UNDP, will support entrepreneurs (both investment capital and capacity grants) whose work complements conservation goals in nearby World Heritage Sites.

This coincides with major advances in measuring the impacts of funds like Verde Ventures' new one - so-called impact investing. A new report from the Monitor Institute outlines the major hurdles still to be addressed before impact investing is anywhere close to the mainstream. Here are three of these hurdles, and some comments on where the Verde Ventures fund stands:

1. Unlock Latent Supply of Capital by Building Efficient Intermediation—Enable more investing for impact by building the investment banks, clubs, funds, and products needed to facilitate existing interest.

These entrepreneurs are a couple worlds away from mainstream investment capital: they're in far-flung places, they're small and speculative concerns, and there are language and numerous other barriers to attracting investment capital. The fact that CI focuses its efforts on, and has an installed base of contacts in many of these World Heritage places will address almost all of these barriers. The major remaining barrier - the fact that these enterprises still are small and speculative - is addressed in part by the 'social returns' nature of the fund, meaning that the funders are looking for a return of their capital, but beyond that they are looking primarily for environmental and social impact as well as modest financial returns.

2. Build Enabling Infrastructure for the Industry—Build the ecosystem for impact investing, including common metrics, language, and an impact investing network that can serve as a platform for collective action such as lobbying for policy change.

Here is where the challenges may lie. We have been working towards common metrics in a common language, while working on global sustainability indicators for tourism. But even we were focused on a particular type of tourism development in a small part of the world. This fund, however, will need something that applies across grantees (in a variety of industries) in different parts of the world, and with each business having a distinct impact on the success of the World Heritage Sites. Comparing across geographic regions means accounting for variations in the extent of surrounding economic and physical development (e.g., infrastructure, biodiversity of roads, etc.), among other factors. Creating something that is substantially more than a "look-back" afterthought for this initiative will be crucial. We hope there is plenty of time and money spent on this aspect of the fund.

3. Develop the Absorptive Capacity for Investment Capital—Develop investment opportunities and ensure high-quality deal flow by cultivating talented entrepreneurs and supporting the enabling grants to support entrepreneurs in building their businesses, and particularly developing biodiversity-friendly strategies and practices.

This, of course, is where this fund really earns its keep. Not only will the fund make loans and other investments, but it explicitly makes grants for building capacity among the entrepreneurs to build successful businesses in regions that demand environmentally responsible business practices. It's intermediaries like the ones involved in this fund, as well as Root Capital and others, that are needed to employ capital that is increasingly ready to test these ripe waters.