Dutch Disease, Ecotourism and
Development Funding.
Roger Hosein and Martin Franklin
1
Outline and Rationale

This paper outlines the mechanics of the
Dutch Disease theory and makes the point
that an ecotourism strategy can be nurtured
and promoted as a means to help consolidate
the overall revenue flows from tourism. The
paper argues for a greater flow of
developmental funding from large MNCs,
especially those in the energy sector.
2
Introduction

Specifically this study focuses on the leatherback
turtle and its capacity to serve as a hub for
ecotourism activity in the North Eastern segment of
the T&T economy. This bloc of the T&T economy
is fairly rural and unlike other parts of the economy
has to date no oil bearing rocks. The leatherback
turtle is the largest amongst sea turtles and can grow
to as much as 6.5 feet in length and weight up to a
whopping 1,400 pounds. This turtle is circum global
and has a range that spans virtually all of the world’s
oceans.
3
Format of Presentation

The rest of this presentation proceeds as follows:





Outline of the mechanics of the Dutch Disease theory,
A discussion of the symptoms of the Dutch Disease in
T&T,
An illustration of trends in the tourism sector of the T&T
economy,
Outline of the main aspects of an ecotourism strategy,
funded on the leatherback turtle,
A discussion on prospective sources of developmental
funding.
4
Mechanics of the Dutch Disease
Figure 2: Illustration of the Impact of a Boom on Wages
wage
L1NT
L1BT
L0NT
L0BT
L0NBT
C
w2
B
w1
A
w0
ONT
NT1
NT0 NT2
NBT0 NBT1 NBT2
OT
Where LNT : Labor force in the NT sector
LNBT : Labor force in the NBT sector
LBT : labor in the BT sector
Y = T + NT
T = BT +NBT
Y = BT + NBT + NT
5
19
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
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1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
2099
2000
2001
2002
2003
2004
2005
2006
2007
08
Symptoms of the Dutch Disease
6.5
3
155
6
135
5.5
5
115
4.5
95
4
real exchange rate
75
3.5
Official
exchange rate
55
2.5
2
1.5
35
15
-5
6
Tourism Sector as Part of the NBT
Sector

The tourism sector forms part of the NBT
segment of an economy adhering to the
characteristics of the model outlined above.
Two ways to measure the relative contraction
of a sector,


Contraction in GDP,
Contraction in labor.
7
Trends in the shares of Value Added and
Employment in the Tourism Sector
0.6
1.2
0.5
1
0.4
0.8
Labor
0.3
0.6
0.2
0.4
0.1
GDP
0
0.2
0
739 749 759 769 779 789 799 809 819 829 839 849 859 869 879 889 899 909 919 929 939 949 959 969 979 989 990 000 010 020 030 040 050 060 0708p
9
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 20
8
Trend in Visitors Arrival Traffic to
Trinidad and Tobago, 1966-2006
500000
Visitors
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20
9
Why is the leatherback turtle endangered?
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
Tourist Building
Illicit Slaughtering
Harvesting of eggs
Shrimp Trawlers
Long Line Fishing
Fibropapiloma Tumors
10
The decline of mass tourism and the rise
of eco tourism


The globalization of markets is one of the most powerful factors
affecting the economic decision making process. As Miller and
Tanglay (1991, pg. 153) stated “years ago, the travel agents who
first dreamed up the idea of “ecotourism” were clearly looking for
new markets, not ways to save the world.
Whether or not the globalization process is the source of the
vibrancy in ecotourism does not negate the importance of
understanding the role of economics in ecotourism. From an
economic perspective, ecotourism is a means of valuing nature
and as Roberts and Thanos (2003) noted, “Ecotourism was
developed as a way to commercialize the economic value of
sensitive ecological regions, protecting forest and generating
employment and income, at the same time”.
11
The decline of mass tourism and the rise
of eco tourism

The ecotourism industry gained momentum
with the germination of the environmental
movement in the late 1970s. The UNWTO has
noted that by the start of the 1990s the
ecotourism industry was the fastest growing
subset of the aggregate tourism industry.
Indeed by 2004, ecotourism grew at almost
three (3) times the pace of the global tourism
industry as a whole.
12
The decline of mass tourism and the rise
of eco tourism

The ecotourism industry has thrived in an era
when mass tourism has began to lose its
followers. For example, as concerns British
tourist, a survey showed that 60% of tourists
felt that big tour companies had only
superficial holidays, and 80% of tourists had
enough of beach and resort type holidays.
13
Advantages and disadvantages of an
ecotourism strategy founded on the
leatherback turtle


There are a number of advantages and disadvantages
of an ecotourism based strategy founded on the
leatherback turtle.
In the first instance the ecotourism industry can help
to create employment. Members of the local
community can benefit from patrolling the beaches
during turtle season.
Residents can set up
guesthouses etc. The local business class should also
be able to benefit with a greater ecotourism effort as
it can help to increase the number of people coming
into contact with local markets.
14
Visitor Arrival Traffic and Unemployment Trends
in SASD 1998 to 2008
16000
14
unemployment rate in
SASD
14000
12
12000
10
10000
8
8000
6
6000
4
4000
Turtle watching visitors
2000
2
0
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
15
Advantages and disadvantages of an
ecotourism strategy founded on the
leatherback turtle



The community as a whole can benefit from better
street lighting, roads, electricity, water, telephone
facilities etc, as the government, private sector and
others contribute towards the development of the
ecotourism sector.
Ecotourism offers the residents of a community
incentive to preserve various facets of their physical
history, fashion etc.
From a macroeconomic level there is an incentive
for a greater inflow of tourism revenues. This can be
particularly useful if the economy has a foreign
exchange crunch.
16
Advantages and disadvantages of an
ecotourism strategy founded on the
leatherback turtle
At the same time:
 Stakeholders would have to take great care to ensure that there is not an
erosion of local culture and the development of a servitude mentality.
Stakeholders would also have to counter the emergence of an overly
materialistic culture. The literature is replete with examples of the
various dangers associated with bringing foreigners in contact with
isolated populations.
 Ecotourism such as that based on turtle watching may be focused mainly
on primary sector goods such as “watching the turtles nest”, but there is
not much demonstrated higher valued added products involved.
 Employment benefits may be only marginal and some may be in
undesirable areas such as prostitution. The main job opportunities tend
to come through hotel service attendants, tour operators, craft operators, a
few government agency staff and game wardens. Locals may not be able
to open accommodations for eco-tourist visitors because they may face a
plethora of financial obstacles and the commercial banking fraternity may
not be too keen to lend to them.
17
Advantages and disadvantages of an
ecotourism strategy founded on the
leatherback turtle

For ecotourism to be successful the local
populations have to capture a significant
amount of the profits generated. However,
some estimates have put the proportion of
earnings by the host community as less than
10% of the tourist expenditure on ecotourism
(Place 1998).
18
Aspects of an eco-tourism strategy
The schema below provides the broad sweep elements of an
approach that could help to shape a successful ecotourism
strategy founded on the leatherback turtle.
Undertaking research
and using key result.
Promoting conservation
and maintaining the
nesting sites of the
leatherback. turtle.
Integrating ecotourism
into the national
planning agenda.
Formulating a successful sustainable
tourism strategy founded on the
leatherback turtle.
Training staff
Development Funding
Involve and support the
local community
19
Developmental funding
Sources of Development Funding for Ecotourism
.
BINGOS
Corporate Philanthropy
Bilateral Donors
ECOTOURISM
International Foundation
Development funding
20
Developmental funding
There are 5 main source of developmental funding for
ecotourism projects, these are;



Big international NGO’s – BINGOs. These include groups
such as The Nature Conservancy and Conservation
International.
Bilateral donors: this refers to one country providing funds
for an organization in another country, e.g. USAID.
International Foundations: these include agencies like the
Ford Foundation and the Rockefeller Foundation.
21
Developmental funding


Multilateral banks
Corporate philanthropy: In this regard, BHP Billiton
and more recently ALNG must be commended for
their leading roles. However, there are other large
foreign corporate players in T&T and these firms
should be called upon for meaningful support.
22
Some concluding points related to greater
corporate development funding.

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Real effective exchange rate, oil prices and NBT
Ratio of profits repatriated and FDI inflows
Oil rents
Value added
Because of the “hands up” benefits of ecotourism
investments as compared to traditional gifts.
Employment.
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Concluding points


The ecotourism activity should be complemented by other
activities within the community. The agriculture sector should
not be ignored. The SASD community would need to be wary
of becoming overly dependent on tourism.
Even so, it is important to remember that all types of tourism
leave an ecological footprint. Ecotourism is really a form of
compromise economic activity which sets limits but allows
some form of accessibility. It must be complemented by strict
management practices.
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Thank you
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