Tourism’s Ecological Challenge

Carles Manera

11 mins - 5 de Septiembre de 2023, 07:00

Tourism: A major impact of climate change
A report by the Ministry of Ecological Transition and the Demographic Challenge, Impacts and Risks Derived from Climate Change in Spain, details crucial impacts on specific vectors, which affect economic activities and their social consequences: water resources, desertification and land, terrestrial ecosystems, agriculture and livestock, marine and urban environments, coasts, human health, energy, transport and infrastructures, and tourism – a very full agenda. The issue raises genuine concerns and occupies the thoughts of many. Only the negligent and ignorant persist in denying it. In the case of mass tourism, the issue has been put very starkly on the table: rising temperatures, if sustained, will directly affect those economies dependent on tourism, by the possible transfer of visitors to other, less hot destinations. This is particularly relevant in the case of southern European countries, and in those regions with a high degree of specialisation in tourism activities. 

Indeed, rising temperatures have economic costs. This further exacerbates the situation of economic uncertainty. Social and experimental scientists have been working on this issue for years. The results are disturbing and give cause for serious thought to the introduction of biophysical, environmental parameters in the deployment of governments’ economic policies.

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In a recent study by the Joint Research Centre of the European Commission (Garcia León, D., Casanueva, A., Standardi, G., Burgstall, A., Flouris, A., and Nybo, L.: Current and projected regional economic impacts of heatwaves in Europe, NATURE COMMUNICATIONS, ISSN 2041-1723, 12 (1), 2021, p. 5807, JRC120759.), the conclusions reached are illustrative. Extreme heat affects people’s ability to work, resulting in lower productivity and, thus, lower economic output. In this research, the present and future economic damages due to reduced labour productivity caused by extreme heat in Europe are analysed. For the study of current impacts, the focus is on heat waves that occurred in four recent abnormally hot years (2003, 2010, 2015, and 2018). The analysis is further contrasted with data for the historical period 1981-2010. In the selected years, the estimated total damage attributed to heat waves amounted to between 0.3% and 0.5% of European gross domestic product (GDP). However, the identified losses were largely heterogeneous across the sample space and showed consistent GDP impacts above 1% in the most vulnerable regions.

Future projections indicate that, by 2060, these impacts could increase in Europe by almost five times compared to the period 1981-2010 if no further mitigation or adaptation measures are taken. This suggests the presence of more pronounced effects in regions where such damage has already occurred. Indeed, the insurer Allianz Trade assesses a loss of 0.6 points to global GDP by 2023 as a result of the heatwave. Central banks are, in turn, seriously studying the obvious externalities of climate change, with a proliferation of studies and macro-prudential positions on the subject (see, in relation to the Bank of Spain).

The Impact is General: Nothing is spared from the consequences of climate change
For an economic activity that is directly dependent on a demand that has leisure as its primary focus, and which requires territories that are agreeable in terms of people and climate, the environmental challenge is immense. In this sense, the impacts of climate change can affect different areas that directly influence the tourism economy: 
  • Variations in ecosystems and, in particular, water scarcity. This would hinder the viability of economic activity in the affected destinations.
  • Changes in calendars which, in turn, would lead to changes in demand. The areas most vulnerable to climate change are located in coastal areas, in other words, the essence of sun and beach tourism. However, this is also the case in mountain areas with a strong focus on snow tourism. 
  • Modifications in demand, in the form of reductions in overnight stays, changes in travel decisions, possible cancellations of trips previously planned, and the exploration of other destinations with a milder climate. 
  • Economic consequences for tourism supply, with falls in tourism revenues and, perhaps, closures of establishments – hotels, restaurants, bars, etc. – and, as a key consequence, the destruction of jobs and an increase in unemployment.
In this context, it is essential to generate systems of indicators that can show and differentiate the impacts by types of areas and tourism products. These final products are consumed in the place of origin; therefore, the territorial component is decisive. And the “product” is, in turn, disparate: the landscape, the space, the entire offer, but also the tourist himself becomes a “product” of the tourism production system. This reality means that other factors are becoming increasingly important in analyses of the tourism economy, to the point of opening up lines of research not only in heterodox economics but also in orthodox and more academic economics rooted in conventional economic theory:
  • Environmental externalities, understood as part of the economic system and, therefore, analysable in order to overcome the problems they can generate in the tourist destination. Here, the notions of “carrying capacity” or the use of metabolic indicators of the productive system appear as new challenges to identify the impacts of tourism with greater precision.
  • The environmental problem is not limited to the evolution of economic growth, as GDP is not an effective measure of environmental control. This affects both the industrial and service sectors. In this respect, markets, technology, and environmental policies play a key role. However, environmental regulations are more severe in a socially conscious context, with clear forms of defence and compensation for externalities. Thus, these regulations must be effective both in phases of strong economic – and tourism – growth and in phases of contraction, when there may be laxity in dealing with environmental externalities. On the other hand, countries with high per capita income show a reduction in emissions levels with an economy structure based on services, better energy efficiency, and greater concern for environmental issues. However, the Kuznets curve is N-shaped, meaning in countries with high income levels, the reduction of externalities is eventually blocked, because the opportunities to limit them are increasingly smaller, with high costs.
In the face of all these elements to consider, the key question is what to do: how to tackle a problem – climate change and tourism – which, at its epicentre, infers a central issue, which is none other than transforming the production model. In recent years, much has been said and written about this aspect and its derivatives, and even that name (“change of model”) has been questioned. Whatever one may say, the fact is that if we accept, as science indicates, that rising temperatures will affect the behaviour of mass tourism in those areas most affected by this climatic malaise, the obvious solution is to reorient tourism activity and diversify the productive fabric in regions highly specialised in this “invisible industry”.

A change in the production pattern of an economy entails transition costs: they are no zero costs. Efforts, both public and private, are required if the aim is to tackle the problems identified and offer other avenues for growth and development. In these scenarios, positions can be polarised. On the one hand, there are those who believe that the diagnosis of the climate threat, without denying it, is not as negative as it is proclaimed, so that work can continue on a day-to-day basis, without thinking about anything more than the numbers for the next tourist season. On the other hand, there are those who want rapid, almost abrupt changes, with the argument – which is true – that time is running out in the face of climate change. In the midst of this cacophony are often the policymakers, those who must enact policies and provide solutions.

No Fear: Let’s talk about changing the model, but one based on rigour
A change of model is neither done by decree nor by an avalanche of volunteers. It is implemented through governance and with explicit leadership, strategic planning, and investments – both public and private. The market can only act negatively, by adapting to a climatic decline in tourism. Short-termism is the main Achilles heel of the tourism economy. This has an impact on public managers and businessmen, who are installed in the quantitative expansionism of the model, despite the fact that voluntary exercises of ecological concern can be carried out. Faced with what is presumed to be the future, it is necessary to speak of a change of model. Or the market itself will do it: without further ado.

Let us start from a tangible reality: tourism accounts for around 13% of GDP in countries such as Spain, Italy, and France. It is a very important economic engine. In regional tourist economies, this percentage rises significantly. We reiterate: we are not dealing with a residual economic sector; it is a determining factor, articulating business projects, jobs, investments, and public strategies. It is a successful model. And the debate on its possible replacement often responds to pre-established conclusions, emphasising the undeniable negative externalities that tourism activities entail. This was also observed with the irruption of industrialisation, with its harsh social and ecological impacts. Contrasting industry and tourism as antagonists – we read a lot about this – is perhaps a mistake in the current scenario of mature service economies.

Tourism is a challenge for experts, politicians, workers, businesses, and society – crossroads that include ecological impacts. But it cannot be overlooked that there are also endogenous components of the economic and social structures themselves that cannot be ignored. The debate focuses on different questions, which are not unique and which are bound to give rise to new consequences:
  • How to reorient an economy specialised in tourism?
  • Is it possible to diversify this economy within a precise and reasonable timeframe?
  • How should the public sector intervene?
  • How to structure financial flows in the process of adaptation?
In Short: How to do it; and who does it?
The orientation of the tourism economy cannot be achieved without an effective public-private partnership: we stress this once again. There are no laws that immediately regulate economic transformations when sectoral changes occur. The aim is to slow down the growth of a driving sector – tourism, with all its derivations – in order to “create” other activities to replace it. But reorienting an economy involves essential ingredients:
  • The willingness of the executive powers – municipal, regional, national – to do so
  • The cooperation of private companies
  • The involvement of civil society and labour unions
  • The financial capacity to take on the projects that emerge
  • The commitment to train human capital, not necessarily technological or university capital
  • The basic lever of investment
  • Political empathy for the issue in question, avoiding partisan and/or electioneering approaches
Thus, we are faced with a great deal of complexity. In specialised regional economies, this means that we are talking about a longer process than can be foreseen. In any economic model, the time vector should not be shied away from, as it conditions decisions. These may vary from the established timelines, and adaptive capacities will be vital. It is a matter of visualising the trend lines that are being set for economic policies, where public and private investments, financial partnerships, and social and economic networks should work together: in strategic planning axes that redefine the pattern of growth.
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