Editorial | Tourism’s industrial policy

Based on Ed Bartlett’s pronouncements in Parliament’s sectoral debate, Jamaica’s tourism industry is sound and will remain the island’s major economic pillar well into the future.

Over the next decade, Mr Bartlett, the tourism minister, reported, between 15,000 and 20,000 new hotel rooms will be built on the island, adding to the more than 30,000 that already exist. The new hotels will cost at least US$4 billion, or more than $600 billion in Jamaican currency.

The additional rooms, all things being equal, should translate to substantially more tourists than the 3.8 million the island is projected to welcome this year, and the industry’s gross earning should go well beyond the US$4.1 billion expected in 2023. Taxes paid by the industry should also be well past the J$40 billion the government earned in 2022, not counting those for profit and wages.

New rooms should also mean more employment than the 350,000 jobs, which Mr Bartlett said were attributable, directly and indirectly, to the industry. He is commissioning a study to get a better handle on the economic impact of the proposed expansion.

But, said Mr Bartlett: “... Tourism will be the biggest driver of economic growth and prosperity in Jamaica for years to come.”

This newspaper welcomes the planned investments. We have no problem with tourism being a critical foundation upon which tourism rests.

TWO ISSUES

But even as we look forward to the flagged projects and their impact on Jamaica’s economic growth, two issues which Mr Bartlett didn’t address in any depth are hopefully receiving serious attention from policymakers.

One relates to the expected relationship between an expanded tourism industry and the wider economy. Put another way, is what used to be referred to as the sector’s backward and forward linkages being planned for in the context of a 21st century economy?

The other issue is the interface between Jamaica’s tourism and climate change and, ultimately, the sustainability of the sector.

This concern, of course, isn’t lost to Mr Bartlett and other key officials in the government who are aware of the threat posed by climate change to Jamaica’s critical asset as a tourist destination: sun, sand and sea.

Jamaica contributes only minutely to the greenhouse gases that cause Earth to grow hotter, disrupting climate patterns and causing sea levels to rise, which threatens the very coastal areas where some of the hotels projected by Mr Bartlett are to be built.

“The high density of tourism development and infrastructure in coastal areas and tourism’s dependence on climate-sensitive ecosystems, such as our coastal reefs, make tourism in Jamaica highly sensitive to climate variability and change aspects,” Matthew Samuda, the minister who has responsibility for environment, said last week at a launch of a Caribbean project to resuscitate the region’s coral reefs.

According to Mr Samuda, the estimated cost of protecting Jamaica “from one metre of sea level rise would be beyond US$500 million”.

But even before it gets to that – although climate scientists have warned that the world is fast heading towards the point when it will be too late to prevent Earth’s temperature from rising beyond the critical 1.5 degrees Celsius by the end of the century – Jamaica’s corals are not in good shape.

In last week’s remarks, Mr Samuda quoted a US Environmental Protection Agency’s (EPA) Coral Reef Health Index (CRHI) on which Jamaica scored 2.7 out of five, which translated to a rating of “fair” for the state of its corals. However, a 2020 report (released in 2021) by Jamaica’s National Environment and Planning Agency (NEPA) painted a significantly bleaker picture.

“In 2020, Jamaica’s CRHI reached an unprecedented low with a CRHI of 2.0,” the NEPA report said. “This indicates that the health of the reef system has been in a steady decline over the past decade.”

While climate change was a significant factor in the damage, it wasn’t the only one. Human population growth, overfishing and coastal pollution were among the contributors.

“Additionally, with increasing coastal development and infrastructure projects across the island, comes extensive coastal modification with large-scale disturbances that have the potential to result in further declines in coral cover,” the report warned.

LARGER MESSAGE

The larger message is that the growth in beachfront hotels must take into account “the nexus between resilience and sustainable development, and tourism’s role in it” – as Mr Bartlett put it in a recent conference on tourism development at the Organization of American States.

Presuming that balance is achieved, there is the question of the industry capacity to fuel growth and development in a way that some analysts say eluded earlier rounds of big hotel investments, such as in the 1990s and early 2000s.

According to Mr Bartlett, an estimated 40 per cent of Jamaica’s tourism earnings stays in the island. Some believe that estimate to be high.

Whatever the amount, a substantial portion of the leakage goes to financing the requirements of the industry, not least of which is food for guests. Agricultural technocrats have long argued that up to a quarter of Jamaica’s food bill of US$1.1 billion (it will rise further if more tourists come) could be displaced with domestic substitutes. Looked at another way, a possible US$275 million (J$41 billion) annually would be freed from investment in the domestic economy, especially agro-industries.

Unfortunately, critics say, there has been no serious, robust or sustained , multi-sector programmatic effort – that is, an education-driven, technology-based industrial policy – to drive this wished-for transformation. Maybe this new round of tourism investment will catalyse this linkages-based approach to development.