Study Shows that Tourism in Wilderness Areas can be both Sustainable and Profitable

This paper is part of the first batch of papers released by the Studies Hub, a bibliographic research platform focused on Economics and the Environment launched by the Instituto Escolhas.

The study entitled Outdoor Recreation as a Sustainable Export Industry: A Case Study of the Boundary Waters Wilderness by Evan E.  Hjerpe was published in the Ecological Economics journal.  It offers an economic analysis of tourism activities in an area encompassed by three counties in northeast Minnesota.  Covering a million acres and dotted with lakes and a network of rivers, this is one of the most popular wildlife regions in the USA.

This study found that tourism activities have substantial impacts – due to the ecological value of this area – generating direct economic benefits of US$ 56

million in 2016 alone.  But this was not all: a further US$ 78 million may be included as prompted by economic activity in this region driven by tourism, and without even mentioning the creation of 1,100 jobs.

The study shows that these figures can be explained easily, because each tourist dollar generates a further 59 cents through rising production of goods and services in this region, with this figure obtained through a production multiplication factor of 1.59.

Furthermore, for each 100 jobs providing services rendered directly to visitors, a further 26 positions are created in tourism support activities, resulting in a job multiplication factor of 1.26.

It is important to stress that this study shows that recreation tourism is a massive industry in the USA, with annual revenues of around US$ 887 billion, of which only a small portion is absorbed by wilderness trips.

Input-Output Matrix

The calculations leading to these results are handled through the Input-Output Matrix (IOM) developed by Russian-born economist Wassily Leontief, which measures the impacts of exchanges among different economic sectors.  If I buy a kilo of beans at the street market, what is the impact resulting from this? In order to grow a kilo of beans, I need seeds, fertilizers to prepare the soil, a tractor and its sowing attachments, and people performing these activities who are paid wages.  Once the beans have been planted and harvested, they must then be bagged and trucked into town for sale.  A truck must be purchased to transport them, its driver must be paid, and its fuel must be bought.  At the street market, bean sales are subject to taxes that must be paid.

These interactions illustrate the complex flows and exchanges in the production system, involving inputs and outputs needed to simply plant beans.  It is the OIM that translates these interactions and chain reactions throughout the production system into a presentation format that is easier to understand, through the numerical matrixes reflected in its name.  This allows academics and other specialists to assess the impacts of a specific activity.

Brazil’s National System of Accounts includes an OIM that is valid nationwide, drawn up by the Brazilian Institute for Geography and Statistics (IBGE) and establishing a common database that may be accessed for all its assessments.  The downside is that Brazil’s OIM dates back to 2005 and has not been updated since then – resulting in an unacceptable lag that undermines valid economic studies in Brazil.

Conservation

Going back to the US study, it also notes that trips to wilderness areas occur mainly on public lands that are legally protected, leading to the conclusion that the resulting economic impacts are crucial for upholding the status, thus benefiting future generations that will be able to enjoy the conservation of these natural resource inventories.

This is particularly important in a State such as Minnesota, where iron ore mining is a key factor for its economy, but also pollutes lakes and rivers with tailings.  This prompted the State Courts to order a mining company to cease polluting Lake Superior – the world’s largest freshwater-body.  During the 1980s and 1990s, pressures imposed by environmentalists and the State Government also forced other companies to follow suit.

The importance of this step may be measured by the fact that Minnesota is popularly known as the Land of 10,000 Lakes, although there are actually over 22,000 of them covering more than 12,300 km², about 5% of its total land surface.  The Mississippi River rises in one of these lakes: Itasca.

Protected Areas in Brazil

Can the findings of this study help Brazil in some way? Obviously! Wilderness tourism is still in its infancy in Brazil, despite its massive potential.  According to the World Economic Forum, Brazil has the “largest potential for generating tourism revenues through its natural heritage assets, bringing in revenues to underwrite conservation initiatives, while also generating jobs and income,” say Pedro Passos and Marcia Hirota.

The conclusions reached by this study can thus help ensure that conservation unit stewardship is finally perceived as a source of revenues in Brazil, underpinning their survival as territorially protected areas, precisely at a time when a flurry of draft bills is under examination by the Brazilian Congress, seeking to overturn this protection for several of these areas in many different biomes nationwide.

This study is part of the Studies Hub online platform run by the Instituto Escolhas, specializing in bibliographical research on the topic of Economics and the Environment.  Eager to develop into a tool underpinning research into these topics in Brazil, this Studies Hub launches its archives with papers published in seven major international journals specializing in Economics of the Environment.  To access this Hub, click here

Check out the full study here: http://www.sciencedirect.com/science/article/pii/S0921800917303452