One of the three values of ecotourism, in addition to its inherent social and environmental benefits, is the economic sustainability provided to local communities through the following tenants:
- Local ownership,
- Observing and maintaining traditional practices of developing goods and food,
- Offering employment opportunities
This infographic was designed to convey the economic benefits of ecotourism, define the terminology used in the travel industry, and describe the differences in how local communities specifically benefit from ecotourism versus traditional (mass) tourism.
The key to understanding these differences is mastering the concept of a local income multiplier.
A local income multiplier is an assessment method for determining how much of a traveler’s dollar (or equivalent local currency) actually goes back into the local economy.
The figure below shows the “rounds of spending” that a traveler’s dollar may go through in the local economy. It also demonstrates the potential for decent and varied employment opportunities in the local community. The premise is that the more goods and services purchased within the community, the greater the local income multiplier will be. On the opposite side of the spectrum, outside purchases (leakages) will lower the impact.
As an example of the direct and indirect impact the “rounds of spending” can have on a local community, consider the situation of a family having dinner at an eco-certified lodge:
- The first round of spending involves only the guests paying for their meal, which goes to the lodge.
- This meal payment is then used to pay for the lodge’s staff wages, replenishing its stocks of food, and of course taxes.
- By sourcing local food, seasonings, cooking utensils and dishware from local farmers and craftsmen, the lodge is also supporting traditional farming practices and trades, local business, and other employees from the same community.
- Revenue from these purchases by the lodge also goes to the supplier’s advertising and infrastructure expenses as well as toward replenishing their own materials, wages, and, of course, taxes again.
Hence, a simple purchase of a family dinner at an eco-lodge that recognizes the value of sourcing items locally inevitably flows throughout the local economy in a large variety of ways.
Alternatively, if the family chose to have dinner at a well-known resort restaurant, most of the money (as indicated in the infographic below) would have to leave the community (been “leaked”) to support the large businesses that service the resort.
After combining every purchase a traveler makes, such as attending attractions staffed by local guides, buying souvenirs made by local residents, and staying at the lodge itself, it becomes easy to imagine how many opportunities there are to support the community as well as understand how leakages weaken or remove those opportunities.
For more information on how to specifically calculate the financial impact of ecotourism, at a business level and destination level, read about the Return on Investment (ROI) Model for Ecotourism.