Concessions Draft Jan 2009 Full

CI Concession Best Practices 3rd DRAFT Miriam S. Wyman INTRODUCTION Why we created this guide The World Conservation Union (IUCN) defines a Protected Area (PA) as “an area of land and/or sea especially dedicated to the protection and maintenance of biodiversity, and of natural and associated cultural resources, and managed through legal or other effective means” (IUCN, 1994). There has been a significant increase in both the number of PAs (a recent assessment of 104,000 sites) and area covered by PAs, from 2.4 million km² in 1962 to over 20 million km² in 2004 (Chape et al, 2005); PAs cover an area of roughly 12% of the global land surface Despite the acknowledged importance of PAs worldwide to protect biodiversity, reduce poverty and promote sustainable development, a consensus has emerged that current spending on PAs is grossly inadequate for both supporting the costs of existing sites, as well as ensuring the creation and effective management of a representative global system of PAs to meet urgent conservation priorities (Eagles et al., 2002). According to one widely-cited estimate, in order to secure an expanded network of PAs (covering 30% of marine ecosystems and 15% of terrestrial lands), $45 billion per year (over 30 years) may be required (Balmford et al., 2002). A more modest estimate of $12-13 billion annually over the next decade to manage PAs in developing countries has also been presented (Bruner et al, 2003). As the current total turnover of the entire global tourism business is calculated to be 6 trillion USD, only half of one per cent (0.5%) is required to meet the estimated need at the high end. In 1993 and 1995 the World Conservation Monitoring Centre (WCMC) conducted two surveys relating to park and protected area funding in 108 counties. The results showed an average funding (for both infrastructure and services) in developed countries to be US$ 893 km², and in developing countries US$ 157 km² (Li & Han, 2001). Many, if not most PAs face a funding crisis, both in terms of the amount of funds available and how those funds are used. There is an urgent need to expand and diversify PA financial options and to ensure that funding reaches the groups and activities essential for biodiversity conservation (Eagles, 2001); tourism presents a viable financial option. Tourism and Protected Areas Tourism is now the world’s largest industry, accounting for over 10% of the global economy and in 37 less-developed countries is the principal source of foreign exchange (Christ et al, 2003). Tourism and recreation are also highly valued PA benefits. For example, nature-based tourism is a major component of export income in Australia, Botswana, Costa Rica, Kenya, Nepal, New Zealand and Tanzania (Eagles, 2001). PAs receive millions of visitors and for some PAs the fees charged for entry or for recreational activities generate significant revenue. In South Africa, for example, approximately 60 percent of all foreign tourists visit a national park or game reserve.

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With this income, the South African National Parks Board finances up to 80 percent of its annual budget from tourism receipts alone (Eagles et al., 2002). A response to PA operations and maintenance funding issues in developed countries such as Canada and the United States, where the traditional tax-based government appropriations have decreased, has been to rely more on park-generated revenues, especially as tourist numbers continue to increase (Brown, 2001). With 700 million people traveling each year, and over 33,000 protected areas worldwide, tourism is a growing source of revenue for the management of PAs with important natural and cultural resources, as well as the communities living within and around these areas. While tourism can lead to problems such as waste, habitat destruction and the displacement of local people and wildlife, with appropriate planning tourism also has the potential to provide incentives for conservation. And aside from revenue generation, tourism also acts as a driver for economic development more generally, supporting a variety of local and national businesses, such as restaurants, hotels, transport and the production of souvenirs within PAs (Eagles et al., 2002). Undoubtedly, biodiversity conservation planners around the world need to focus on ensuring ecotourism is an important ally in their struggle for preserving the natural environment (Ceballos-Lascurain, 2001). Document Objectives A detailed and in-depth review of concession agreements and government documents was conducted from 22 countries. These primarily covered Latin America (9 countries) with other examples from Southern Africa (5 countries), Australia & New Zealand, the U.S. and Canada, and Asia (4 countries) (Table 1). The data reviewed do not capture the volume of tourism concessions taking place within protected areas worldwide. For some of the case studies used, gaps exist with regard to specific concession contract components and therefore do not provide definite conclusions about a given country or region of the world. However, these reviewed government documents and case studies provide an overview of where best practices are being established as a priority with tourism concessions and where more development is needed. Based on obtained information, strengths overall appear to be with the social and environmental responsibility components while concessionaire qualifications, legal, and financial responsibility components appear the weakest.

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Table 1. Summary of Tourism Concession Components

Chile

x

Costa Rica

x

15

x x x

x

x

x

x

x

x

x

x

x

x

x

x

x x

x

x

x

x

x

x

x

x

x

x

x

x

x

x

x x

x

x

x x

x x

x x

x x

x x

x

Mexico 10

x

x

x

x

x

x

x

x

x

x x

x

x

x

x

x

x

15

x x

x

x

20

- AFRICA Zambia Botswana

x

x

Ecuador Columbia

Local business involve

x

x x

Belize

Community rev. share

x

x

x x

Guatemala

Community Assessment

x

Risk Analysis

Waste Management

Alternative Energy

Monitoring plan

Infrastructure devlpmt

Maintenance/repair res.

Income requirements

Concessionaire user fee

Performance bonds

Contract non-fulfillment

Fines

Environ / Com. damage

Facility ownership

Late / non-payment fee

Local employment

Argentina

Social Responsibility Capacity Building

- LATIN AMERICA Peru x

Environmental Responsibility

x

20

x

10

x

15

x x

x

3

Canada

Financial Responsibility

x

10

- NORTH AMERICA U.S.

Legal Responsibility Contract length (ave.)

Language abilities

Education level

Tourism experience

Concession qualifications Financial capacity

Table 1

x x

x

x x

x x

x

x

x x

Namibia Seychelles S. Africa

x x

x

x

x

x

x

- AUSTRAILIA Australia

x x

x x

x

x

30

N. Zealand

x

-3-

x

x

x

x x

x

x

- ASIA China Japan Thailand India

x

x

x x

x x

x x

The main objective of this document is to provide a framework for protected area managers (community-owned or government-owned) and conservation practitioners to develop and implement their own best practices for tourism concessions within their protected area systems. This framework is intended to be a guide on key areas of tourism concessions that may be adapted to each individual situation. This document will identify: -

the key issues affecting the successful implementation of tourism enterprises the key issues affecting the successful implementation of tourism concessions Identify the most appropriate and effective indicators under key concession components Recommend best practices for each key component Provide practical tools for communities, NGOs, government officials, and protected area managers to create more sustainable tourism relationships through the development of best practices for tourism concessions Foster a proactive attitude and encourage the implementation of best practices for tourism concessions within protected areas worldwide as a tool for conservation and sustainable development.

Best Practices for Concessionaires Concessions are one of a number of market-based mechanisms, known collectively as Tourism User Fees (TUFs) that can be used to gather significant revenues from tourism-based activities which can then be directed toward supporting PAs and other conservation efforts. The fees partially reflect the cost of supplying recreational services, the demand for natural resources, and the value that visitors place on their experience at the site. The direct link between maintaining natural areas and income from user fees is a strong economic incentive for conservation. Some examples of different TUFs that can be incorporated into PA tourism: 1. Entrance fees. Visitors can be charged to enter PAs. 2. Concession fees. Companies (“Concessionaires”) providing services within PAs (e.g., lodging and food) are charged fees to operate such business concessions. 3. Licenses and permits. Private firms operating within or outside PAs (e.g. tour operators, guides, cruise ships) and individuals participating in specific recreational activities (e.g. diving, fishing, camping) can be charged for licenses or permits. 4. Tourism-based taxes. Taxes can be levied at hotels, airports and other collection points, and channeled into conservation. The advantages / disadvantages of utilizing these different mechanisms are summarized below.

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Mechanism Entrance fees. Visitors can be charged to enter PAs.

Positive - Have the potential to generate a large portion of operating costs of a PA where tourism volume is high and entry fees are also relatively high.

Negative - Highly variable month to month which could affect planning - Can be difficult to collect and enforce in Marine Protected Areas where entry is difficult to restrict to specific locations.

- Provide the greatest revenue contributions to ecotourism sites, primarily because - Can exclude the they are the easiest fee very poor domestic to collect visitors from enjoying the site if user fees are highpriced.

Concession fees. Companies (“Concessionaires”) providing services within PAs (e.g., lodging and food) are charged fees to operate such business concessions.

- A fixed fee component aids planning - An excellent way to involve local people in PAs (sole or coowners or employees of the concession). This can help build local community support for the PA.

- A concession fee may not be a viable option for some sites, particularly if there is limited demand for the service. - Difficult to arrive at a balance between the amount the concessionaire will earn by exploiting the resource, and the amount that will be returned to the PA administration. - Inherent risk of commercialization of sites and trend toward facilities designed to

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Examples Fees collected at entry gates. The Galápagos Islands (Ecuador) charges foreign visitors a US$100 entry fee. National parks in Kenya, Tanzania, Uganda and Botswana charge foreign tourists US$20–30 per day. These relatively high fees are typically only found at well-known international parks, or at sites that have large numbers of “charismatic” terrestrial wildlife species (e.g., lions, elephants and primates) Fees to operate restaurants, hotels, eco-lodge facilities and souvenir shops. In Peru’s Sandoval Lake Lodge (within Tombopata National Reserve) the privately-run lodge contributes $19 per tourist to the Tambopata Reserve

Licenses and permits. Private firms operating within or outside PAs (e.g. tour operators, guides, cruise ships) and individuals participating in specific recreational activities (e.g. diving, fishing, camping) can be charged for licenses or permits. Tourism-based taxes. Taxes can be levied at hotels, airports and other collection points, and channeled into conservation.

- A useful mechanism for monitoring how many visitors actually carry out certain activities.

- An excellent way to raise additional funds that are set aside specifically for protected areas.

produce income rather than protect natural resources. - Unstable revenue Permits for tour subject to seasonal or operators and guides annual fluctuation. scuba/snorkel, kayaking, sport fishing; mountain climbing/hiking permits; licenses for cruise ship visits.

- Double taxation can occur when local residents must pay a user fee as well as local taxes that support the PA system.

In Seychelles, tourism outfitters must pay a tourism license fee to access protected areas Taxes on hotel rooms, airport use (entry or departure tax). Belize requires all foreign tourists to pay an airport departure "conservation fee" of US$3.75, which goes directly to Protected Area Conservation Trust (PACT)

Source of information: The Conservation Finance Alliance, 2004. This document focuses on the role of tourism concessions within protected area systems. There is great potential for PA authorities to form partnerships with other sectors and agencies in order to develop tourism opportunities. Tourism services are provided through “concessions”, or agreements, that are made between the operator and the protected area agency. Concessions are usually undertaken within the private sector but can also involve community organizations, NGOs, and other non-for-profit enterprises (Eagles et. al, 2002). In general, these relationships will take place on a continuum, from government ownership and operation at one extreme, and private ownership and operation at the other.

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Government involvement with tourism concessions in protected areas Most government involvement

Govt. ownership and operation

Least government involvement

Govt. ownership and private sector operation

Govt. ownership and non-profit operation

Private construction, ownership and operation of facility

Although government-owned PAs (e.g., national parks) play an important role in the maintenance and management of protected areas, when it comes to tourism activities and running a for-profit operation, governments tend to lack the economic funds and business “know-how” necessary to be successful. Furthermore, state-run concessions that exist tend to be restricted in their ability to innovate and respond to changes in consumer demands (Eagles et al., 2002). National governments increasingly favor the promotion of private tourism concessions within protected areas so that the overarching goal of preservation and conservation remains with the state. Furthermore, governments understand the importance of creating links between conservation and local economies through the involvement of local communities within protected area concessions. Overall, experience has shown that devolving responsibilities for the establishment and operation of PA tourist facilities to local communities and the private sector can yield substantial increases in revenue, as well as providing a financing mechanism that can help cover many of the wider costs of PAs (Eagles et al., 2002). Although tourism concessions can greatly benefit PAs, without proper management tourism concessions can lead to degradation of the natural resources on which it depends. Therefore, tourism concessions are not only an opportunity, but also a challenge. One approach to better manage tourism concessions and to distinguish unsustainable tourism from other forms of tourism that are more socially, culturally, and environmentally sensitive is to develop, incorporate and implement a set of best-practices for private sector involvement in protected area concessions. There is therefore a need to analyze the options available for private sector concessions, along with the successes and failures of various approaches, the management skills necessary, and the most desirable methods in various circumstances (Eagles et al., 2002). Developing Concessions

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The process of tourism concessions development involves three components (Figure 1). This document focuses on the third component of tourism concessions development, Contract management and oversight. 1. The legal and policy framework for concession contracting (Legislation) outlines best practices for how concession programs are defined and regulated. 2. The prospectus development process (Regulation) outlines best practices for how concession opportunities are defined, structured, priced and brought to the market and how suitable operators are selected. 3. Contract management and oversight (Contract) outlines best practices for how concession contracts are managed once an operator is in place and includes observations on rates, the roles and responsibilities of the players and evaluations and inspections (PriceWaterHouseCoopers). Originated By

Scope

Time Line

Legislation

Legislative arm of Government

Broad: sets out general intent of concession program, and general guidelines

Longest and slowest process. Should be updated and reviewed every 25 – 50 years

Regulation

State land management agency

More focused: the specific rules and regulations to implement the legislation

Will typically take 1 – 5 years to establish full body of regulations. Review and update every 5 – 10 years

Contract

Agency (at national, regional or park level – depending on size and scope of operation) and Operator

Very Specific: details the exact nature of the operation, rates, etc.

Shortest process: once prospectus has been issued (which includes draft contract), final negotiation of contract should be a matter of weeks or a few months at most

Figure 1. The Process of tourism concession development. Source: PriceWaterHouseCoopers

Stages of development An important pre-cursor to best practices is to understand the stages of development in a tourism business enterprise. All tourism concessions, from hotels to restaurants to souvenir shops, follow three stages of development once the business plan has been developed and approved by the owner / operators. These stages are design, construction, and implementation. 1. Design

2. Construction

3. Implementation

In an optimal situation the concession agreement components should all occur before or during the design phase of the development, and should include clauses relevant to these three phases.

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During the design phase, and before the construction phase, an Environmental Impact Assessment should be undertaken to evaluate this component of the project. This should serve as a key hurdle in determining the conditions under which construction and implementation will take place. Understanding the Bottom Line While PAs can receive funds through these sources, funds also flow out of PAs in several ways, such as staff costs, operational services, and even damage caused to PAs (Figure 2). Even when tourism is developed within PAs and revenue is made through charging tourists and business for access to, and use of these sites, there are also management costs involved, such as providing the necessary infrastructure, collecting fees from tourists and concessions, and managing tourism damages. Therefore, it is important to remember that a profit will need to be generated. Funds from tourism will need to exceed management costs in order for tourism to provide the necessary financial benefit to PA management rather than have the PA essentially subsidize tourism (Font et al., 2004).

Figure 2. An economic model of tourism in protected areas. Source: Font et al., 2004

With tourism growing so rapidly, and with the wide range of fees available, TUFs have the potential to generate significant revenues for conservation, particularly in countries and specific PAs developed as ecotourism destinations. Factors Affecting the Successful Implementation of Tourism Projects in Conservation Issues are Land Tenure, Access to Capital, Availability of Skills, Access to Markets -9-

Land Tenure

Best practices for tourism concessions within protected areas cannot begin to be addressed without addressing land-tenure. Although a few exceptions exist, the majority of documents reviewed show tourism concessions located on government / state-owned land. However, community-owned and managed PAs are also increasingly involving tourism concessions on their lands. In some countries, protected areas are owned and managed by the state, such as New Zealand, Costa Rica, Argentina, Columbia, Chile, Peru, and China. In other countries, local communities and non-governmental organizations manage or co-manage protected area systems. For example, in Belize, non-governmental organizations co-manage nine protected areas; in Canada approximately one-third of its 39 National Parks have cooperative management boards with Aboriginal peoples; in Australia, many national parks operate under joint ownership with state and indigenous communities; and in Ecuador, the Cofan Community Ecotourism Program in Zabalo (Cuyabeno Reserve) is a good example of a self-managed ecotourism enterprise, carried out by an indigenous group in the Amazonian region. The tourism activity is managed directly by the local council, who operates the community funds. In 1999, their total revenues were reported at US$120,000 (Ceballos-Lascurain, 2000). And in protected areas throughout South Africa, different scenarios for land tenure exist (private, state, community-owned, and joint management). In Namibia, Botswana and Zimbabwe, for example, community-based management of natural resources is increasing, along with revenues and wildlife populations. Land ownership by a community provides them the most powerful form of equity. If local communities have secured land tenure, they have control and power over decision making (Ashley and Garland, 1994; Spenceley, 2003). Unfortunately, as a whole local governments have not properly recognized the struggle for control over local resources that the tourism industry has created. Often decision-making about local resources local people depend upon is decided by elitist bodies exogenous to local communities (Brohman, 1996) and there are many examples where a few private entrepreneurs exclude local people in order to gain key assets, often through unauthorized land-grabbing. For example, in the Philippines’ St. Paul’s National Park, the gateway town of Sabang had large public land areas 20-30 years ago. Today, however, almost all these lands have been privately exploited and the local authority lacks any power to effectively prevent planning regulation violations (Ashley et al., 2000). Community ownership of natural resources and other tourism assets provides the opportunity to obtain the concession fees from the private sector in exchange for their use. For example, in Zimbabwe, the Mahenye community has benefited from a lease agreement for two lodges. But this was only possible because the community and local authority controlled the lease rights, along with support of community interests by the local council, and supportive policy context from the CAMPFIRE program (Ashley et al, 2000). Font et al (2004) stresses a key component of successful community-based management is proprietorship, of which there are three aspects: 1) the right to benefit (including cash); 2) the right to management (e.g., to set quotas); and 3) the right to sell to best advantage.

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If land tenure issues are not resolved and communities are not given the ownership and management rights they are entitled to, best practices for tourism concessionaires cannot even begin to take place. Because of this, resolving land tenure disputes is a necessary foundation to establishing best practices. Access to Capital

In order for the poor to expand informal tourism sector activities, financial capital is critical (Shah, 2000). However, the lack of marketing skills, tourism experience, and access to capital creates challenges for communities to develop assets on their own (Ashley and Jones, 2001). By beginning with small projects and reinvesting profits over several years, some poor entrepreneurs have generated their own capital over time. However, locals can be squeezed out if rapid growth is driven by outside investors, which is what has occurred in the Philippines’ Boracay Island (Shah, 2000). In another example, as India’s tourism industry develops, the barriers are increasing for those with little capital who want to enter the hotel market. Linkages to the local urban economy is high but connections with rural economies are low. And although hotel ownership may be ‘local’, it is concentrated into the hands of a few entrepreneurs with connections to the traditional elite (Goodwin, 2002). In general, regulations within the tourism industry related to activities, service standards, and worker qualifications are often focused on the more formal tourism sector enterprises which also impose difficulties for those lacking capital and contacts within the industry (Ashley et al., 2000). Increasingly, partnerships with private tour operators are viewed as a way to tap into the tourism market (Ashley and Jones, 2001). Availability of Skills

One of the factors constraining the involvement of local community tourism is local skills development (Ashley and Garland, 1994). For example, in Indonesia’s Komodo National Park, local involvement within the tourism industry is restricted by low education levels and social capital. While existing skills and capacities allow basic level involvement, there is substantial external business ownership, and little opportunities for training (Goodwin et al, 1998). In another example, hotel labor around India’s Keoladeo National Park is drawn primarily from the urban sector and the more expensive hotels tend to employ non-local professionals (Goodwin, 2002). Where local communities have access to various forms of social capital and there are established mechanisms for training and planning, the potential for tourism participation may be greater (Shah, 2000; Ashley and Garland, 1994). For example, in Indonesia’s Bromo Tengger Semeru National Park, activities such as horse and jeep rides are organized through associations which ensure a fair share of the market to all their members (Shah, 2000). Where skill development way not always be possible, rule revisions can help involve local residents. For example, in Namibia accommodation classifications that excluded very basic but clean campsites and homestays are being revised, as are guide training systems that were suitable only for those with English, formal education and access to the capital city. As in many other countries, there is a strong case for ‘local guide’ registration systems (Ashley et al., 2000). Access to Markets

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For tourism within protected areas (e.g., national parks), proximity to park entrances and other areas tourists congregate or pass creates tourism market opportunities. In Indonesia’s Komodo National Park, however, rather than benefit the local communities living within the park who have been disadvantaged by a lack of capital and resource use and tourism development restrictions, 99% of the revenue to the local economy from tourism ends up in neighboring town communities (Goodwin et al, 1998). In another example from the Upper Mustang region in Nepal, the tour agencies association, TANA, has reduced opportunities for local travel entrepreneurs by working to establish rules that prevent independent travelers (Shah, 2000). Local access to the tourism market is greatly inhibited with enclave tourism and all-inclusive package trips. With these situations, hawking at entry and exit points or along roadsides is often the only option for local people (Goodwin, 2002; Ashley et al, 2000). One solution to this specific situation is organized markets to facilitate local sales to tourists by establishing specific sites within parks for women craft-sellers (e.g., South Africa’s Kwazulu Natal National Park) or to set-up market locations at the park entrance, something demanded by local communities outside Zimbabwe’s Gonarezhou National Park (Ashley et al., 2000). Factors Affecting Successful Implementation and Execution of Concession Agreements This document continues with a description of each component with indicators and recommendations for creating best practices, illustrating examples from the field. 1. 2. 3. 4. 5.

Concessionaire Qualifications Legal Responsibilities Financial Responsibilities Environmental Responsibilities Empowerment / Social Responsibilities

1. Concessionaire Qualifications What is the issue? The rationale for protected area management to outsource tourism development to the private sector stems from PA management’s lack of tourism business know-how and experience, as well as the PA’s main focus of conservation. Therefore, in order to make sure the PA makes a profit to help fund management operations, private sector entities interested in developing tourism concessions within protected areas should demonstrate their ability to be profitable. Reviewed contracts specify a range of concessionaire qualifications, from financial capital to tourism experience to language abilities. Concessionaire qualifications are very important to consider when developing contract agreements to ensure the most qualified and experienced concessionaires are chosen. The four indicators CI considers most important are the following: 1. financial capital

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2. tourism experience 3. education / training level 4. language abilities What Are the Options? Financial capacity - Minimum amount = ?? Tourism / concession experience - Experience with at least one past concession experience and demonstrated success Education and Training -demonstrated training or education in field for area of concession and knowledge of environmental laws of protected area / country Language abilities -bilingual staff where job entails communication with tourists (English and native language) Good Practice in Action Concessionaire qualifications are shown in Table 1 demonstrated by these case studies: ● In Botswana, concessions are based on the following criteria: experience, financial capacity, and demonstrated knowledge of the Botswana conservation legislation (and in particular the Wildlife Conservation and National Parks Act and its subsidiary legislation). ● In Costa Rica, bilingual language abilities (Spanish / English) and a high school education level is required of all major staff. ● In Columbia, a concessionaire must have initial capital of $200,000,000 Columbian pesos. (~ US $1000)

2. Legal Responsibilities What is the issue? A common authority granted to protected area managers (state- or community-owned) is the authority to terminate a concession contract for the breach or non-fulfillment of that contract. In addition, graduated sanctions, depending upon the severity of the situation, are also present in the majority of concession contracts, with most involving a financial penalty and a set duration of suspended activity and is most-likely determined on a case by case basis with each individual contract. Specific language for late payment or non-payment financial penalties is more defined with specific monetary amounts. The six indicators CI considers most important under legal responsibilities are the following: 1. Contract Length

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2. Late payment of fee / non-payment of fee 3. Facility ownership after contract 4. Environmental / community damage 5. Fines 6. Contract non-compliance Contract Length Review of government documentation and case studies showed that concession contract length varied extensively, depending upon the type of concession. Contract lengths between 10-20 years, however, emerged as an overall average length. However, preference is often given to contract proposals that involve local communities and longer contract length is given with increasing capital investments by private parties. Contracts can be structured to include performance tests and renewal options to create the appropriate flexibility for the agency to terminate badly performing operators, while creating a degree of certainty for good operators. The contract length for a concession within a protected area depends, to some extent, on the grantee (private, NGO, local community) and type of concessionaire (size, activity). And although contract length varied, the majority of contracts reviewed contain options for renewal. Another issue to consider with regard to contract length is the capital the concessionaire has invested into infrastructure. For example, if the concessionaire builds a facility costing US $50,000, when the lease ends 20 years later, the same facility could cost US $100,000 to build. In the U.S. National Park Service, a response to address this issue has been the establishment of a maximum 30 year lease on privately constructed concession facilities as the minimum time frame for a concessionaire to pay off their investment (Ise, 1961). What are the Options? CI recommends 2 tiers of contract length: Tier 1: A contract with little or no investment by the concessionaire should have a shorter contract length (5 years) with a review of contract fulfillment after 2 years Tier 2: A contract with a substantial investment (over US$ X) should have a longer contract length (20 years) with a review of contract fulfillment after 5 years Contract renewal should be available to all concessions, given they are in good standing of all contract requirements, and based on a case by case basis. Late payment of fee / non-payment of fee Late payment carries fee of flat rate / % for every day missed Facility ownership after contract At the end of the contract term all facilities revert to land ownership. Any compensation to concessionaire for structure development will be assessed on an individual basis (with consideration to such things as structure depreciation, concessionaire profits, etc.) Environmental / community damage

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Any damage to the environment and resources will require full compensation to the state and local communities affected - Government’s environmental division and local community leaders will assess damage and compensation requirements. - Fees (see fines) - Performance bonds (see “Financial Responsibilities” recommendations) can also be applied to environmental / community damage restitution. - Suspension of concession activity until compensation to state and communities is fulfilled. Fines - For environmental / community damage, fees will incur for each week that compensation to state and communities is not fulfilled. - In case of a breach or non-fulfillment of the contract, the following fines and fees apply: 20% of the value of the unpaid obligation - For non-compliance of capacity building to local communities, a fine established by protected area management will incur. Contract non-compliance - In addition to fee (see Fines), a 1 year suspension of concession activity will be issued. - Every 6 months contract should be reviewed to ensure all obligations are being met. Good Practice In Action: Legal Responsibilities Contract Length Average contract lengths are shown in Table 1 but specific case studies show a range of contract lengths, depending upon the concession. ● In Argentina a general government document states contract lengths are 10 years with additional 5 year renewals possible. - In Pliego Panuelo Isla = 15 years Other contract lengths in Argentinean PAs are based on the historical relationship with the park service ƒ Activities developed by local community residents receive longer contract lengths ƒ If the only relation is one contract, concession contract is 3 years with option to renew ƒ If the concession is a compliment to a previously granted concession, the newly granted concession will last until the older concession runs out. ● In Peru there is a 20 year maximum contract length, with a renewal period for 20 years ● In South Africa, most concession contracts are for 20 years. In addition, - length of contract: with investment = 20 years; without investment = 10 years - where substantial capital investments are made by the private party under such arrangements, the PPP agreements (PPP = Public Private Partnership) tend to be longer Facility Ownership after concession

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● In South African national parks, at the end of the contract term all facilities revert to SANParks. ● In the US NPS, concessionaires that construct structures or other facilities (capital improvements) on park property using their own funds are compensated for their investments when concession contracts expire. The amount compensated depends on the initial value of the structure, adjusted according to the increase or decrease in the Consumer Price Index and less the amount of depreciation of the structure (i.e., the condition and serviceability in comparison with a new unit of the same kind). If a new concessionaire must pay a prior concessionaire for prior capital improvements made, this amount is based on the value of the structure at the time of the exchange. Fines and Fees In case of a breach or non-fulfillment of the contract, the following fines and fees apply: ● In Peru (Tombopata) the concessionaire will have to pay to INRENA (National Institute of Natural Resources) the equivalent of twenty percent (20%) of the value of the unpaid obligation as a penalty and there will be a 2 year suspension of activity by the concessionaire ● In Argentina, the concessionaire agreement for Nahuel Huapi and Arrayanes National Parks (Argentina), have graduated fines, depending upon the severity, from the equivalent of 100 – 2000 “Daily Rights Access”. Other general fines include: a fine equivalent to 1 year’s tax and a 1 year suspension. Environmental / Community Damage ● In Peru (Tombopata) the concessionaire provides full restitution to the state and to compensate third parties that could have been affected (e.g., damages to the protected natural area or to the native communities and local populations of the zone) ● In Argentina when a negative environmental impact not previously seen or detected is the result of the concession’s development or project, the APN (park management = state) can modify the conditions of the contract, order mitigation actions, suspend the activity or project as a preventative measure until the precautionary environmental measures are adopted, or terminate the concession because of the severity of non-fulfillment of obligations or the unnecessary risk posed to those involved. Non-payment or lateness of payment ● In Chile a late payment results in a fine of 15 UF (Unidades de Fomento) for every late day, from the first day the concessionaire delays payment until payment is made. ● In Columbia a late payment requires a daily pay equal to the maximum rate of one S.M.L.M.V.(Salario Minimo Legal Mensual Vigente = Valid Legal Monthly Minimum Salary), without surpassing a total of 30 SMLMV.

3. Financial Responsibilities

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What is the issue? A concessionaire typically pays a user fee that can involve various forms from a set annual fee, a flat fee in conjunction with a percentage of the gross revenue, to a percentage of all revenue earned (Eagles et. al, 2002). Aside from fees, other financial responsibilities include a demonstration of revenue earned and performance bonds (insurance) in place in the event the concessionaire cannot carry through all financial obligations. The four indicators CI considers most important under legal responsibilities are the following: 1. Performance bonds 2. Concessionaire User Fee 3. Income requirements 4. Maintenance / Repair Reserve Concession fee income can be structured in different ways. The major options include: - An annual fixed / flat fee - fees based on the number of people a concession serves during a given year - fees based on a percentage of the gross or net income of the concessionaire - a combination of the above According to the Conservation Finance Alliance (2004), key questions to consider when deciding which concession user fee to use include: -Which pricing schemes offer the greatest revenue potential over time? -Which schemes offer the greatest revenue potential in the near-term? - How might revenues fluctuate as concessionaires grow their businesses? One difficult area of concessions is figuring out the balance between the amount that the concessionaire will earn by exploiting the resource, and the amount that will be returned to the PA administration. To take two examples, in the US this figure is about 2 to 3 percent of concessionaire earnings while in New Zealand the Department of Conservations receives 37.5%, depending on the activity with the higher percentage for guided tours (Font, 2004). A fixed or flat rate for renting a concession service is a commonly used tool and in many ways it may provides an easier way to charge a concessionaire because tracking and calculating profits, income and number of tourists can sometimes be difficult. In the US NPS, this flat fee has been the traditional method of charging concessionaires and can be calculated taking into account gross revenues, operating expenses and net profits. In other situations a fixed rate is established at the beginning of a contract. The risk with this type of fee, however, is that it must be paid by the concessionaire whether a profit is made or not (Ise 1961). In the US national parks, for example, the work of a concessionaire may be financially risky. Even if the concessionaire goes into debt purchasing a concession, they are prohibited from raising their rates to visitors and are not able to receive a waiver of franchise fees (National Park Service 1988a). All rates the concessionaire charges to visitors must be approved by NPS and must be comparable to those in the private sector (National Park Service 1988b).

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On the other hand, however, the concession may be steadily increasing its business while the annual fee remains the same. It is not unusual for concessionaires to make huge profits while site administrations receive very little in fees. Another issue to keep in mind is that the responsibilities that the site administration will always have involve costs which should be factored into user-fee systems, such as monitoring and ensuring contract standards. Therefore, it is important to be creative in setting concession fees at appropriate levels for all parties and using fee income methods that are easily calculated (Ise 1961). Ise (1961) recommends concessionaires pay a portion of their net revenues rather than a flat rate to decrease some of the risk involved for both parties involved. What are the Options? Performance bonds - A performance bond must be valued at 10% of the annual pay value of the concession and must be maintained until 6 months after the concession expires in the event there are damages that have incurred. Concessionaire User Fee - Concession pays an established percentage of their net revenues - Concession user fee reviewed periodically (e.g., every year) to assess profits and expenses and adjust user fee where necessary Income requirements – Maintenance / Repair Reserve - 10 % of monthly revenue will be placed in this Maintenance / Repair Reserve for use specifically related to infrastructure repair or improvements. - Park management will maintain account and requests must be made by the concessionaire indicating the infrastructure improvement / repair use. Good Practice In Action: Concession user fees ● In Belize the government enacted the Protected Areas Conservation Fund (PACT) to collect revenues and taxes earned from tourist activities and visitor use fees. PACT receives 20 percent of the revenues earned by the non-governmental organizations co-managing some of the parks. Seventy percent of the collected fees are used for the management and development of the protected areas. The remaining 10 percent helps meet expenses specifically related to infrastructure and security for the areas (Brown, 2001). ● In South Africa, an annual fee is based on the percentage of gross revenue bid by the concessionaire during the bidding process.

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● In Ecuador’s Galapagos National Park charges a concession fee to each boat (an operation license) which varies with the category of ship. In 2002, concession fees generated US$400,000, or 8% of the income generated by the park visitor entrance fees (Benitez, 2001) Performance bonds ● In New Zealand “performance” bonds are used to cover any costs incurred by the government in carrying out work that the concessionaire has failed to carry out and that was required by the concession document or to mitigate any adverse effects arising from, but not authorized by, the concession or not reasonably foreseen at the time the concession was granted. ● In Columbia a performance bond covering $1,000,000,000 Columbian pesos is required (~ US $475,000). ● In Chile a performance bond must be valued at 10% of the annual pay value of the concession and must be maintained until 6 months after the concession expires. Income requirements ● Columbia - By the 9th year of a concession contract, the concession must demonstrate that they have made an additional $200,000,000 Columbian pesos (~US$1,000) Maintenance / Repair Reserve One of the most overlooked areas of concession contracting is the cost of ongoing capital maintenance of concession operation assets (IUCN, 2005). Many times concession operators find themselves without the funds necessary to allocate to repair and maintenance costs. This type of maintenance / repair reserve, also known as a “reserve for replacement”, represents cash paid by the operator into an account that can only be used for the ongoing capital maintenance. Considering the government or community holds title to the property, this ensures a burden of deterred maintenance is not left when the contract ends. Good Practice In Action: Maintenance / Repair Reserve ● In the US NPS, concessionaires are responsible for all maintenance and repairs of facilities and lands they lease from the park (National Park Service 1988a). ● In Belize 10 percent of visitor entrance fees in protected areas helps meet expenses specifically related to infrastructure and security for the areas (Brown, 2001).

4. Environmental Responsibilities What is the Issue? In an effort to support environmentally-responsible tourism practices, concessionaire contracts are increasingly involving measures to minimize environmental impacts. Depending upon the concession activity, contracts may require management plans for such areas as waste disposal, infrastructure development, water use and management, and recycling efforts.

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The five indicators CI considers most important under environmental responsibilities are the following: 1. Infrastructure development 2. Monitoring Plan 3. Alternative Energy 4. Waste Management 5. Risk analysis Infrastructure development Site planning and design is a process which involves integration in the issues of land use, human circulation, structures, facilities and utilities within the natural and human environment. In order to ensure harmony between tourism development and environmental protection, it is essential to apply sensitive design of infrastructure, master site planning, ecologically and socially conscious site design, and landscaping (Ceballos-Lascurain, 2001). The site planning and design for any tourism facility must be, first of all, an instrument that safeguards the sustainability and conservation of the surrounding natural and cultural heritage. Not only should it conserve the natural ecosystems but it must also contribute to repairing and restoring the environmental damages that may already be present in the site. The development of the site should strive to leave the site better off after development than before (CeballosLascurain, 2001). Monitoring Plan Monitoring is needed to assess the fragility of the ecological and socio-cultural components (Ceballos-Lascurain, 2001) and should be established when a project is initiated. Baseline information will provide the early warnings of impending change that will better enable management to take action (Eagles et al, 2002). Especially with seasonal tourism, this should happen before and after the tourism season (Ceballos-Lascurain, 2001). What are the Options? Infrastructure development - Any infrastructure development must be approved by park management. Elements that should be taken into consideration include: materials being used (recycled), alternative energy components, ecologically and socially conscious site design, and landscaping. Monitoring Plan A monitoring plan should incorporate periodical base-line inventories of biodiversity and other natural resources. This should be presented and approved before a contract is given. Alternative Energy At the very least, infrastructure plans must show design techniques that allow for: - natural ventilation - heating - lighting

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- rain water catchments Waste Management - The concessionaire must agree to manage and treat sewage using the established regulations of the protected area. - The management plan must include a plan for waste management Some important areas of waste management include - wastewater re-use (both grey and black) should occur as much as possible. Systems can be created in which water goes through several uses before being disposed. For example: - wastewater can be used for flushing toilets, and as irrigation or fertilizer for cultivations. - Septic tanks and separate lines must be installed for re-use of both grey and black waters. - In areas where water is scarce, or during the dry season, dry toilets (and pit latrines, in cases of extreme isolation and budget restrictions) should be incouraged. Risk analysis Environmental impact assessments (EIAs) must be approved before the concession is approved and should include the following components: - inventory of natural resources and cultural resources in proposed concession area - potential risk to any vegetation or animal habitat where proposed concession intends to operate and activities it plan to engage in. - any potential risks to local communities or resources local communities may depend upon (e.g., water) - steps in place to mitigate these risks - this risk analysis can also serve as base-line data for a monitoring plan Good Practice In Action: Monitoring Plan ● In Costa Rica every concession service, as a minimum, must consider the following: - describe and implement an infrastructure and cleaning maintenance plan for all public areas under the concessionaire’s responsibility - use biodegradable and environmentally-friendly detergents and disinfectants - agree to manage and treat sewage using the established regulations - describe and implement a waste management plan - identify the closest centers for waste collection and put into practice a waste classification, management, treatment, and transportation system to these centers. -monitoring plan ● In China’s Sichuan Province a biodiversity protection plan is required Alternative Energy Alternative practices involve design techniques that allow for natural ventilation, heating, lighting, and rain water catchments. Other more advanced technology allows for alternative energy sources such as solar power, wind power, low-scale hydroelectricity, geothermal power, natural gas and biomass. Solar energy especially has an enormous potential (both for heating

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water and for generating electricity) but so far is not exploited to its full potential in the majority of countries and regions (Ceballos-Lascurain, 1997). Good Practice In Action: Alternative Energy ● In Mexico’s Sian Ka’an Biosphere Reserve, the Ecolodge Project design includes use of solar energy (for heating water and photovoltaic generation of electrictity), ecological waste treatment, water recycling, use of local building and decorative materials (timber, thatch, native grass, and ‘zascab’ - local limestone), and natural cross ventilation (instead of air conditioning) (http://www.ceballos-lascurain.com/english/prod05-sian.htm) ● In Belize’s Rio Bravo Conservation and Management Area, infrastructure of five cabanas includes hot water and solar electricity and composting toilets (http://www.nature.org/aboutus/travel/ecotourism/travel/#belize) ● In China’s community-managed Wenhai Ecolodge, alternative energy and waste management installation (e.g., biogas, greenhouse, solar heating, water purification have been installed (http://www.nature.org/aboutus/travel/ecotourism/travel/art7280.html) Waste Management The management of waste is a crucial conservation problem in both urban and rural areas, including natural areas. The basic premise of a tourism facility operation is minimizing waste generation, since this is one of the main causes of degradation of the surrounding environment. Biodegradation practices should be used as much as possible. In the process of biodegradation, microorganisms break down the products of other living things and incorporate them back into the ecosystem. Biodegradable or bioconvertible material includes anything that is organic. Plastics are not considered includable in this category, despite industry contention that they are (Ceballos-Lascurain, 2001). Good Practice In Action: Waste Management ● In Australia’s Great Keppel Island Resort, paper, cardboard, garden waste, sewage sludge and some food scraps are shredded, composted for several weeks, and the fed to the worms at the resort’s worm farm. Within several months, the worms produce a rich product that is used in the resort’s gardens instead of fertilizer (Sweeting et al., 1999). ● In India’s Taj Jungle Lodge at Thekaddi, wastewater is discharged into the root zone at a subsurface level of sturdy plants with tubular roots, the plants purifying the wastewater by feeding off the organic material (Ceballos-Lascurain, 2001). ● In Columbia’s Nevados Park the concessionaire must present a document that establishes management of hyrologic resources (consumer and residual) and describe the supervision of environmental protection (energy, solid wastes), management of solid residuals, separation and recycling. Risk analysis Risk analysis involves the identification beforehand of the possible negative impacts tourism can have in the PA and surrounding communities, and what resources could be impacted. A

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feasibility analysis should be part of a risk analysis. This analysis should not only include the natural environment and its biophysical features of the site (e.g., vegetation, wildlife, etc.) but should also assess socio-cultural features (local communities, archaeological sites, etc.), and business aspects (how suitable is this location, comparative analysis of the different possible sites, long-term economic sustainability, etc.) (Ceballos-Lascurain, 2001). Another form of risk analysis, called the “precautionary principle” is a guiding rule in an Environmental Impact Assessment (EIA) to protect people and the environment against future risks, hazards, and adverse impacts (Ceballos-Lascurain, 2001). Good Practice In Action: Risk Analysis ● In Guatemala concessions must have cost-benefit analyses, environmental impact assessments (EIAs) and tourism management plans implemented to minimize impacts ● In New Zealand every application for a concession shall include the following information: a description of the potential effects of the proposed activity and any actions which the applicant proposes to take to avoid, remedy, or mitigate any adverse effects. ● In China’s Sichuan Province a feasibility report should include business plans and a biodiversity protection plan.

5. Empowerment/Social Responsibilities. What is the Issue? Local people will greatly influence the future of protected areas. Communities in and around PAs may depend upon natural resources within PAs for their livelihoods (e.g., agriculture and resource extraction). PAs must respond to these pressures by demonstrating their economic value. One way to accomplish this is through conservation management employment and developing alternative livelihood options, such as tourism (Font et al., 2004). Therefore, a focus of national governments should be the development of employment and small business opportunities that also develop positive attitudes towards these areas (Ishwaran and Erdelen, 1990) and reduce other environmentally detrimental activities (Argentina Secretary of Tourism and Sports, Law No. 22.351). One area where this can occur is though the promotion of private concessions within protected areas that incorporate local community benefits in some form (e.g. selling crafts from local artisans, hiring qualified local residents, etc.). Without these types of opportunities and benefits to local communities, hostility and illegal harvesting may result and hinder conservation efforts and highlights the importance of creating links between conservation and local economies (Nepal and Weber, 1995). The five indicators CI considers most important under empowerment and social responsibilities are the following: 1. Capacity Building - 23 -

2. Local community employment 3. Community Assessment (risks and benefits) 4. Community revenue sharing 5. Local business involvement Role of local communities Communities near protected areas may incur considerable costs from losing access to resources in those areas (Shyamsundar and Kramer 1996). Some sort of compensation or incentive may be necessary to gain and keep the support of local communities. One way to compensate locals is through protected area concessions. Locals often become the best wardens of the protected area's resources since their livelihood is at risk (McNeely et al., 1992). If the private sector can provide protected area support services at a fair rate, private competitive bidding for protected area support functions such as trash removal, security, and fee collection would reduce governmentprovided support staff and reduce costs (Leal and Fretwell, 1997). The use of local businesses to provide protected area support services would also benefit local communities and keep revenues in the region. Revenue sharing, where local communities receive a portion of the revenues generated through visitor use fee systems may be another option for protected area management. Revenue sharing with local communities' protected area revenues may be insignificant to a national treasury but substantial to a local community (Laarman and Gregersen, 1996). Lastly, capacity building and technical training of local communities can create employment and a vested interest in community-based management of PAs (Font et al., 2004). What are the Options? Capacity Building Together the protected area manager and concessionaire will determine the most appropriate form of local training and capacity building with local communities and this must be demonstrated in the concession proposal. This will be evaluated every 6 months for compliance and will result in a fine for non-compliance (see “fees” under financial responsibilities). Local community employment A private concession must show they are benefiting local communities through employment opportunities by hiring X% of their staff. The management plan should describe strategies that will be used to involve the local population in a concession enterprise. Community Assessment (risks and benefits) Management plans must include risks to, and involvement of, local populations. Specifically, the management plan should describe the potential cultural impacts (positive and negative) on the local population, as well as a ways to minimize or avoid the negative effects. Community revenue sharing A percentage of concession profits, if located within a community, should go directly to a community reserve that can then be used by the community development improvement projects. Local business involvement Longer contracts are granted to a concessionaire from the area surrounding a protected area

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Licensed-out services (e.g. construction, maintenance, etc.) must hire a minimum specific percentage of local citizens. Good Practice In Action: Capacity Building ● In Guatemala capacity building is encouraged to make communities more viable to run a concession ● In Chile community participation in encouraged by going outside of the borders of the protected area to present concession opportunities to communities and, when necessary, helping them to build the capacity to implement these concession projects. ● In South Africa, if funding for a concession comes from a grant, the grant can stipulate certain provisions regarding training and empowerment. In a grant from the Poverty Relief Fund, it included provisions for a training budget of R325,000 (~US$45,000). (Spenceley, 2003) Good Practice In Action: Local community employment ● In Chile 18% of protected areas have ties to indigenous communities. Through its policies, the Chilean government has recognized the importance of encouraging indigenous and nonindigenous local communities to participate in the management of protected areas. They encourage this through granting concessions directly to communities and through the implementation of community run tourist activities in the areas surrounding protected areas. ● China’s Sichuan Province requires that a contract assures community participation by employing at least 20% of staff from local communities. ● In South Africa empowerment obligations are determined by the bidders with 20% of the award mechanism being based on these empowerment commitments. The winning bidder is held to these commitments, which form part of the contract. Good Practice In Action: Community assessment (risks and benefits) and Community revenue sharing ● In Peru the management plan must include risks to, and involvement of, local populations. Specifically, the management plan should describe the potential cultural impacts (positive and negative) on the local population, as well as a description of their indicators and the mitigation measures that the project will employ to minimize or avoid the negative effects. ● In Botswana concession fees from park visitation go to local communities and are also applied to natural resource management. ● In Yasuní National Park in Eastern Ecuador the Napo Wildlife Center is an ecotourism partnership with the 120-person Añangu Community, which has created a private protected area within Yasuní. The community receives 49% of the net profit from the lodge, and 93% of the paid lodge staff are from the community (http://www.tropicalnature.org/examples.html).

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Good Practice In Action: Local business involvement ● In Argentina, longer contracts are granted to a concessionaire from the area surrounding a protected area - Patagonian parks are encouraged to allow local communities to be involved with certain tourism activities including the renting / use of horses, oversight of camping areas with minimal services, the sale of crafts and other artisans, and the sale of locally made food items, etc. - In other situations where rural populations have the training and experience, other tourism activities are promoted for local involvement, including small lodges and restaurants. In these situations, Argentina works to provide the land where these small tourism enterprises could be developed. ● In Zambia privatization of game lodges and hunting concessions is regulated on an international competitive bid basis, but to encourage local investors and particularly indigenous entrepreneurs, certain leases and hunting concessions have been reserved for domestic bidders. ● In Seychelles local legislation specifies that there must be local partners in any tourism business, and that licensed-out services (e.g. boats, outfitter equipment) must hire a minimum specific percentage of Seychelles citizens Key Elements of a concession contract When developing a concession contract, there are key elements that all concession contracts should include: Element 1. Services to be provided:

Issue Provide minimum or maximum requirements as appropriate

2. Business Plan

Address the feasibility of income generation and market interest in the proposed concession

3. Rates:

State how they will be determined

4. Operating Plan:

The government can either draft an operating plan or request bidders to propose an operating plan. If drafted by the government, the plan should specify the level of service to be provided, but allow the - 26 -

Examples In Botswana concessions are based on the following criteria: experience, financial capacity, and knowledge of Botswana conservation legislation In South African parks, during the first 12 months the concessionaire is held to a Bid and Development Bond of R250,000 (~US $34,000). If it fails to implement the project within a specified time, it forfeits the bond. In New Zealand the concession fee is linked to proportion of the concession’s income In South Africa’s National Park System the concessionaire must report on progress made achieving contract obligations every six months

5. Capital Replacement / Improvement Schedule

6. Maintenance Plan:

7. Land and Property Assignments

8. Insurance:

9. Changes to property:

10. Contract termination:

operator some flexibility in determining the best way to actually run the operation dayto-day. The plan should also specify the nature and frequency of reporting, evaluations, responsibilities, etc Specify responsibilities for any damage or needed repairs to infrastructure or natural resources

In Peru (Tombopata) the concessionaire provides full restitution to the state and to compensate third parties affected (e.g., damages to the protected natural area or to local populations of the zone) The plan should specify roles In the US National Park Service, and responsibilities, the nature concessionaires are responsible for and frequency of developing all maintenance and repairs of maintenance plans and budgets, facilities and lands they lease from and the procedure for larger the park repair implementation. Specify what land and other In the US National Park Service, property is assigned to the concessionaires are responsible for concession, and the rights and all maintenance and repairs of responsibilities associated with facilities and lands they lease from that property (e.g. include the park utility lines and roads). Specify the level and nature of In Chile a performance bond must insurance required and what be valued at 10% of the annual pay property must be insured. It is value of the concession and must be common and acceptable to maintained until 6 months after the require the operator to carry concession expires insurance on government real property. Specify the process by which In Columbia’s Nevados Park the changes to the fixed property concessionaire must present a can be proposed and approved document that establishes management of energy resources and use of recycled materials for repairs and construction Specify what property must be In the US National Park Service, returned to the government, concessionaires that construct sold to the next concessionaire structures or other facilities (capital or removed from the park on improvements) on park property contract termination, how the using their own funds are value of the property will be compensated for their investments determined and by whom it will when contracts expires. The amount

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be paid.

11. Transition Requirements:

12. Local Community Involvement: 13. Addenda: - Design Phase

- Construction Phase

compensated depends on the initial value of the structure, adjusted according to the increase or decrease in the Consumer Price Index and less the amount of depreciation of the structure. Specify the requirements for In the US National Park Service if a contract transition at conclusion new concessionaire must pay a prior of contract term, should the concessionaire for prior capital incumbent not be awarded the improvements made, this amount is next contract. based on the value of the structure at the time of the exchange. Specify the requirements for China’s Sichuan Province requires local community involvement that a contract assures community and/or benefits participation by employing at least 20% of staff from local communities Need for the completion of a comprehensive EIA

In Guatemala concessions must have cost-benefit analyses, EIAs, and tourism management plans implemented to minimize impacts

Identify construction actions that are destructive, and ensure remediation steps are taken

In Peru (Tambopata), contracts must indicate the potential development risks and have contingency measures in place in case of accidents or natural disasters

(Adapted from PriceWaterHouseCoopers) When tourism concessions should not be granted Despite the great revenue potential for PA management from private tourism concessions, thought should also be given to situations where a concession should not be approved. A concession fee may not be a viable option for some sites, particularly if there is limited demand for the service. In some cases, there may be demand but not the concessionaire with sufficient capital, interest and risk-taking ability (Tourism concessions memo.doc). A few case studies represent this point. ● Namibia: Between 1994 and 1996 residents of the Bergsig area were involved in negotiations with two different tourism investors who wanted to set up luxury lodges. The Resident Committee negotiated two joint ventures but decided to proceed with only one, for a 16-bed tented camp. The other offer for a small exclusive lodge was discussed for three years when the company finally demanded a “yes or no”, and the community decided not to go ahead. The prospect of high cash returns was outweighed by a number of disadvantages in the eyes of the community: it was considered a high risk, involved keeping people and livestock out of a much larger area, and involved a much longer commitment (Ashley, 2000).

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● Namibia: In 1999, the Lerato company started negotiations with a number of Namibian conservancies to develop several 10-bed lodges in Namibia and elsewhere in Southern Africa. Conservancy representatives and advisors came together to assess the proposals. They identified many problems, such as lack of clarity on the size and exclusivity of proposed areas, risk, no proposals for joint management or local training, risk of environmental damage, and Lerato’s ‘domineering attitude’. They made a counter-proposal of the kind of issues they would like to see reflected in a contract, which offers insights into the benefits the communities seek from tourism on their land, and the disadvantages they seek to minimize (Ashley, 2000). Conclusion In view of the funding crises that most PAs face worldwide and the need to diversify funding options, tourism is seen as a very viable financial option. Considering the various funding options through tourism user fees, tourism concessions through partnerships with the private sector has many advantages. Although government-owned PAs (e.g., national parks) play an important role in the maintenance and management of protected areas, when it comes to tourism activities and running a for-profit operation, governments and local communities tend to lack the economic funds and business expertise necessary to be successful (Eagles et al., 2002). Therefore, national governments increasingly favor the promotion of private tourism concessions within protected areas so that the overarching goal of preservation and conservation remains with the state. Although tourism concessions can greatly benefit PAs, without proper management tourism concessions can lead to degradation of the natural resources on which it depends. Therefore, tourism concessions are not only an opportunity, but also a challenge. One approach to better manage tourism concessions is to develop and implement a set of best-practices for private sector involvement in protected area concessions. This report has reviewed government documents and case studies to provide an overview of where best practices are being established as a priority with tourism concessions and where more development is needed. The greatest weaknesses of best practices appear to be with concession qualifications, legal, and financial responsibilities. These are important components because they greatly impact the strength of concession contracts for obtaining qualified and experienced concessionaires and any liability concessionaires would face in the event of contract obligation non-compliance. Without greater consideration given to concession contracts in these areas, both human welfare (local communities) and biodiversity can suffer as a consequence. While the strengths of tourism concession best practices included environmental and empowerment / social responsibilities, some of these documents may also be no more than symbolic statements; just because these priorities are mentioned in government documents does not guarantee that they will be enforced on the ground. However, the fact that these countries are recognizing the importance of these best practices is a good beginning. The next step is to ensure these best practices are not just promoted but also applied. This tourism concessions best practices framework with outlined contract components, indicators, and recommendations will assist protected area managers, local communities, and conservation practitioners working with tourism in protected areas to ensure that tourism has a positive impact on protected area management.

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References Ashley, C. and E. Garland. 1994. Promoting community-based tourism development. Why, What and How? Research Discussion Paper series: Namibia Ministry of Environment and Tourism. Ashley, Caroline. 2000. The Impacts of Tourism on Rural Livelihoods: Namibia's Experience. Working Paper 128. Overseas Development Institute (ODI). ISBN 0 85003 461 2 £6.00. London, UK. http://www.odi.org.uk/publications/summwp128.html Ashley, C.; C. Boyd; and H. Goodwin. 2000. Pro-poor Tourism: Putting Poverty at the heart of the tourism agenda. Oversees Development Institute (ODI). ISSN: 1356-9338. London, UK. Website: pdj.sagepub.com/cgi/content/refs/4/4/294. Viewed August 30, 2007 Ashley, C. and B. Jones. 2001. Joint ventures between communities and tourism investors: Experience in Southern Africa. International Journal of Tourism Research. 3: 407-423 Balmford, A.; A. Bruner; P. Cooper; R. Costanza; S. Farber; R.E. Green; M. Jenkins; P. Jefferiss; V. Jessamy; J. Madden; K. Munro; N. Myers; S. Naeem; J. Paavola; M. Rayment; S. Rosendo; J. Roughgarden; K. Trumper; and R.K. Turner. 2002. Economic reasons for conserving wild nature. Science 297: 950-953. In Emerton et al, 2005 Benitez, P.S. 2001. Visitor Use Fees and Concession Systems in Protected Areas: Galapagos National Park Case Study. The Nature Conservancy Report Series Number 3. nature.org/aboutus/travel/ecotourism/resources/ Brohman, J.1996. New directions in tourism for third world development. Annals of Tourism Research. 23(1): 48-70. Brown, Cory R. 2001. Visitor use fees in protected areas. A synthesis of the North American, Costa Rican and Belizean experience. Ecotourism program technical report series number 2. The Nature Conservancy. Bruner, A; J. Hanks; and L. Hannah. 2003. How much will effective protected area systems cost? Presentation to the Vth IUCN World Parks Congress, 8-17 September: Durban, South Africa. In Emerton et al, 2005 Ceballos-Lascurain, Hector. 1997. Ecolodge Development in Coastal and Desert Zones of Egypt. Report for Winrock International/U.S.-AID. Arlington, Va, USA. In CeballosLascurain, 2001. Ceballos-Lascurain, Hector. 2000. Relevant Ecotourism Experiences Around the World. Special presentation at Fundación Miguel Alemán, Mexico City. In CeballosLascurain, 2001.

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