Developing the Philippine blue economy: Opportunities and challenges in the ocean tourism sector

Zafra, Maria Angela G. Working Paper Developing the Philippine blue economy: Opportunities and challenges in the ocean tourism sector ADBI Working Paper, No. 1291 Provided in Cooperation with: Asian Development Bank Institute (ADBI), Tokyo Suggested Citation: Zafra, Maria Angela G. (2021) : Developing the Philippine blue economy: Opportunities and challenges in the ocean tourism sector, ADBI Working Paper, No. 1291, Asian Development Bank Institute (ADBI), Tokyo This Version is available at: https://hdl.handle.net/10419/249470 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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Zafra No. 1291 December 2021 Asian Development Bank Institute ADBI’s discussion papers reflect initial ideas on a topic and are posted online for discussion. Some discussion papers may develop into other forms of publication. Suggested citation: Zafra, M. A G. 2021. Developing the Philippine Blue Economy: Opportunities and Challenges in the Ocean Tourism Sector. ADBI Working Paper 1291. Tokyo: Asian Development Bank Institute. Available: https://www.adb.org/publications/developingphilippine-blue-economy-opportunities-and-challenges-ocean-tourism-sector Please contact the authors for information about this paper. Email: [email protected] Maria Angela G. Zafra is executive director at Strategia Development Research Institute, Inc. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms. Working papers are subject to formal revision and correction before they are finalized and considered published. Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan Tel: +81-3-3593-5500 Fax: +81-3-3593-5571 URL: www.adbi.org E-mail: in[email protected] © 2021 Asian Development Bank Institute ADBI Working Paper 1291 M. A G. Zafra Abstract Ocean tourism contributes significantly to the economy of the Philippines, an archipelagic nation with one of the longest coastlines in the world and one of the best marine environments in terms of biodiversity. This paper aims to explore how ocean tourism and economic development intertwine in archipelagic nations, examining national statistical data on tourism and economic development in the Philippines over the last several years. Furthermore, it discusses the policy landscape and identifies the enabling and disabling factors for the development of ocean tourism in the Philippines. It indicates how inclusive models can be a catalyst for sustainable tourism through a case analysis of El Nido Resorts, a tourism enterprise operating luxury resorts within the protected area of El Nido, Palawan. It also discusses recommendations of practical policy relevance based on the opportunities and challenges of sustainable ocean tourism in the Philippines. Keywords: ocean, tourism, blue economy, development JEL Classification: L8, O1, M2, Q5, Z3 ADBI Working Paper 1291 M. A G. Zafra Contents 1. INTRODUCTION ............................................................................................................ 1 2. TOURISM AND ECONOMIC DEVELOPMENT IN THE PHILIPPINES........................ 1 3. OCEAN WEALTH OF THE PHILIPPINES .................................................................... 5 3.1 The Philippine Blue Economy ............................................................................ 5 3.2 Valuating Coastal and Marine Ecosystems ....................................................... 6 3.3 Ocean Health ..................................................................................................... 6 4. OCEAN TOURISM IN THE PHILIPPINES .................................................................... 8 4.1 Sun and Beach Tourism .................................................................................... 8 4.2 Diving and Marine Sports .................................................................................. 9 4.3 Cruise Tourism ................................................................................................. 10 4.4 Ecotourism ....................................................................................................... 10 5. POLICY LANDSCAPE AND GAPS ............................................................................. 11 6. CASE STUDY ANALYSIS ........................................................................................... 12 6.1 Framework for the Case Study Analysis ......................................................... 12 6.2 Case Study: El Nido Resorts ........................................................................... 13 7. CONCLUSION AND WAYS TO PROCEED................................................................ 17 APPENDIX A: LAWS AND POLICIES REGARDING BLUE ECONOMY DEVELOPMENT .. 20 REFERENCES ........................................................................................................................ 24 ADBI Working Paper 1291 M. A G. Zafra 1 1. INTRODUCTION Our oceans contain vast amounts of wealth, providing an estimated at US$1.5 trillion in global value added each year (Nature Conservancy n.d.). Research has acknowledged coastal and maritime activities as drivers supporting a nation’s economy (McKinley et al. 2019). With the spotlight on climate change, the current discourse is tackling the appropriate use and management of private sector activities in the ocean (Voyer and van Leeuwen 2019). The blue economy, “the sustainable use of ocean resources of ocean resources for economic growth, improved livelihoods and jobs while ensuring ocean ecosystem health,” covers a plethora of activities (World Bank 2017). Ocean tourism constitutes a significant component of the economy for countries with marine resources. Sustainable ocean tourism can be part of the blue economy if the provision of livelihoods and economic growth occur simultaneously with the protection of marine resources. This requires countries to move away from business models that are purely extractive in nature and toward integrating conservation, protection, and rehabilitation into the equation. Proper management of tourism in marine environments can propel developing countries forward and help to achieve several of the Sustainable Development Goals. This paper aims to explore how ocean tourism and economic development intertwine in archipelagic nations by using the Philippines as a country case example. It will achieve this by examining national statistical data on tourism and economic development over the last several years. Furthermore, this paper discusses the policy landscape that supports the development of ocean tourism in the country and seeks to understand how it is incorporating sustainability practices into ocean tourism by examining a tourism establishment in the Philippines. With the importance of the blue economy in global sustainable development, understanding the different opportunities and challenges in ocean-related development is critical in making recommendations regarding existing tourism policies. The findings of the study have implications for policymakers, tourism planners, and other tourism stakeholders in developing island economies. 2. TOURISM AND ECONOMIC DEVELOPMENT IN THE PHILIPPINES 1 It is crucial to understand the importance of tourism to the Philippine economy since this sector is a key driver of the Philippine blue economy. In 2018, the country welcomed 7.1 million international visitors, while locals made 111 million domestic trips (Arnaldo 2019). Through the “Build, Build, Build” program of President Duterte, the country has built, renovated, or expanded tourism infrastructure, such as airports and seaports, to cope with the increasing tourist numbers. Data from the World Bank’s World Development Indicators show that international tourism has been increasing since the turn of the millennium in two separate cycles. The global financial crisis of 2008 led to a large slump in tourism, but the Philippines has long since recovered. In Figure 1, the bar graphs show that international tourism receipts, the gross domestic product (GDP) per capita, and the gross national income (GNI) per capita have all been 1 The information in this section comes primarily from the Philippine Tourism Satellite Accounts (PTSAs), which the National Statistical Coordination Board (NSCB) compiled in coordination with the Department of Tourism, and the NSCB Inter Agency Committee on Tourism Statistics (IACTS). ADBI Working Paper 1291 M. A G. Zafra 2 on the rise since 2010, with tourism receipts showing the fastest increase. The line graphs in the same figure show that the annual GDP and GNI growth both hover between 6% and 7%, indicating economic growth for the country, as the dotted regression trend lines in the graph indicate. Figure 1: International Tourism and Economic Development, 2000–2017 2 Source: Author’s compilation using the World Bank World Development Indicators (2019). Figure 2: TDGVA and GDP at Current Prices, 2014–2018 Source: Author’s compilation using Philippine Tourism Satellite Account data (2019). Tourism is one of the largest sectors of the Philippine economy. The bar graph in Figure 2 illustrates that tourism’s domestic gross valued added (TDGVA) receipts reached 2.2 trillion pesos in 2018, passing the 2 trillion pesos mark for the first time. The share of TDGVA in the country’s GDP also rose from 9.0% in 2014 to 12.7% in 2018 (red line), with the annual TDGVA growth rates (green line) outpacing the GDP 2 All the graphs in this section use two vertical axes. Bar graph data appear on the left-hand vertical axis, which shows absolute numbers. Linear data appear on the right-hand vertical axis, which uses the percentage as its unit. The horizontal axis plots the year. ADBI Working Paper 1291 M. A G. Zafra 3 growth rates (yellow line). Accordingly, the tourism sector has accomplished the goal of a 10% contribution to the GDP years ahead of its 2022 target in the National Tourism Development Plan 2016–2022. Figure 3 indicates that, with its 8% share of the Philippines’ total exports (red line), inbound tourism expenditure, or the expenditure of international visitors in the Philippines, ranks third among the biggest export items, with only miscellaneous services and semiconductors ranking higher. While the growth rate of inbound tourism expenditure (green line) rose sharply to 43.9% in 2017, it then declined by 1.6% in 2018. There are several possible reasons for this, including the closure of Boracay, the top foreign tourism destination, in 2018 and the controversies surrounding the Duterte administration, which led to caution in travel advisories. Figure 3: Inbound Tourism Expenditure and Exports at Current Prices, 2014–2018 Source: Author’s compilation using Philippine Tourism Satellite Account data (2019). Domestic tourism is also continuing to increase as Filipinos choose to travel to different regions of the country for holidays. The country reached the target numbers for domestic tourists in the National Tourism Development Plan 2016–2022 early, causing the Department of Tourism to consider revising the target (Talavera 2019a). The share of domestic tourism expenditure in household final consumption expenditure (red line) grew from 13.1% in 2014 to 19.8% in 2018, as Figure 4 shows. The increasing GDP per capita and the transitioning of the Philippine economy from the lower-middle-income to the upper middle-income bracket over the next several years are encouraging more and more Filipinos to travel, starting with domestic travel and gradually including outbound international travel. The growth of domestic tourism expenditure (green line) is double the growth of household final consumption expenditure (yellow line). ADBI Working Paper 1291 M. A G. Zafra 4 Figure 4: Domestic Tourism Expenditure (DTE) and Household Final Consumption Expenditure (HFCE) at Current Prices, 2014–2018 Source: Author’s compilation using Philippine Tourism Satellite Account data (2019). Employment in the tourism industry grew steadily from 4.8 million employed persons in 2014 to 5.3 million employed persons in 2018, as Figure 5 shows, with the industry employment growth rate (green line) a notch higher than the aggregate growth rate (yellow line). The share of employment in tourism in the total employment (red line) also increased steadily from 12.7% in 2014 to 13.0% in 2018. Figure 5: Employment in Tourism Industries versus Total Employment, 2014–2018 Source: Author’s compilation using Philippine Tourism Satellite Account data (2019). Just like many developing countries, community participation in the tourism planning process is a way of implementing sustainable tourism in the Philippines (Okazaki 2008). In community-based tourism, local communities manage and organize most tourism activities. This is an effective way to manage tourism in the Philippines since it decentralizes the governance to the local government units, with the barangay as the smallest unit. Community-based tourism allows coordination amongst the different ADBI Working Paper 1291 M. A G. Zafra 11 Table 6: Assessment of Ocean Tourism Products Type of Ocean Tourism Benefits Negative Impacts Challenges Sun and beach tourism Easy to develop across all market segments (budget to luxury) Generates the most local employment Many different mechanisms to integrate sustainability into tourism operations Mismanagement and overcrowding can lead to unsustainable tourism Solid waste and water pollution negatively affect the water quality and marine environments Increased bacteria in the water can lead to illnesses Preventing the overdevelopment of beaches and coastal ecosystems Presenting the business case for investing in natural assets to mobilize the private sector Dive tourism Can combine diving trips with marine educational and cleanup activities Frequently dived sites may suffer damage or loss of coral cover due to close contact with divers stirring up sediment Illegal removal of biodiversity or artifacts Damage resulting from boat anchors Making the economic benefits of diving more inclusive since it is a niche market Ecotourism Implementable as community-based ecotourism in smaller communities Linking ecosystems to tourism promotes the development of natural capital Potential damage to ecosystems and loss of biodiversity without good management of tourism Developing a tour that is enticing to paying customers Balancing nature conservation with economic activity Cruise tourism Highest growth potential since cruise tourism is still nascent in the Philippines Congestion due to a large influx of simultaneous arrivals Can push out local tourists from top attractions in favor of higher-paying cruise passengers Large carbon footprint of cruise liners Requires significant investments in port-of-call infrastructure 5. POLICY LANDSCAPE AND GAPS The policy landscape for ocean tourism comprises a mix of tourism policies, environmental policies, and the integration of the two (see Appendix A). As an archipelagic nation, the Philippines relies heavily on marine-related tourism activities. Thus, the policy framework for the blue economy is relatively well developed and robust. In fact, given the numerous regulations, it might be challenging for different actors to navigate the complex policy landscape. Poor implementation and enforcement of laws are typical in the Philippines. Despite having a national ecotourism strategy and supposed coordination of different national agencies, many tourist destinations in the Philippines are experiencing uncontrolled development. The closure of Boracay, El Nido, and, soon, other tourist destinations for necessary rehabilitation is evidence of the mismanagement of the growth of tourism. Given the economic impact of tourism, municipalities are now considering it as a way to alleviate poverty for the community. However, many municipalities are developing their ADBI Working Paper 1291 M. A G. Zafra 12 tourism portfolios without proper planning and without putting the necessary infrastructure in place. Successful management of protected areas in the Philippines is critical to both biodiversity preservation and inclusive development for the local communities. However, there are challenges in managing protected areas. Aside from the few that the National Integrated Protected Areas System (NIPAS) and the Extended National Integrated Protected Areas System (E-NIPAS) cover, local government ordinances form the majority of marine protected areas. Regulating fishing is the primary reason for designating marine protected areas. Tourism is usually an afterthought. There is often a need to build the capacity of locals to manage and govern their marine protected areas effectively. Marine protected areas often lack adequate funding because they rely primarily on income from permits and an allotment from the municipality’s coffers. Many of these biodiversity-rich areas are in low-income municipalities, implying that the proportion of funding will be smaller. The bettermanaged marine protected areas can augment their budget through grants, donations, and partnerships. However, this requires the local government and those managing the protected area to have the competencies and the resources to write grant applications. There are instances in which policies have varying levels of applicability that lead to conflict among governing bodies. For instance, the Protected Area Management Office of a particular protected area will have jurisdiction over the seascape and landscape of that protected area. Thus, the local government can issue fishing permits only on waters that are not part of the protected area, which can conflict with the Philippine Fisheries Code, the scope of which covers all Philippine waters. The Department of Agriculture can also establish fish refuges and sanctuaries in fishing grounds. Too many governing laws and bureaucratic red tape can discourage potential tourism enterprise owners. 6. CASE STUDY ANALYSIS This paper analyzes the case of El Nido Resorts as an example of a sustainable ocean tourism enterprise. The private sector is a key actor in the development of the Philippine Blue Economy. The majority of tourism establishments in the country are privately owned, and El Nido Resorts shows how a private tourism enterprise can contribute to the blue economy by providing local communities with economic benefits while ensuring ecosystem integrity through investments in natural capital. Engaging the private sector in shifting to more sustainable behavior is one of the key challenges for a lower-carbon economy. 6.1 Framework for the Case Study Analysis The analysis of the succeeding case study utilizes a combined framework that espouses the principles of the blue economy (WWF 2015), sustainable tourism development (UNWTO 2018), and the inclusive business model framework (UN Global Compact 2015). The three frameworks align with each other as their foundation is the tenet that economic development should be inclusive and should not come at a cost to the environment and society. The inclusive business model framework takes the economic side further by showing the integration of the bottom of the pyramid into the supply chain. ADBI Working Paper 1291 M. A G. Zafra 13 Figure 7: Conceptual Framework for Analyzing Tourism in the Blue Economy Tourism in the blue economy should be inclusive, engaging stakeholders in the development and operation of tourism products and services, and it should be dependent on the state of the localized marine environment and the available resources. Ideally, the design of the tourism product should also consider the provision of solutions for the existing social, economic, and environmental problems that the area is experiencing. The analysis of the level of engagement uses the OECD typology of levels of stakeholder engagement (OECD 2015). The study also examines the business models of the various cases, with an emphasis on establishing whether the business model is inclusive and the operational activities are green. The third level of analysis is the different social, environmental, and economic benefits that tourism generates and how it transforms the state of the ocean and its resources. Lastly, the discussion considers the model of governance in the area. 6.2 Case Study: El Nido Resorts Situated in Bacuit Bay, the municipality of El Nido is a first-class municipality located in the province of Palawan, Philippines. The municipality covers a land area of 465.1 square kilometers on the northernmost tip of mainland Palawan. Several bodies of water, the Linapacan Strait in the north, the Sulu Sea in the east, and another body of water in the opposite side, surround it. El Nido consists of 45 islands and islets, each of which has its own unique geological formations. The municipality has a population of 41,606 people living in 18 barangays as of the 2015 census. Given its location, most of the residents engage in fishing, agriculture, or tourism. The poverty incidence in the province of Palawan was 24.6% in 2015, but this reduced significantly to 16.2% in 2018 as the province joined the cluster of least poor provinces in the country. Palawan is an archipelago of 1,780 islands in the western part of the Philippines. It has the highest concentration of islands but is the most sparsely populated region in the country. Palawan is rich is natural resources, giving it the moniker of the Philippines’ last ecological frontier. The El Nido–Taytay Managed Resource Protected Area is located on the north-western tip of the mainland of Palawan. The local government initially proclaimed it as a marine reserve and later expanded this to include the nearby town of Taytay and the terrestrial ecosystem when it converted it into a protected area. ADBI Working Paper 1291 M. A G. Zafra 14 Covering 36,000 hectares of land and 54,000 hectares of marine waters, the inventory of natural resources includes limestone cliffs, beaches, mangroves, clear waters, and forests. The protected area is a habitat for high counts of biodiversity. On 17 October 2017, six municipalities in northern Palawan, including El Nido, signed a Memorandum of Agreement to implement the 1.008 million-hectare Northeastern Palawan Marine Protected Area Network Management Plan. Tourism in El Nido started in the early 1980s with the establishment of a dive station on one of the islands. The tourism growth was initially slow due to a lack of infrastructure. The development of an airport and improvements in the road network from the provincial capital of Puerto Princesa led to shorter travel times, resulting in the exponential growth of tourism. The closure of Boracay for 6 months in 2018 diverted tourists to new destinations, with Palawan providing the biggest draw. Figure 8: Tourist Arrivals in El Nido Source: Llanto (2018). The tourism boom over the last 10 years may have transformed the local economy, but the uncontrolled development has led to the declaration of El Nido as overcrowded. The municipality is experiencing a spate of environmental issues, including pollution. The town has had positive tests for coliform in the past. It underwent a 6-month rehabilitation program starting in November 2018 to address its problems. Unlike Boracay, El Nido remained open to tourists during this period but implemented a noswimming policy in severely affected areas. Furthermore, the government inventoried commercial and residential establishments violating easement rules and gave them notice to vacate. The town also passed an ordinance banning single-use plastic bottles and bags. The Ten Knots Development Corporation, now an Ayala Land Inc. subsidiary (60% ownership), is a pioneer in El Nido. The corporation opened its first luxury resort in 1983 and operates using the El Nido Resorts brand in four locations: Apulit Island, Miniloc Island, Lagen Island, and Pangulasian Island. The company is also the developer of the Lio Tourism Estate, the master plan of which is to be an ecologically and financially sustainable tourism destination. ADBI Working Paper 1291 M. A G. Zafra 15 The company operates its resorts within the protected area. All El Nido Resorts uphold the company’s “Be G.R.E.E.N.” philosophy—Guard, Respect and Educate El Nido. All resort staff need to follow this training program, which consists of modules and exams on environmental management, biodiversity conservation, and environmental legislation. Staff also take a sustainability tour and experience immersion in the material recovery facility and farm. The company requires business operations to have the least possible impact on the environment while promoting respect for the local culture. The best practices of the resort include different ways to engage customers, motivate employees, and work with local communities while protecting the environment. Organization-wise, these initiatives are under the management of El Nido Resorts’ sustainability team, which the director of environment and sustainability leads. Each resort has at least one in-house member of the sustainability team as a sustainability officer, an environmental officer, or an environmental enforcement officer. The background of the team members ranges from environmental engineering to wildlife biology to working as a ranger in the protected area, qualifying the team to design and implement sustainability programs. Table 7: Stakeholder Engagement for El Nido Resorts Level Case Examples Communication Making the guests more knowledgeable about the different ecosystems, local culture, and sustainability issues in El Nido by integrating education with the guest experience Consultation Consulting with stakeholders on designing not only the guest experiences but also their conservation and sustainability programs Participation Working with the community on developing scientific studies and monitoring wildlife Representation Upskilling the local community and prioritizing locals for hiring and promotion Partnerships Partnerships with the local community to supply good and services to the resort Co-decision making and co-production Working with the local government to craft ordinances 6.3.1 Linking with Local Communities El Nido Resorts has spurred economic growth as the largest employer in the municipality. In the beginning, many of the staff were from other parts of the country due to the lack of hospitality skills amongst the locals. The resort began to capacitate the local community by offering training programs on the skills that the hospitality industry required. Local women received training to become licensed massage therapists. This allows the residents of El Nido to have a secure livelihood without migrating to other parts of the country. From a business standpoint, it guarantees a consistent supply of skilled human resource for the El Nido Resorts and other establishments in the area. The resort also makes it a priority to patronize local products to provide a livelihood for the community and reduce the carbon footprint. Local farmers learn about sustainable agricultural techniques from the resorts’ model farm, which they can then implement on their own farms. Locally and organically produced vegetables comprise 60% of the total kitchen purchases, while locally reared livestock accounts for 90% of the total kitchen purchases. Sourcing locally allows the company to have more control over its supply chain while lowering the transportation costs. From a marketing standpoint, this can be a unique selling proposition due to the growing trend for consumers to prefer the “farm-to-table” approach to food. ADBI Working Paper 1291 M. A G. Zafra 16 Instead of investing in its own boats, El Nido Resorts works with local outrigger boat owners to fulfill the transportation requirements of the resort, including island-hopping tours and snorkeling trips. The resorts purchase native bags and slippers from local female weavers as complimentary room amenities for guests. Locals have a continuous livelihood because there will always be a demand from the resort. This also allows the preservation of the local culture and traditions through weaving. In addition, by paying competitive rates, the resorts will always have a supply of the products and services that they need. 6.3.2 Low-Impact Operations El Nido Resorts implements practices that reduce waste and save resources like energy and water. The initial investment in the required technology might be higher in terms of upfront costs, but it pays off in the long term in the form of savings due to operational efficiency. El Nido Resorts operates a sewage treatment plant in combination with native reed bed filters to prevent discharges of raw sewage and grey water into the sea. It utilizes treated water in flushing toilets, watering plants, and supplying fire hydrants. Solid wastes undergo strict segregation before reaching the resort’s full-cycle material recovery facility. This picks up recyclable waste for recycling while composting organic waste for use in the garden or on farms. Saying no to singleuse plastics is common these days, but El Nido has had a refillable drinking water system for the last 10 years. The kitchen also works with its suppliers to refill containers for some of their supplies, such as cooking oil. The resorts also operate their own desalination plant to guarantee the supply of fresh water without competing with local communities for the limited supply on the island. A rainwater catchment system for flushing toilets augments it. Several resort cottages have solar panels. Instead of the once-a-year Earth Hours, the resorts turn off their lights for an hour every full moon during the summer months and use the savings to purchase seedlings for a carbon-offsetting program in the El Nido watershed. 6.3.3 Guest Satisfaction through Low-Impact Tourism El Nido is highly selective when it comes to its portfolio of guest activities; these should strongly engage guests but limit the disturbance to the natural environment. Only non-motorized sports equipment, such as kayaks, snorkels, and paddleboards, are available for guest use. Investing in these amenities is less costly than investing in motorized equipment, and the potential for damaging the ecosystems is lower. Guided tours, such as fishing expeditions, educate guests on ecosystems and conservation. Guests learn how to catch fishing sustainably using a line. The resort partners with a local fishing village to run these tours and demonstrate fishing techniques. With the ability to augment their income, local fishermen are less prone to resort to illegal means of fishing in the protected area. Trends in consumer behavior indicate an increase in preferences for authentic experiences (Boss 2008). The combination of environmental education, engaging with locals, and learning traditional practices provides guests with a unique experience that captures their satisfaction and loyalty and gains a competitive advantage for the organization. 6.3.4 Conservation and Education Efforts El Nido Resorts works closely with the community and local government in the prevention of illegal fishing, coral and reef fish assessments, and environmental education campaigns. The organization launched El Nido Biodiversity Online, a database of El Nido’s flora and fauna, in 2000 so that guests can learn more about the ADBI Working Paper 1291 M. A G. Zafra 17 biodiversity in the area. The resorts also support scientific studies by providing visiting researchers with logistical support. The resort works with the government, mainly the Protected Area Office, to develop conservation programs, such as tagging and releasing sea turtles, protecting hatching grounds, and relocating giant clams to prevent poaching. A partnership with CSOs and the local community installed an artificial reef in part of Bacuit Bay that illegal fishing and coral bleaching had damaged. It also installed mooring buoys around the bay to prevent coral damage in high-traffic reefs. El Nido Resorts sponsors Sea Scouts training for both resort staff and the local community to develop qualified personnel who are able to respond to marine incidents. Resort staff are also part of the joint Marine Monitoring Task Force, helping the Protected Area Management Board and the municipal government to patrol the area. Furthermore, the resort is highly engaged in the policy cycle as it participates in co-designing ordinances to improve the management of the protected area. El Nido Resorts was one of the stakeholders that lobbied for the creation of the marine reserve in 1991. 6.3.5 The Business Case for Sustainability El Nido Resorts has been operating in Palawan for almost 40 years and is an example of how to balance profit generation with social and environmental benefits. The various resorts within Ten Knot Development Corporation’s portfolio have been reaping rewards for the last 20 years. The company has built a very strong brand based on sustainability. Travel companies and prospective guests take note of these awards when they make their purchase decisions. For a tourism venture that generates revenues from guests experiencing nature, keeping the environment pristine can only enhance the product and experience. This has worked since all El Nido’s resorts currently enjoy a 4.5 or higher (out of 5) rating on Trip Advisor, the top online word-of- mouth rating website for travelers. El Nido Resorts’ good practices and key success factors in delivering tourism services within the context of a protected area can be a model for other ocean tourism enterprises. 7. CONCLUSION AND WAYS TO PROCEED As a component of the blue economy, ocean tourism is an important contributor to the growth and development of the Philippines. As an archipelagic nation, tourism activities in coastline areas, as well as in offshore zones, contribute to revenues for cities and municipalities, job generation and skills development for local residents, and business opportunities. These can lead to improvements in the quality of life of communities. The Philippine Government has been active in policy development given the significance of ocean tourism. Policies couple tourism development with environmental protection and poverty alleviation and require multi-agency collaboration. However, despite the numerous tourism and marine ecosystem protection policies in place, many tourism destinations, often beaches, are experiencing uncontrolled development. ADBI Working Paper 1291 M. A G. Zafra 18 The analysis of the ocean tourism ecosystem of the Philippines and the corresponding case study of El Nido Resorts led to the identification of several policy recommendations: 1. An analysis of ecosystems in a destination with significant natural resource assets is necessary to estimate the carrying capacity for tourism. This would allow tourism planners to manage tourist numbers and not exceed the carrying capacity when planning for tourism development. The collection of tourism statistics will be critical in monitoring the limits of tourism in the area. This requires harmonized standards and procedures on how to make inventories of natural capital. 2. Multiple stakeholders need to engage in the entire tourism development chain, from conceptualization and master planning to monitoring and evaluation. The co-creation of tourism development pathways is critical to innovation and to making the sector more inclusive. Stakeholders could include government agencies, local governments, the business sector, tourists, and the local community. The socio-economic development of the area should also include minority groups to give them a voice. Stakeholder management will be critical in harnessing synergies that result in a mutually valued roadmap for tourism development. 3. There is also a need to assess infrastructure needs prior to creating a tourism development plan for a destination. Financing mechanisms and private–public partnerships could be the norm in tourism enterprise zones. 4. Embedding payment for ecosystem services (PES) in tourism products is a financing mechanism that ensures that those who work on preserving the environment also share in the economic benefits. Currently, national parks and other community-based tourist spots charge an environmental fee and/or entrance fees. PES can act as a valued-added form of taxation through different modalities, commonly through a utilities charge. This mechanism can pass on the cost to the consumer in terms of a per bed per night fee. This defrays objections from the private sector on spending for sustainability. The charging of the PES would need an estimate of the valuation of the natural resources and corresponding ecosystem services of the area. 5. Limiting tourist numbers each day for each site or attraction based on assessments of the carrying capacity and infrastructure can help to address the issue of capacity. The local government can restrict the capacity for public attractions by requiring prior reservations with the local tourism office, which tour operators or accommodation establishments can make on behalf of the guests. Booking timeslots can also spread out visitors during the day, preventing overcrowding and making the experience much more pleasurable. 6. The private sector is responding to the changing regulations. Most tourism businesses will change their practices if government policies compel them to do so. Local governments and national agencies can explore policies mandating tourism establishments to incorporate sustainability into their business plans prior to the issuance or renewal of their business permit. Government incentives in the form of lower tax rates and other instruments can incentivize the private sector to incorporate ESG factors into their practices and key performance indicators. On the violation side, the imposition of stiffer penalties on violators can discourage businesses from choosing to pay the penalties rather than changing their practices. ADBI Working Paper 1291 M. A G. Zafra 19 7. Local communities have a key role to play in citizen-led enforcement, which can address poor enforcement of laws and policies. Civil society organizations and community members can form volunteer groups to monitor any violations of the existing tourism and environmental ordinances and legislation. Capacity building will be necessary to equip these groups with the ability to recognize and report illegal behavior to the relevant authorities through an established referral pathway. 8. Further research can develop the business case for sustainability in ocean tourism enterprises to understand the different modalities for success in terms of the financial sustainability of the business, environmental protection, and climate change mitigation or adaptation. The private sector will consider strategies if research can prove that investing in sustainability has a return and makes business sense. ADBI Working Paper 1291 M. A G. Zafra 20 APPENDIX A: LAWS AND POLICIES REGARDING BLUE ECONOMY DEVELOPMENT A.1 Overarching Policy 1987 Philippine Constitution Ocean tourism’s foundation is Article XII of the 1987 Philippine Constitution—National Economy and Patrimony—which mandates that “The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.” A.2 Tourism Policies Executive Order 111, Series 1999 E.O. 111, s. 2019 establishes the guidelines for ecotourism development in the Philippines, which foster sustainable tourism while enjoining the participation of the Filipino people in enhancing the growth and competitiveness of the Philippine economy. Provisions for the creation of the National Ecotourism Development Council and the formulation of a National Ecotourism Strategy are also part of the order. Republic Act 9593 or the Tourism Act of 2009 RA 9593 declares tourism to be an indispensable element of the national economy and an industry of national interest and importance, which the country must harness as an engine of socioeconomic growth and cultural affirmation; to generate investment, foreign exchange, and employment; and to continue to mold an enhanced sense of national pride for all Filipinos. One of the specific objectives of this act is to promote a tourism industry that is ecologically sustainable, participative, and ethically and socially equitable for local communities. The act also paved the way for the creation of Tourism Enterprise Zones through the reorganization to what is now called the Tourism Infrastructure and Enterprise Zone and the reorganization of the tourism promotion function of different organizations into the Tourism Promotions Board. A TEZ is a master planned piece of land for development into an integrated tourism complex to host tourism enterprise facilities and services within the property. National Ecotourism Strategy and Action Plan 2013–2022 The National Ecotourism Strategy (NES) is a joint development of the Department of Tourism and the Department of Environment and Natural Resources—Biodiversity Management Bureau (DENR-BMB) and establishes the ecosystem agenda for the Philippines. The NES focuses on fostering strong cohesion among ecotourism stakeholders to pursue inclusive growth in the development of ecotourism sites and destinations forming a network within the identified clusters of tourism development. The NES identifies eight strategies for sound ecotourism development and includes coordination between host communities and different key players, from the national government to the private sector. It requires these key players to build institutional relationships. ADBI Working Paper 1291 M. A G. Zafra 27 Voyer, D. M., and D. J. van Leeuwen. 2019. “Social License to Operate in the Blue Economy.” Resources Policy 62: 102–13. https://doi.org/10.1016/ j.resourpol.2019.02.020. World Bank. 2017. The Potential of the Blue Economy. Washington, DC, US: The World Bank Group. WWF. 2015. Principles for a Sustainable Blue Economy. WWF Baltic Ecoregion Programme. Yap, C., and A. Calonzo. 2018. “No More Beach Parties When Philippines’ Boracay Island Reopens.” Bloomberg.com.