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Palau’s Carrying Capacity, An Elusive Goal

Koror- Palau’s tourism industry is at a crossroad. The goal of attracting more visitors to fuel Palau’s economic development that can be sustained without degrading the island’s natural beauty has been made a priority as Palau sets out to determine its carrying capacity - acceptable levels of environmental, cultural, and community impacts.

The release of “The Palau Responsible Tourism Policy Framework and Action Plan 2017-2021” late last year, which has yet to receive endorsement by the Olbiil Era Kelulau, has for the first time put Palau on a course to measure the island’s carrying capacity.

In recent years, Palau has enjoyed strong economic growth fueled by its tourism industry, but the rosy picture is masking urgent infrastructure and environmental challenges that threaten the long term sustainability of Palau’s economy, says an Asian Development Bank (ADB) report released last February.

The nation of less than 20,000 people has enjoyed significant growth rates achieved in 2013– 2015, with a relatively high per capita income that has reached $16,000, the second highest in the Pacific region. An economic growth that is indicative of the potential for the country to provide higher standard of living to its citizens.

The huge rise in visitor arrivals within the last five years and the rapid proliferation of budget-oriented tourism development catering to those visitors have led to concerns about devastating consequences on the industry. This has put Palau in a quandary with some serious thinking about the direction of its tourism industry.

This is best exemplified by the ADB report describing the current issues facing Palau as a classic example of the tension between short-term and long-term issues. The high growth rates seen in 2014–2015 are at least partly the result of the rapid expansion of the number of visitors to Palau. A short-term view would imply that the growth in tourism numbers should continue unabated.

Senator Aric Nakamura has said in a Senate session that the tourism slow down impacts the local boat operators who have taken out loans to finance their own tour boats.

Further, the ADB report said that based on tourism experts, as well as visitor surveys, suggest that this growth is not sustainable in the longer term. The World Heritage sites that attract visitors are becoming overwhelmed by the sheer numbers of people visiting them. This means that, over time, Palau will become less attractive to tourists and visitor numbers will decline. If investment in facilities and services that cater to low-end tourists continues to expand, resistance will grow exponentially to policies aimed at reducing the size of this market segment.

Tourism Plan

In 2015, President Tommy E. Remengesau Jr established a steering committee to develop “The Palau Responsible Tourism Policy Framework and Action Plan” through a technical assistance grant of the U.S. Department of the Interior to look into achieving long-term tourism industry profitability and sustainability.

“The Palau Responsible Tourism Policy Framework is our vision, map, and compass. This framework calls for the step-by-step management and coordination of responsible tourism growth to support, protect, enhance, and share our unique home, the Republic of Palau,” Remengesau said in a statement accompanying the plan.

The tourism policy framework pursues of niche tourism markets, which support value growth over volume growth, targets a more engaged traveler who seeks new, authentic experiences as opposed to low-budget sun-and-sea mass tourism. Examples of niche markets include nature-based tourism, cultural heritage tourism, culinary tourism, agri-tourism, sports tourism, weddings and honeymoons, and adventure tourism.

It identifies six targets including: responsible tourism awareness and alignment is a national priority; visitor economy is responsibly managed; responsible product development attracts targeted high-value markets; visitor experience is the living brand; tourism industry provides improved visitor yield; and Palau’s tourism development is community-driven.

Target number-two is the goal for determining a visitor-to-resident ratio to reflect sustainable carrying-capacity. This has a range of objectives from measuring environment and cultural impacts, airline access, user fees levied, and strengthened visitor communication and outreach.

Impacts to be measured are collection of key data to facilitate understanding of the percentage of capacity used trends relative to capacity, and number of instances where capacity limits are reached or exceeded.

It increases the number of tourism sites with active policies designed to minimize environmental, social and cultural impacts and levying of user fees are carefully adjusted to prevent negative impact on desired markets. It further seek to increase visitor compliance of best-practice behaviors at tourism sites as determined by community and site surveys.

A creation of a new entity, the National Tourism Coordination Board, will be the main body to lead the implementation of the tourism policy framework.

The quest to establish the size of visitors market to Palau should have in order to better manage and plan its growth we’ll have to endure the current downward trend of arrivals. Palau’s visitor arrivals this year is projected to drop by 10 percent following last year’s 15 percent decline from a record high of more than 160,000 in 2015. The declining numbers have given calls to revisit tourism-related policies and investment laws to accommodate more visitors to sustain the tourism industry, which contributes 54 percent to Palau’s economy.

And by that time, as a reminder by ADB, Palau may find it increasingly difficult to change course, and this is a further reason that Palau has set out to deal with the current influx of mass tourism with its goal of establishing its carrying capacity.

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