Funding the Tourism sector to reach net carbon zero
In those wonderful days prior to Covid-19, tourism vied with dairy as New Zealand’s biggest export industry. In 2019, tourism comprised 18.65% of New Zealand ‘exports’ to the rest of the world while dairy contributed 18.81%. Other biggies are meat and edible offal (9.38%), wood (5.85%), fruit and nuts (3.98%), and cereals (2.67%). What differentiates tourism from these other big earners of offshore revenue for New Zealand?
- Dairy: research to support this industry is conducted by DairyNZ, the Fonterra Research and Development Centre, the Dairy Research Institute, the Ministry for Primary Industries (MPI), and others.
- Meat: research to support this industry is conducted by the Meat Industry Research Institute of New Zealand (a division of AgResearch), Beef+Lamb New Zealand, the Meat Industry Association, MPI, and others.
- Wood: research to support this industry is conducted by Scion, the Wood Technology Research Centre at the University of Canterbury, the New Zealand Farm Forestry Association, and others.
- Fruit and nuts: research to support this industry is conducted by Plant & Food Research, MPI, Zespri, and others.
- Tourism: research to support this industry is conducted by … hmm, well, nobody actually.
Four out of five of New Zealand’s top export earners have significant research support, some with large Crown Research Institutes (CRIs) conducting research to help those industries remain innovative, internationally competitive, and responsive to the imperative to become net carbon zero by 2050. If I am a tourism operator and I want to conduct some research on how to lift the quality or sophistication of what I am providing, where do I apply for that funding? Alternatively, what government-funded CRI do I have at my beck-and-call to conduct that research for me? Who is funded to help me transition to a net carbon zero service?
The question I would like to pose in this monthly piece, is this: Given that tourism is either New Zealand’s biggest, or close to biggest, export earner, why is there no massive investment in tourism research to maintain this vital sector of New Zealand’s export economy? I don’t know the answer, but I have been wondering what can be done about that.
Here is an idea and, like many of my ideas, I don’t know if it’s a good one or a bad one. I need you to tell me (email your thoughts to me at greg@bodekerscientific.com). Here it is:
Since 1 July 2019, most international visitors to New Zealand have been charged the International Visitor Conservation and Tourism Levy (IVL) of $35. Half of the funds collected go to the Department of Conservation (DoC) for (i) biodiversity (35-40% of the IVL) and (ii) responding to visitor pressure on conservation and the environment (10-15%). The other half goes to (i) tourism strategic infrastructure (40-45%) and (ii) tourism system capability (5-10%). None of it goes to tourism research and development (R&D) and none of it is available to help the tourism sector transition to being net carbon zero.
What if we increased the IVL from $35/tourist to $350/tourist? Yes, tens time higher! That may halve the number of tourists coming to New Zealand (a complete guess on my part), noting that the Parliamentary Commissioner for the Environment observed ‘respective cabinet papers and regulatory impact statements reveal that these levies were deliberately set at modest levels to avoid any chilling effect on demand’.
Seasonally adjusted overseas visitor arrivals peaked at 348,100 in May 2019. That would have generated $12.18M/month, of which $6.09M would have gone to DoC and the other half to building toilets at freedom camping spots etc.. Now, if we go for an IVL of $350, halve the number of tourists, and still give DoC their $6M and the infrastructure developers their $6M, that leaves a little less than $50M, each month, to do something cool. So, what are we going to use our $600M each year? We could:
- Pay tourism service providers to collect data on their carbon footprint and to use those data to chart their transition to being net carbon zero as part of their value proposition to their clients. Expecting providers to do that at their own cost is unreasonable, especially in an industry with slim margins and the challenges of digging their way out of the covid hole.
- Conduct research that will allow New Zealand’s tourism sector to transition to net carbon zero, and to a values-based model where we determine the kinds of experiences we want tourists to have, and the kinds of outcomes we want for New Zealand. As described by the Parliamentary Commissioner for the Environment, conducting such research would need to delve into the ‘cold hard realities’ of pricing, rationing, access, and the need to internalise all the environmental externalities associated with noise, crowding and greenhouse gas emissions.
- Develop a fully funded carbon intensity accreditation system that would make it possible for tourism service providers to reliably promote their carbon credentials.
- Buy lots of chocolate. Afterall, you shouldn’t waste all of that $600M
Spot the effects of Covid-19? Essentially, we set the IVL so that the number of tourists coming into New Zealand (i) doesn’t overwhelm the capacity of our infrastructure and ecosystems, (ii) generates sufficient revenue to achieve the goals outlined above, and (iii) permits a system that supports our values while being commercially sustainable. Maybe $350 is too high. I don’t know. Let me know what you think.
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