LESSONS LEARNED AND RECOMMENDATIONS
FOR PUBLIC-PRIVATE PARTNERSHIPS IN ECOTOURISM
Rachel Tennant, 2012
Rainforest Expeditions is a for-profit ecotourism provider that has partnered with Infierno, a Native Ese’eja Community, to establish a 20-year ecotourism venture on Infierno’s Amazonian property in the Tambopata Region of Madre de Dios, Peru that will end in 2016. This report explores that partnership in practice and provides recommendations for similar such contracts moving forward.
Ecotourism Background
As environmental awareness has increased in the past decades, so too have environmentally conscientious products and services. Ecotourism – responsible travel to natural areas that conserves the environment and improves the well-being of local people (TIES 1990) - is one such service that has expanded significantly since the nineties amounting to roughly $24.2 billion globally in 2006 (NMI 2007). Broadly, ecotourism serves to educate travelers in conservation and culture, to protect the environment via conservation measures and sustainable practices, and to provide tangible benefits to the often-poor local communities.
Community involvement is becoming a higher priority, noted as one of the two main cross-cutting industry themes at the 2002 World Ecotourism Summit in Quebec (WTO) and again at the Global Ecotourism Conference in 2007 (TIES). As such, various management frameworks are being tested and explored, often as some rendition of a public-private partnership. This can be as minimal as an agreement to sell local handicrafts at the lodge gift shop or as expansive as a joint business venture, or co-ownership.
Rainforest Expeditions
Rainforest Expeditions (hereafter RFE) is one such private ecotourism company that is exploring various management frameworks in the Tambopata region of Madre de Dios, Peru. Established in 1989, RFE now operates three award-winning lodges, each under its own unique management scheme: Tambopata Research Center, Refugio Amazonas, and Posada Amazonas.
Tambopata Research Center was built in 1989 and completely renovated in 2007. It is 100% owned by RFE though the site is shared with Texas A&M University for use in a long-term macaw research project. This university partnership allows for unique volunteer tourism and research opportunities at TRC that are not as readily available at Refugio or Posada.
Refugio Amazonas, the newest of the three lodges, began operations in 2005. It is also 100% owned by RFE, but is located on a brazil-nut concession. Brazil-nut concessions entitle locals to harvest nuts from otherwise unkempt Amazonian rainforest. To minimize environmental impact of harvesting, RFE pursued an agreement with the local harvesters. Refugio Amazonas provides the harvesters with food in exchange for a complete ban on wildlife hunting and periodic visits by interested tourists.
Posada Amazonas is the most progressive of the three management schemes and is therefore the focus of the remainder of this report. Posada began operations in 1996. It is managed under a joint business venture between RFE (40% ownership) and Infierno, the local Native Ese’eja Community (60% ownership). It is a 20-year contract ending in 2016 at which time Infierno will have full ownership of the lodge. Alternately, the existing contract can be extended in five-year increments. Broadly, the contract outlines management responsibilities, shared oversight, expectations for capacity development, and commonwealth etiquette.
Contract History and Details
Infierno is made up of 150 households, roughly 600 residents, of varying descent. There are Indian Ese’eja natives, Ribereño (riverine) and Andean migrants, and Mestizo or mixed descent (Gordillo Jordan et al 2008 and Stronza 2005). The territory is roughly 10,000 hectares and divided into sectors based on intended use: areas for economic activities, community protected areas, and the communal reserve (see Figure 1). The communal reserve is 3,000 hectares (just under 5,000 acres) of protected primary forest in which hunting and resource extraction was banned in the 1980s after a territory battle with the national government (Gordillo Jordan et al 2008).
Posada Amazonas stands within the communal reserve, now also referred to as the ecotourism zone. The ecotourism zone was defined in early negotiations between RFE and Infierno and also includes two lakes outside of the communal reserve and any areas where harpy eagle and large prey bird nests are found (for wildlife conservation purposes).
The lodge’s location on the communal land provides for a unique attention to environmental stewardship throughout the joint-venture contract. Rainforest Expeditions, a private ecotourism provider, is contractually obligated to minimize environmental impact in three separate clauses with statements requiring that RFE “in all cases preserve the scenic beauty of the area; ensure the conservation of flora and fauna of the region; [and] keep it free from contamination” (1996). There are also three clauses emphasizing local products and two clauses for the protection of Infierno’s cultural heritage. Similarly, the commonwealth is contractually obligated to minimize hunting of wildlife; to preserve water resources, flora, and fauna; and to limit agriculture all within the ecotourism zone in order to protect the “Community tourism resources.”
Operationally, RFE is tasked with financial, administrative, and legal responsibilities – in line with their expertise as an already-successful private tourism company in the Tambopata region. Rainforest Expeditions also maintains a physical office in Puerto Maldonado (regional capital and the nearest travel hub), manages Posada marketing, and offers ongoing training for capacity development of the community. In turn, Infierno is tasked with general property protection and creation of what is called the Control Committee but translates also as an Oversight or Audit Committee. The Control Committee is designed to include five community members who meet at least quarterly with RFE to discuss financial and administrative reports, reviews, and approvals. Control Committee members are elected and must appropriately represent different interests within the community.
Most would consider this a successful partnership and ecotourism venture. The lodge has a waiting list and operates at full capacity almost year-round. Profits began as early as 2001 (after full repayment of one start-up loan) and, as of 2006, Infierno has received roughly $500,000 in dividend profits from the lodge[n1] . Community members receive ongoing training in management, hospitality, accounting and marketing. And RFE has made a name for itself as the architect of one of the most successful and lauded public-private partnerships in the ecotourism sector to date.
In practice, the partnership has ebbed and flowed. With only four contract years remaining, Infierno is uncertain as to whether they are prepared to run the lodge on their own. Simultaneously, RFE must pursue investment in their other lodges to stay competitive should Infierno ultimately choose to break away in 2016. What follows is a detailed recount of lessons learned provided by Kurt Holle, co-founder and current co-president of RFE.
The Partnership in Practice
At the outset, RFE and Infierno each began this endeavor with their own set of assumptions and expectations. Rainforest Expeditions was at the time a small ecotourism company operating only one small lodge (TRC) roughly eight hours downriver and seeing only 200 to 300 tourists per year. They stood to benefit from the added lodge as a tourist stopover en route to TRC and hoped simultaneously for added profit to further invest in their already existing research and tourism operations. Infierno declined an ecotourism proposal by RFE two years prior, in 1993, before ultimately contacting RFE in 1995 to reconsider. The final proposal was a 20-page document resulting from door-to-door communications with Infierno households and full RFE-Infierno collaboration. The community stood to benefit from potential profits on otherwise untouchable property and to gain first-hand experience and expertise in hospitality. This was also their very first partnership with a private company, a notion not taken lightly for the historically marginalized native population in Peru.
At the time, Amanda Stronza, an environmental anthropologist at Texas A&M University, began her ongoing research into the emerging public-private partnership and its implementation in years to come. Over the years, Stronza’s research has highlighted the effects of increased supplemental income to Infierno households (Stronza 2007), brought three similarly managed South American ecolodges together for participatory studies and collaboration (Stronza and Gordillo 2008), and captured a storyline of the evolving partnership including struggles and successes (Stronza 2005, Gordillo Jordan et al 2008). Stronza both explains and serves as a demonstration of the importance of institutional support for this partnership, including NGOs, universities, and other specialized institutions (Gordillo Jordan et al 2008 and Stronza & Gordillo 2008).
Contractually, RFE and Infierno saw their first real difficulties around 2001, once the lodge began to see a profit and routine set in. Through 2001, the Control Committee had been operating as intended and as set forth in the contract, to “supervise, evaluate and monitor on an ongoing basis” with “no power of management or business administration.” But beginning in 2001, the Control Committee was interested in doing more. They wanted to participate in the management and day-to-day decision-making at the lodge. RFE’s initial reaction was to cite the contract and continue operating as previously agreed. Ultimately, RFE ceded in 2004 and the Control Committee began to function more as a Management Committee, though the title Control Committee remains.
Similarly, and at about the same time, Infierno turned to RFE to begin community involvement projects unrelated to ecotourism. There is a clause in the contract that alludes to “the development of projects for management of flora and fauna of the region for research, educational and commercial use.” Infierno interpreted this clause broadly, turning to RFE in 2001 to develop community projects specifically regarding agriculture. Rainforest Expeditions, on the other hand, interpreted this clause as pertaining only to ecotourism projects and hadn’t intended to be as involved in the development of unrelated community projects as Infierno seemingly expected them to be. The two ultimately came to a compromise and RFE agreed to participate minimally in unrelated community development projects, but only out of good will and with the understanding that Infierno was primarily responsible for the projects.
There is also a clause that prohibits Infierno from practicing third ecotourism businesses that would compete directly or indirectly with Posada Amazonas. Infierno contested this clause around 2005 when Refugio Amazonas was to begin operations, citing that Refugio served to compete directly with Posada Amazonas and that Infierno should therefore not be limited to reducing competition when in fact RFE was not following that same principle. Ultimately RFE granted Infierno with their request and today many community members are pursuing homestays, some working with RFE and some without.
Internally, Infierno has had to adapt to changing culture. In some cases Infierno has seen the beginnings of an economic gap due primarily to dividends provided directly to families, each of which manages their money differently. Each year the Community hears new proposals for how to divide up the annual dividends, and each year the Community votes anew. Most of the time, members vote to receive the dividends directly to households rather than donate large sums of it toward public projects like schools. But only 20 to 25 families receive those dividends, the elders who were originally chosen to receive the dividends in 1996. The remaining 125 families must rely on lodge employment or complementary ecotourism services such as selling crafts and food to the lodge. Furthermore, as the younger population grows, they appear to be underrepresented in Community meetings, causing problems in addition to the emerging economic gap.
The Community has exceeded expectations in many ways, too. They have continued to successfully protect natural resources of the communal reserve, and have ongoing participation in wildlife monitoring with institutions like the Frankfurt Zoological Society and Conservation International (Gordillo Jordan et al 2008). Furthermore, as constant stewards of the property, they have been able to observe environmental changes since inception and to identify new indicators for success like number of gunshots heard as a measurement of reduced hunting. Community members also exhibit a growing concern for environmental conservation (Stronza and Gordillo 2008) and a newfound appreciation for what is coined in the contract as “Community tourism resources.” Their involvement in the lodge has been more-than-met since day 1, as exhibited by their interest in expanding the Control Committee responsibilities early on.
Over time, RFE and Infierno have grown to learn each other as partners in ecotourism – tackling unspoken assumptions and adjusting expectations. Rainforest Expeditions has learned to acknowledge the lodge not as an asset to Infierno but as its home. Similarly, Infierno has learned through experience the ins and outs of business collaborations, better situating them for similar such projects in the future. What follows are recommendations based on my observations after three trips and roughly one consecutive month at the lodge in 2011 and based on my interactions with Kurt Holle for this report. Infierno can benefit from these recommendations as they continue to expand their homestay ecotourism operations and as they consider whether to extend their current contract with RFE. Rainforest Expeditions is also considering a fourth lodge elsewhere, and can benefit from these recommendations with Infierno and perhaps in considering a similar public-private partnership for their fourth lodge.
Recommendations
The RFE-Infierno contract is set to expire in 2016, at which time Infierno may choose to extend the contract for five years or let it expire and continue on their own. Although ongoing training has provided community members with an expertise in hospitality and lodge management, members are uncertain of their ability to manage finances, marketing, and administration on their own. There is an uneven but notable sentiment from some community members that RFE has not done its job in ensuring that Infierno can manage the lodge on their own. Some go so far as to claim RFE has purposely fallen short in order to minimize competition in 2016. Meanwhile, RFE continues to offer training and capacity development to community members. The following recommendations are targeted at the original contract and ways to avoid some of the challenges posed throughout the course of it.
Clarity of Purpose
From the outset, partners should be clear in telling what their motivation is for pursuing the partnership. The contract should reflect those motivations. Internally, this exercise provides clarity between partners and ideally curbs assumptions of participation from inception. Externally, this exercise protects partner images in the eyes of interested tourists who can otherwise pick up on disappointment from either partner during regular partnership lectures (a key activity of the educational component of ecotourism).
In this case, RFE’s motivation would be primarily to partner with Infierno in a profitable ecotourism venture that capitalizes also on its unique public-private arrangement. Alternately, Infierno’s motivation would be primarily to enter the ecotourism market for sustained income and intensive capacity development toward their future ability for growth projects. In articulating each party’s motivation, we have already identified a gap: Infierno is seeking a level of capacity development that RFE did not originally intend to fulfill. In practice, this gap wasn’t identified until five years in and RFE compromised to partially fill it. Ideally, a capacity-development NGO would have been identified and committed as partnership negotiations ensued. Leading us to our next recommendation…
Institutional Support
This kind of public-private partnership should heavily involve a nonprofit organization for added capacity development that is beyond the scope of the private partner’s involvement (also emphasized in Gordillo Jordan et al 2008). In this case, the NGO would serve to aid Infierno in more than their desired capacity development projects like improved agriculture operations, and higher-volume handicraft production for ecotourism sales that spur off of initial profit. We’ve also seen via the dividends distribution process that Infierno would benefit from ongoing workshops for personal and public budgeting – a role RFE is not experienced to fill. Furthermore, an NGO would be the more appropriate messenger to insist that Infierno divert a certain percent of their annual dividends toward public projects, a requirement that RFE has deemed absolutely necessary for any similar such arrangements in the future. The NGO’s role should be complete and included in plans, as set forth in a detailed timeline, recommended below.
In Infierno’s case, post-partnership, there will be additional value in keeping trusted outsiders involved in the decision-making process. If Infierno chooses to assume full ownership, continued participation of trusted outsiders can serve to reduce favoritism within tourism-related decision-making.
Detailed Timeline
The current contract alludes to an implementation timeline phased out in a document, “The Ecotourism Development Project for the Native Ese’eja Community of Infierno.” However, this recommendation serves to propose full emphasis of that timeline (which is currently not public), complete inclusion of details, and that it be completed prior to contract signing rather than after. Such a timeline is risky in business when setbacks can occur, leading parties to feel “behind,” but its existence and emphasis, if done properly, can reduce uncertainty by clarifying expectations on either end. For example, if Infierno had mentioned that five years down the line they would like RFE to launch an agriculture campaign, RFE could have clarified their expected involvement in such projects early on. A detailed timeline would also provide a framework for assessing progress, an added indicator measurement. Finally, the timeline should also include reduction of RFE assistance toward the end of the contract, further clarifying expectations of RFE’s ability to manage on their own come 2016.
Regarding Payment Structures
Different payment structures can yield different partner dynamics and should be given ample consideration at the onset. The existing Infierno-RFE partnership, a Dividend Structure, is based on a system of co-ownership and annual dividends, providing for extensive participation from the community and community members while also training them in basic economic principles. And while this has been successful for RFE and Infierno, it may not always be the case that a community wants complete involvement, or that a company wants to join in a partnership. For those companies and communities still interested in pursuing shared ecotourism, they might be interested in one of the following approaches:
-
The Flat Fee arrangement is one in which the community rents out its land to an operator for a flat fee. This arrangement allows community members to focus on their more traditional skills like farming, forest management and hunting while still earning extra income from the rent (depending on how the rent income is distributed).
-
The Flat Fee Plus Variable arrangement is very similar to the Flat Fee arrangement except operators must also pay a fee per tourist.
In both cases, there does not have to be added risk of environmental damage if both parties want to commit to sustainability. In these cases, operators and communities can include similar environmental standards and clauses that are seen in the RFE-PA contract.
With only four years remaining, researchers, conservationists and businesspeople alike are watching intently to see what lies ahead for Posada Amazonas. Just as they have served as an example for the duration of this contract, RFE and Infierno stand also to set an example in the years to come: for the ecotourism industry and for public-private partners alike. The contract’s success will be measured not by Infierno’s decision to or not to continue partnering with RFE, but by Infierno’s ability to manage on their own if they do decide to end the partnership. Moving forward, should Infierno and RFE decide to pursue a second term, the next contract would do well to include heavy NGO involvement for capacity development, clarification of motivations from the outset, and a detailed timeline including any expected involvement beyond Posada Amazonas.
Work Cited
Gordillo Jordan, Javier, C. Hunt, and A. Stronza. 2008. An Ecotourism Partnership in the Peruvian Amazon: the Case of Posada Amazonas. CAB International.Ecotourism and Conservation in the Americas. Eds. A. Stronza and W.H. Durham. Chapter 3. Pp 30-48.
The Natural Marketing Institute (NMI). 2007. New LOHAS Market-Size Data Released: A $209 Billion Opportunity. Retrieved on May 1, 2012 from <http://www.prlog.org/10006954-new-lohas-market-size-data-released-209-billion-opportunity.html>
Joint Venture Contract: Rainforest Expeditions and The Native Ese’Eja Community of Infierno. 1996. For development and management of Posada Amazonas.
Stronza, Amanda. 2005. Host and Hosts: The Anthropology of Cummunity-Based Ecotourism in the Peruvian Amazon. National Association for Practice of Anthropology Bulletin 23:170-90.
Stronza, Amanda. 2007. The Economic Promise of Ecotourism for Conservation. Journal of Ecotourism. Vol 6:3:210-21.
Stronza, Amanda and J. Gordillo. 2008. Community Views of Ecotourism. Annals of Tourism Research. Vol 35:2:448-68.
The International Ecotourism Society. 1990. Retrieved on May 1, 2012 from <www.ecotourism.org>
Comments