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

Table 1 Concession Legal Financial Environmental Social

qualifications Responsibility Responsibility Responsibility Responsibility

Contract non-fulfillment

Community Assessment
Environ / Com. damage

Concessionaire user fee

Maintenance/repair res.

Local business involve

Late / non-payment fee

Infrastructure devlpmt

Community rev. share

Contract length (ave.)

Income requirements

Waste Management
Tourism experience

Performance bonds

Alternative Energy

Local employment
Facility ownership
Language abilities

Capacity Building
Financial capacity

Monitoring plan
Education level

Risk Analysis
Fines
- NORTH AMERICA -
U.S. x x x
10

Canada x x x x x x x x
15

- LATIN AMERICA -
Peru x x x x x x x x x x x x
20

Argentina x x x x x x x x x x x
10

Chile x x x x x x x x x
15

Costa Rica x x x x x x x x x x
3

Guatemala x x x x x x
Belize x x x x x
Ecuador x x
Mexico x
Columbia x x x x x x x x x x x x x x x x
10

- AFRICA -
Zambia x x x
Botswana x x x x x x x
15

Namibia
Seychelles x x
S. Africa x x x x x x x x x x x x x x
20

- AUSTRAILIA -
Australia x x
N. Zealand x x x x x x x x
30

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- ASIA -
China x x x x
Japan x x
Thailand x
India 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 Positive Negative Examples
Entrance fees. - Have the potential to - Highly variable Fees collected at entry
Visitors can be generate a large month to month gates.
charged to enter PAs. portion of operating which could affect
costs of a PA where planning The Galápagos
tourism volume is Islands (Ecuador)
high and entry fees - Can be difficult to charges foreign
are also relatively collect and enforce in visitors a US$100
high. Marine Protected entry fee. National
Areas where entry is parks in Kenya,
- Provide the greatest difficult to restrict to Tanzania, Uganda and
revenue contributions specific locations. Botswana charge
to ecotourism sites, foreign tourists
primarily because - Can exclude the US$20–30 per day.
they are the easiest fee very poor domestic These relatively high
to collect visitors from fees are typically only
enjoying the site if found at well-known
user fees are high- international parks, or
priced. at sites that have large
numbers of
“charismatic”
terrestrial wildlife
species (e.g., lions,
elephants and
primates)
Concession fees. - A fixed fee - A concession fee Fees to operate
Companies component aids may not be a viable restaurants, hotels,
(“Concessionaires”) planning option for some sites, eco-lodge facilities
providing services particularly if there is and souvenir shops.
within PAs (e.g., - An excellent way to limited demand for
lodging and food) are involve local people the service.
charged fees to in PAs (sole or co- In Peru’s Sandoval
operate such business owners or employees - Difficult to arrive at Lake Lodge (within
concessions. of the concession). a balance between the Tombopata National
This can help build amount the Reserve) the
local community concessionaire will privately-run lodge
support for the PA. earn by exploiting the contributes $19 per
resource, and the tourist to the
amount that will be Tambopata Reserve
returned to the PA
administration.

- Inherent risk of
commercialization of
sites and trend toward
facilities designed to

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 produce income rather
than protect natural
resources.
Licenses and - A useful mechanism - Unstable revenue Permits for tour
permits. Private firms for monitoring how subject to seasonal or operators and guides -
operating within or many visitors actually annual fluctuation. scuba/snorkel,
outside PAs (e.g. tour carry out certain kayaking, sport
operators, guides, activities. fishing; mountain
cruise ships) and climbing/hiking
individuals permits; licenses for
participating in cruise ship visits.
specific recreational
activities (e.g. diving, In Seychelles, tourism
fishing, camping) can outfitters must pay a
be charged for tourism license fee to
licenses or permits. access protected areas
Tourism-based - An excellent way to - Double taxation can Taxes on hotel rooms,
taxes. Taxes can be raise additional funds occur when local airport use (entry or
levied at hotels, that are set aside residents must pay a departure tax).
airports and other specifically for user fee as well as
collection points, and protected areas. local taxes that Belize requires all
channeled into support the PA foreign tourists to pay
conservation. system. 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 Least government involvement

Govt. ownership Govt. ownership and

and operation private sector operation

Govt. ownership and Private construction,

non-profit operation 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 Broad: sets out general Longest and slowest process.
Government intent of concession Should be updated and reviewed
program, and general every 25 – 50 years
guidelines

Regulation State land management More focused: the specific Will typically take 1 – 5 years to
agency rules and regulations to establish full body of regulations.
implement the legislation Review and update every 5 – 10
years

Contract Agency (at national, Very Specific: details the Shortest process: once
regional or park level – exact nature of the prospectus has been issued
depending on size and operation, rates, etc. (which includes draft contract),
scope of operation) and final negotiation of contract
Operator 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

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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. Concessionaire Qualifications
2. Legal Responsibilities
3. Financial Responsibilities
4. Environmental Responsibilities
5. 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

- 15 -
● 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 3-
7.5%, 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).

- 17 -
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 (Ceballos-
Lascurain, 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

- 21 -
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

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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 government-
provided 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

- 24 -
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 non-
indigenous 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).

- 25 -
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 Issue Examples

1. Services to be Provide minimum or maximum
provided: 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
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

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 operator some flexibility in
determining the best way to
actually run the operation day-
to-day. The plan should also
specify the nature and
frequency of reporting,
evaluations, responsibilities, etc
5. Capital Specify responsibilities for any In Peru (Tombopata) the
Replacement / damage or needed repairs to concessionaire provides full
Improvement infrastructure or natural restitution to the state and to
Schedule resources compensate third parties affected
(e.g., damages to the protected
natural area or to local populations
of the zone)
6. Maintenance The plan should specify roles In the US National Park Service,
Plan: 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.
7. Land and Specify what land and other In the US National Park Service,
Property property is assigned to the concessionaires are responsible for
Assignments 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).
8. Insurance: 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.
9. Changes to Specify the process by which In Columbia’s Nevados Park the
property: 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
10. Contract Specify what property must be In the US National Park Service,
termination: 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. 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.
11. Transition Specify the requirements for In the US National Park Service if a
Requirements: 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.
12. Local Specify the requirements for China’s Sichuan Province requires
Community local community involvement that a contract assures community
Involvement: and/or benefits participation by employing at least
20% of staff from local communities
13. Addenda:
- Design Phase Need for the completion of a In Guatemala concessions must have
comprehensive EIA cost-benefit analyses, EIAs, and
tourism management plans
implemented to minimize impacts

- Construction Phase Identify construction actions In Peru (Tambopata), contracts must

that are destructive, and ensure
remediation steps are taken
(Adapted from PriceWaterHouseCoopers)
indicate the potential development
risks and have contingency measures
in place in case of accidents or
natural disasters

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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