Perú: Reserva Ecológica Inkaterra

Sustainability Analysis

Environmental Sustainability

Inka Terra has proven over many years that it is committed to conducting its business activities in an environmentally respectable manner. IFC has concluded that Inka Terra’s existing facilities meet or surpass IFC’s environmental and social guidelines. All of the new and expanded facilities will also be constructed and operated in an environmentally sustainable manner. In fact, although Peru has not yet completed its ecotourism certification system, ITP and ITA will continue to operate in accordance with the standards of the Costa Rican ecotourism certification system.¹³

Beyond that, the environmental sustainability of this project will hinge on the extent to which the project is able to successfully mitigate the threats to the IER. If the threats remain at a manageable level then it is anticipated that the project will be able to successfully mitigate them. Yet some threats stem from – and may be exacerbated by – government policies. Public sector agencies such as the Ministry of Agriculture, Ministry of Energy and Mines, Ministry of Fisheries, and INRENA sometimes promote policies that have a negative impact on biological diversity. For instance, this is the case with road that’s being constructed along the back of the reserve. ITA will do everything possible to prevent such policies from being instituted and will do its best to avoid negative impacts on the IER if/when such policies are instituted. With strong support of local communities, it is probable that ITA will be able to ensure the long-term conservation of the 10,000 hectare reserve.

Social Sustainability

T
Figure 12: President of Micaela Bastida

he sustainability of this project in a social sense will hinge on the extent to which local communities continue to embrace the project’s goals. So far they have indicated strong support for the project. They have expressed genuine desire to enter into a partnership with ITA in which they will become stewards of the forest in exchange for technical assistance and other forms of support that allow them to provide for their families in a conservation-compatible manner.

Institutional Sustainability

If ITA has sufficient ongoing funds, then it is highly likely that it will continue to focus on managing the reserve, promoting sustainable development with the local communities, and fostering environmental awareness. However, ITA will depend on ITP for its revenues; thus, in many respects the institutional sustainability of this project will hinge on ITP continuing to allocate 20% of its revenues to ITA each year (with a guaranteed minimum payment of US$132,000). IFC will be able to make sure that ITP does so during the 4 year project implementation period and the subsequent 6 year loan repayment period. However, mechanisms will need to be instituted to ensure that ITP continues to adhere to this arrangement thereafter. Fortunately, José Koechlin (owner of ITP) has proven to be an ardent supporter of conservation over several decades.

Financial Sustainability

The financial sustainability of this project will depend on ITP and general economic conditions. If ITP is able to increase occupancy rates and accommodation prices then it will be possible to cover the recurrent costs associated with each of the activities included in this proposal. This is likely to be the case for the following reasons:

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  The Reserva Amazónica lodge has been underpriced relative to competitors. Increasing prices should therefore be feasible, especially since the lodge has recently been renovated into a relatively upscale facility and will soon be accompanied by some new ecotourism attractions.
  

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  It is realistic to expect the new ecotourism products to give Palma Real a major marketing advantage. Tour operators have indicated that they would be more inclined to bring clients to the lodge if the new products are installed. In particular, the canopy walk is expected to be a significant new attraction. Indeed, canopy walks have proven to be profitable in other parts of the world. For instance, in 1995 a canopy walk was built in a national park in Ghana. Visitation to the park increased from 1,000 people per year to 80,000 – an eighty-fold increase. The canopy walk has generated an average annual income of US$ 780,000. Thus, it is highly likely that Inka Terra will be able to increase occupancy rates at the Reserva Amazónica lodge.
  

In addition to the above analysis, the financial sustainability of this project was assessed by examining four different scenarios, as described below.¹⁴

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  In the Most Likely Scenario¹⁵, cash flow projections have been based on an initial flow of 3,924 tourists, which accounts for a 25% occupancy rate at the Reserva Amazónica lodge. (The occupancy rate in 2001 and 2002 was 20% and 21% respectively.) This percentage is forecasted to grow to 45% by Year 4. Additionally, it is assumed that Palma Real will be able to attract tourists from other lodges who are willing to pay to visit the new ecotourism attractions. This is expected to amount to 5% of total revenues. Thus, the Most Likely Scenario is based upon very conservative assumptions. And yet sufficient revenues are nonetheless generated to cover the recurrent costs and pay back the loan. [It is reasonable to assume that the Most Likely Scenario has about 60% chance of occurring.]
  

• 
  The Pessimistic Scenario was based on an initial flow of only 3,500 tourists, which constitutes a mere 22% occupancy rate at the Reserva Amazónica lodge (i.e., a negligible increase). This percentage is forecasted to grow to only 34% after a few years and remain at that level. It is assumed that Palma real will not be able to attract paying customers from other lodges to visit the new ecotourism attractions. The Pessimistic Scenario is useful to see what would happen if ITP were somehow unable to increase revenues. It is not likely to occur. [It is reasonable to assume that the Pessimistic Scenario has about 15% chance of occurring.] Yet sufficient revenues are nonetheless generated to pay back the loan and to cover the recurrent costs of an ongoing forest conservation and community development program. The only items that would need to be reduced would be the following: (i) ITA would have to scale back its Community Development Fund. Instead of having US$20,000 to allocate per year, it would only have US$10,000; (ii) ITA would have to dramatically reduce its Educational Programs. The only educational activities to be carried out would be those paid for by ACEER; and (iii) ITA would have to scale back its management and administration costs.
  

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  The Worst Case Scenario assumed that occupancy rates at Reserva Amazónica would remain at the 2002 level of 3,300 visitors per year. In this case, ITA would receive the minimum payment of $132,000 per year. This would allow ITA to carry out the same set of activities as described in the Pessimistic Scenario. However, ITA would have even less funds available for administering these programs; there would be essentially no funds available for additional organizational development activities. This scenario is even less likely than the Pessimistic Scenario. [It is reasonable to assume that the Worst Case Scenario has about 5% chance of occurring.] And yet it still provides comfort that the essential components of this project will be financially sustainable.
  

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  Finally, the Optimistic Scenario was based upon significant growth in Palma Real’s occupancy rate – from 32% in 2004 to 55% in 2007. It also assumed that Palma Real will be able to get more than 3,000 guests from nearby lodges to visit the new ecotourism attractions. Although it’s not clear that Palma Real will be able to attract so many paying customers from other lodges, it is quite possible for Palma Real to achieve these increases in occupancy. If the Optimistic Scenario proves to be true, then ITA will begin receiving the maximum payment of US$400,000 starting in Year 4. In this case, ITA would be able to implement significant ongoing educational campaigns in addition to its forest management and community development programs. ITA would also be able to devote roughly US$30,000 per year towards researching and developing new “bio-businesses” – i.e., additional ways for ITA and local communities to sustainably generate economic benefits from the forest reserve. [It is reasonable to assume that the Optimistic Scenario has about 20% chance of occurring.]