Ecotourism and Economic Growth in the Galapagos: An Island Economy-wide Analysis

This paper raises questions about the compatibility of "ecotourism” and conservation in the unique environment of the Galapagos Islands. It updates a 1999 economy-wide analysis that predicted that increases in tourism would result in rapid economic as well as demographic growth on the islands. The following six years witnessed sharp growth in tourism; a restructuring of tourism around larger cruise ships and new, larger hotels; and rapid population growth. Our findings indicate that total income (that is, the gross domestic product) of the Galapagos increased by an estimated 78% between 1999 and 2005, placing Galapagos among the fastest growing economies in the world. Tourism continues to be far and away the major driver of economic growth; however, new injections of all sorts of spending, including by government, commercial fishing, and conservation agencies, have had a multiplier effect on income in the Galapagos economy, and as a result, on population growth, via uncontrolled immigration that is theoretically prohibited by the Special Law of the Galapagos to prevent ecological harm to the islands. Further, immigration has diminished the effect of economic growth on household income, creating political pressure to find even more economic development options for Galapagos residents, including commercial fishing. The linkage between economic growth, led by tourism or any other sector, and environmental protection of the Galapagos should be taken seriously when designing and implementing economic development and conservation programs.