## Appendix 1. National Sustainable Tourism Master Plan 2012–2030

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### I. Introduction
- NSTMP endorsed in 2011 to guide tourism development from 2012 to 2030, setting initiatives and targets for the immediate and medium term.
- Key questions addressed:
  - How has tourism evolved in recent years?
  - What are the comparative advantages and challenges?
  - How could reforms help in sustaining tourism and contributing to economic growth?

### II. How has tourism evolved in recent years? — Findings and key statistics
- Tourist arrivals: increased at a rate of 8.6 percent per year from 2010-2018 (15 percent in 2018).
- Caribbean comparator: tourist arrivals grew 3.5 percent per year in 2010-2018 (6.1 percent in 2018).
- Direct contribution of tourism: 15 percent of GDP in 2017 (Caribbean average 4.8 percent of GDP).
- Total contribution (direct, indirect, induced): around 41.3 percent of GDP (Caribbean average 15.2 percent of GDP).
- Employment:
  - Direct employment in tourism: 13.4 percent of the labor force.
  - Including indirect jobs: 37.3 percent of total employment.
- Travel earnings: around 40 percent of total exports in 2018, up from 32 percent in 2008.
- Since launch of NSTMP in 2011:
  - Overnight tourist arrivals grew at 10.1 percent per year.
  - Tourism expenditure grew 10.7 percent per year.
  - Cruise visitors grew by an average 7.5 percent per year (compounded annual rate).
- NSTMP implementation status (as of end-2018): 80 percent of total 54 subprograms completed or in progress.
- NSTMP targets (2011 to 2030):
  - Overnight tourist arrivals: 3.8 percent (Target Growth Rate, in percent)
  - Tourism Expenditure (overnight): 7.65 percent
  - Cruise visitors: 3.68 percent
  - Tourism Expenditure (cruise): 5.89 percent

### III. Comparative advantages
- Natural assets:
  - Four “unique tourism assets” with international recognition: Barrier Reef Reserve System, Blue Hole Marine Reserve, Caracol Mayan site, Chiquibul Caves System.
  - Despite area < 23,000 km2, Belize holds globally significant biodiversity.
  - Maya Golden Landscape in Toledo District forms one of Central America’s last unbroken stretches of broadleaf forest; key link in the Mesoamerican Biological Corridor.
- Cultural heritage:
  - Numerous Mayan-origin heritage sites; many unexcavated and difficult to access by road.
  - Diverse ethnic mix (Kriol, Garifuna, Mestizo, Maya, Mennonite) provides unique cultural experiences.
- Location and cost competitiveness:
  - Geography allows easy access and tourist movement (Central America and Caribbean Sea).
  - Lower cost of a one-week vacation per IMF “Week at the Beach” Index relative to Caribbean average.
  - Cost of electricity cited as US$16/kWh, described as one of the lowest in the region.

### IV. Supply-side bottlenecks and challenges
- Concentration and source markets:
  - North America comprises 75 percent of arrivals, implying saturation and concentration risks.
  - Tourists concentrate on a small number of attractions (especially reef-centered sites).
- Infrastructure gaps:
  - Water and sanitation infrastructure and coastal facilities are stretched.
  - Limited paved roads to tourism destinations and limited air accessibility cause uneven distribution of tourism flows; overcrowding at some sites and underutilization of others.
  - Insufficient waste disposal and sewage systems causing unhealthy conditions and visual pollution.
- Institutional and land-use planning gaps:
  - Overcrowding in hotspots (example: San Pedro in Ambergris Caye); existing development plan not fully implemented due to lack of land use policy and planning framework.
- Skill shortages:
  - Availability of appropriately skilled labor is tight; difficulty finding replacement staff due to lack of workplace skills.
- Natural hazards and climate risks:
  - Belize ranks 3rd at risk for natural disasters and 5th at risk from climate change among small states (2018 CCPA).
  - Vulnerability to sea level rise, storm surges, sargassum seaweed influxes causing cancellations and business closures.
- Crime and governance:
  - Homicide rate: 38 per 100,000 people (compared to 12 on average in EMDEs).
  - Crime cited as the biggest threat to Belize’s tourism industry in World Bank 2016 SCD.
  - Governance perceptions and corruption perceptions indicate room for improvement; measures noted include operationalized Integrity Commission and need to improve court system efficiency and contract enforcement.
- Shared-economy impacts:
  - P2P accommodation (rent-share) expands product and market access and income-generation opportunities.
  - Potential negative effects: reducing expenditure levels per visitor, adverse impact on job-intensive hotel sector, contribution to overcrowding.
  - Budget P2P listings compete with lower-end hotels, affecting earnings.

### V. How could structural and institutional reforms benefit tourism and Belize's economy? — Literature and empirical context
- Infrastructure investment positively affects tourism competitiveness (cited studies: Ilić and Jovanović (2016); Bolaky (2011)).
- Policy measures to enhance tourism competitiveness include better infrastructure, increased investment, private sector development, more flexible labor market, reduced vulnerability to natural disasters, higher human development.

Panel regression analysis (sample of 12 Caribbean countries):
- Dependent variable: ARRIVALSi,t = Tourist Arrivals, in percent of population in each country.
- Explanatory variables included: Primary School Enrollment, Regulatory Quality, Internet Access(-1), Crime, Damage/GDP(-1), US real GDP growth, REER(-1). Country fixed effects included.
- Data sources:
  - Tourist Arrivals: Caribbean Tourism Organization
  - Damage from natural disasters: Emergency Events Database (EM-DAT)
  - REER, US real GDP growth: IMF
  - Primary School Enrollment, Regulatory Quality, Internet Access, Crime: The World Bank

Regression results (coefficients and standard errors in parentheses):
- Primary School Enrollment: 0.5613* (0.33006)
- Regulatory Quality: 41.7212*** (12.53501)
- Crime: -0.4836** (0.22532)
- Internet Access(-1): 0.2779** (0.13674)
- REER(-1): -0.1898 (0.11718)
- US real GDP growth: 2.4012*** (0.74983)
- Damge/GDP: -0.1446*** (0.03467)
- Constant: 69.7942* (37.94704)
- Country Fixed Effects: Significant***
- Sample period: 2002-2016
- R-squared: 0.9861
- Adjusted R-squared: 0.9833
- N: 107 (unbalanced)

Interpretation of empirical findings (as reported):
- Positive associations:
  - Increasing enrollment at primary level by 1 percent is associated with “Arrivals” being higher by 0.56 percent.
  - Raising regulatory quality by 1 point is associated with “Arrivals” being higher by 41.7 percent.
  - Enhancing public access to internet by 1 percent is associated with a 0.28 percent rise in “Arrivals”.
- Negative associations:
  - Crime: higher homicide rates reduce “Arrivals” (coefficient -0.4836).
  - Damages from natural disasters: “Arrivals” decline by 0.14 percent for every 1 percent of GDP increase in estimated economic damage.
- External factors:
  - US real GDP growth positively associated with arrivals (coefficient 2.4012***).
  - REER(-1) coefficient negative but not statistically significant at conventional levels (-0.1898).

### VI. Policy implications (synthesized from findings) — Near-term priorities
- Strengthen education and human capital (primary education enrollment) to support tourism growth.
- Improve regulatory quality and governance to boost arrivals and investor confidence.
- Expand public access to internet and ICT infrastructure to raise tourism demand.
- Reduce violent crime and enhance public safety to protect tourism revenues.
- Invest in disaster risk reduction and climate resilience to mitigate adverse impacts of natural disasters on tourism.
- Address infrastructure gaps: water, sanitation, coastal facilities, road and air accessibility to reduce overcrowding in hotspots and promote wider geographic distribution of tourism activity.
- Implement land use policy and planning frameworks to ensure effective management of high-demand tourism jurisdictions (example: Ambergris Caye).
- Monitor and manage shared-economy accommodation impacts to protect hotel sector earnings and manage overcrowding.

### External factors, simulation, and additional implications
- A 1 percent increase in US real GDP growth is associated with an increase in “Arrivals” by 2.4 percent.
- For Belize, model estimates imply that about 40 percent of the rise in tourist arrivals in 2018 are explained by US growth.
- US tourists accounted for 70 percent of stay-over tourist arrivals in 2018.
- Price competitiveness proxied by the REER: a 1 percent reduction in price competitiveness (a 1 percent appreciation of the REER) is associated with “Arrivals” declining by 0.2 percentage points.
- In 2018, overnight tourist arrivals increased by 63,290 compared with 2017. The US growth of 2.9 percent in 2018 added an estimated 7 percentage points to Belize’s tourism/population ratio, or an extra 27,000 of tourist arrivals.
- Damages from the 2016 Hurricane Earl were estimated at around 4 percent of GDP by the National Emergency Management Organization.
- Simulation: narrowing the gaps of regulatory quality, homicides rate, internet access, and natural disaster damage by ¼ to ¾ compared to the best-performing Caribbean economy could potentially increase tourist arrivals by 22 percent to 66 percent.
- An empirical analysis by Thacker, Acevedo, and Perrelli (2012) suggests that an increase in tourist arrivals by 1 percent could lead to a 1.7 percentage point (ppt) increase in GDP growth, implying an additional GDP growth of between 0.4 ppt to 1.1 ppt given the simulated increases in arrivals.

### Medium-term priorities
- Ensure continuous and sustainable tourism development through vocational training and diversification of source markets and attractions.
- Develop programs connecting local industries and local communities to the tourism value chain to ensure equitable and sustainable growth.
- Promote formal tourism degrees and tourism graduate programs to mitigate shortages in skillsets and skilled labor.
- Pursue strategic and diversified marketing, including leveraging ICT platforms, to reduce saturation and concentration risks:
  - North America comprises 75 percent of arrivals at present.
  - Tourists still focus on a small number of attractions.

*Source: Appendix 1. National Sustainable Tourism Master Plan 2012–2030 (excerpt).*

### Appendix 1. National Sustainable Tourism Master Plan 2012–2030 ......................................18

### Appendix 1. National Sustainable Tourism Master Plan 2012–2030

### I. Introduction
- NSTMP endorsed in 2011 to guide tourism development from 2012 to 2030, setting initiatives and targets for the immediate and medium term.
- Key questions addressed:
  - How has tourism evolved in recent years?
  - What are the comparative advantages and challenges?
  - How could reforms help in sustaining tourism and contributing to economic growth?

### II. How has tourism evolved in recent years?
Findings and key statistics:
- Tourist arrivals: increased at a rate of 8.6 percent per year from 2010-2018 (15 percent in 2018).
- Caribbean comparator: tourist arrivals grew 3.5 percent per year in 2010-2018 (6.1 percent in 2018).
- Direct contribution of tourism: 15 percent of GDP in 2017 (Caribbean average 4.8 percent of GDP).
- Total contribution (direct, indirect, induced): around 41.3 percent of GDP (Caribbean average 15.2 percent of GDP).
- Employment:
  - Direct employment in tourism: 13.4 percent of the labor force.
  - Including indirect jobs: 37.3 percent of total employment.
- Travel earnings: around 40 percent of total exports in 2018, up from 32 percent in 2008.
- Since launch of NSTMP in 2011:
  - Overnight tourist arrivals grew at 10.1 percent per year.
  - Tourism expenditure grew 10.7 percent per year.
  - Cruise visitors grew by an average 7.5 percent per year (compounded annual rate).
- NSTMP implementation status (as of end-2018): 80 percent of total 54 subprograms completed or in progress.
- NSTMP targets (2011 to 2030):
  - Overnight tourist arrivals: 3.8 percent (Target Growth Rate, in percent)
  - Tourism Expenditure (overnight): 7.65 percent
  - Cruise visitors: 3.68 percent
  - Tourism Expenditure (cruise): 5.89 percent

### III. Comparative advantages
- Natural assets:
  - Four “unique tourism assets” with international recognition: Barrier Reef Reserve System, Blue Hole Marine Reserve, Caracol Mayan site, Chiquibul Caves System.
  - Despite area < 23,000 km2, Belize holds globally significant biodiversity.
  - Maya Golden Landscape in Toledo District forms one of Central America’s last unbroken stretches of broadleaf forest; key link in the Mesoamerican Biological Corridor.
- Cultural heritage:
  - Numerous Mayan-origin heritage sites; many unexcavated and difficult to access by road.
  - Diverse ethnic mix (Kriol, Garifuna, Mestizo, Maya, Mennonite) provides unique cultural experiences.
- Location and cost competitiveness:
  - Geography allows easy access and tourist movement (Central America and Caribbean Sea).
  - Lower cost of a one-week vacation per IMF “Week at the Beach” Index relative to Caribbean average.
  - Cost of electricity cited as US$16/kWh, described as one of the lowest in the region.

### IV. Supply-side bottlenecks and challenges
Key constraints:
- Concentration and source markets:
  - North America comprises 75 percent of arrivals, implying saturation and concentration risks.
  - Tourists concentrate on a small number of attractions (especially reef-centered sites).
- Infrastructure gaps:
  - Water and sanitation infrastructure and coastal facilities are stretched.
  - Limited paved roads to tourism destinations and limited air accessibility cause uneven distribution of tourism flows; overcrowding at some sites and underutilization of others.
  - Insufficient waste disposal and sewage systems causing unhealthy conditions and visual pollution.
- Institutional and land-use planning gaps:
  - Overcrowding in hotspots (example: San Pedro in Ambergris Caye); existing development plan not fully implemented due to lack of land use policy and planning framework.
- Skill shortages:
  - Availability of appropriately skilled labor is tight; difficulty finding replacement staff due to lack of workplace skills.
- Natural hazards and climate risks:
  - Belize ranks 3rd at risk for natural disasters and 5th at risk from climate change among small states (2018 CCPA).
  - Vulnerability to sea level rise, storm surges, sargassum seaweed influxes causing cancellations and business closures.
- Crime and governance:
  - Homicide rate: 38 per 100,000 people (compared to 12 on average in EMDEs).
  - Crime cited as the biggest threat to Belize’s tourism industry in World Bank 2016 SCD.
  - Governance perceptions and corruption perceptions indicate room for improvement; measures noted include operationalized Integrity Commission and need to improve court system efficiency and contract enforcement.

Shared-economy impacts:
- P2P accommodation (rent-share) expands product and market access and income-generation opportunities.
- Potential negative effects: reducing expenditure levels per visitor, adverse impact on job-intensive hotel sector, contribution to overcrowding.
- Budget P2P listings compete with lower-end hotels, affecting earnings.

### V. How could structural and institutional reforms benefit tourism and Belize's economy?
Literature and empirical context:
- Infrastructure investment positively affects tourism competitiveness (cited studies: Ilić and Jovanović (2016); Bolaky (2011)).
- Policy measures to enhance tourism competitiveness include better infrastructure, increased investment, private sector development, more flexible labor market, reduced vulnerability to natural disasters, higher human development.

Panel regression analysis (sample of 12 Caribbean countries: Belize, Bahamas, Barbados, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Vincent and the Grenadine, Suriname, Trinidad and Tobago, Dominican Republic):
- Dependent variable: ARRIVALSi,t = Tourist Arrivals, in percent of population in each country.
- Explanatory variables included: Primary School Enrollment, Regulatory Quality, Internet Access(-1), Crime, Damage/GDP(-1), US real GDP growth, REER(-1). Country fixed effects included.
- Data sources:
  - Tourist Arrivals: Caribbean Tourism Organization
  - Damage from natural disasters: Emergency Events Database (EM-DAT)
  - REER, US real GDP growth: IMF
  - Primary School Enrollment, Regulatory Quality, Internet Access, Crime: The World Bank

Regression results (coefficients and standard errors in parentheses; significance levels as provided):
- Primary School Enrollment: 0.5613* (0.33006)
- Regulatory Quality: 41.7212*** (12.53501)
- Crime: -0.4836** (0.22532)
- Internet Access(-1): 0.2779** (0.13674)
- REER(-1): -0.1898 (0.11718)
- US real GDP growth: 2.4012*** (0.74983)
- Damge/GDP: -0.1446*** (0.03467)
- Constant: 69.7942* (37.94704)
- Country Fixed Effects: Significant***
- Sample period: 2002-2016
- R-squared: 0.9861
- Adjusted R-squared: 0.9833
- N: 107 (unbalanced)

Interpretation of empirical findings (as reported):
- Positive associations: Tourist arrivals increase with Primary School Enrollment, Regulatory Quality, and Internet Access.
  - Increasing enrollment at primary level by 1 percent is associated with “Arrivals” being higher by 0.56 percent.
  - Raising regulatory quality by 1 point is associated with “Arrivals” being higher by 41.7 percent.
  - Enhancing public access to internet by 1 percent is associated with a 0.28 percent rise in “Arrivals”.
- Negative associations:
  - Crime: higher homicide rates reduce “Arrivals” (coefficient -0.4836).
  - Damages from natural disasters: “Arrivals” decline by 0.14 percent for every 1 percent of GDP increase in estimated economic damage.
- External factors:
  - US real GDP growth positively associated with arrivals (coefficient 2.4012***).
  - REER(-1) coefficient negative but not statistically significant at conventional levels (-0.1898).

### VI. Policy implications (synthesized from findings)
- Strengthen education and human capital (primary education enrollment) to support tourism growth.
- Improve regulatory quality and governance to boost arrivals and investor confidence.
- Expand public access to internet and ICT infrastructure to raise tourism demand.
- Reduce violent crime and enhance public safety to protect tourism revenues.
- Invest in disaster risk reduction and climate resilience to mitigate adverse impacts of natural disasters on tourism.
- Address infrastructure gaps: water, sanitation, coastal facilities, road and air accessibility to reduce overcrowding in hotspots and promote wider geographic distribution of tourism activity.
- Implement land use policy and planning frameworks to ensure effective management of high-demand tourism jurisdictions (example: Ambergris Caye).
- Monitor and manage shared-economy accommodation impacts to protect hotel sector earnings and manage overcrowding.

*Source: Appendix 1. National Sustainable Tourism Master Plan 2012–2030 (excerpt).*

### 16. External factors, including growth in the US economy, significantly influence

### 16. External factors, including growth in the US economy, significantly influence

### External drivers of tourist arrivals
- A 1 percent increase in US real GDP growth is associated with an increase in “Arrivals” by 2.4 percent.
- For Belize, model estimates imply that about 40 percent of the rise in tourist arrivals in 2018 are explained by US growth.
- US tourists accounted for 70 percent of stay-over tourist arrivals in 2018.
- Price competitiveness proxied by the REER: a 1 percent reduction in price competitiveness (a 1 percent appreciation of the REER) is associated with “Arrivals” declining by 0.2 percentage points.
- In 2018, overnight tourist arrivals increased by 63,290 compared with 2017. The US growth of 2.9 percent in 2018 added an estimated 7 percentage points to Belize’s tourism/population ratio, or an extra 27,000 of tourist arrivals.

### Structural and institutional gaps; natural disaster risk
- Belize appears to be underperforming in some structural and institutional indicators relative to the Caribbean.
- The country is highly susceptible to natural disasters; damages could be costly though not as high as some neighboring countries.
- Damages from the 2016 Hurricane Earl were estimated at around 4 percent of GDP by the National Emergency Management Organization.
- The 2018 Climate Change Policy Assessment (CCPA) indicates that among small states, Belize ranks 3rd at risk for natural disasters, and 5th at risk from climate change. The country is low-lying and will face severe damages from inundation if the sea level rises and storm surges intensify.
- A significant influx of sargassum seaweed has led to travel cancellations and in some cases closure of tourism businesses.

### Simulation: potential gains from narrowing gaps
- Narrowing the gaps of regulatory quality, homicides rate, internet access, and natural disaster damage by ¼ to ¾ compared to the best-performing Caribbean economy could potentially increase tourist arrivals by 22 percent to 66 percent.
- An empirical analysis by Thacker, Acevedo, and Perrelli (2012) suggests that an increase in tourist arrivals by 1 percent could lead to a 1.7 percentage point (ppt) increase in GDP growth.
  - This implies an additional GDP growth of between 0.4 ppt to 1.1 ppt given the simulated increases in arrivals.

### Conclusion and policy implications — near-term reform priorities
- Continue reforms based on the NSTMP to sustain tourism development and enhance economic growth.
- Near-term reforms should focus on:
  - Climate change:
    - Address natural perils—hurricanes, flooding, sea level rise, coastal erosion, coral bleaching, droughts—and intensified impacts from increased weather volatility and sea temperature.
    - Mobilize substantial private investment, with official sector financial involvement supporting adaptation and mitigation plans.
  - Infrastructure bottlenecks:
    - Improve water and sanitation infrastructure and coastal facilities.
    - Enhance presentation of visitation centers and transportation to national tourism sites.
    - Expand ICT infrastructure to cater to shifts in tourism demand and changing tourist demographics.
  - Institutional and governance framework:
    - Address regulatory bottlenecks and governance concerns, including in customs and public procurement, to enhance the business environment and promote private sector capital.
    - Establish a land use policy and planning framework to manage overcrowding during peak tourism periods.
    - Ghazanchyan, Li and Brito (2019) on the ECCU shows that improving governance, ease of doing business, and reducing tariffs would increase the union’s global market share of tourism by 40 percent.
  - Reducing crime:
    - Confront safety and security risks to underpin tourist perception even if tourists are rarely victims of violent crime.
    - Policies include improving the quality of education, keeping children at school, promoting job training programs, investing in safe neighborhood programs, better community engagement (e.g., “self-patrolling”), and collaboration between private sector and local police to develop security plans.
    - Plotnikov (2019, forthcoming) finds crime reduces GDP by about 3 percent and recommends (i) preventive interventions increasing expected benefits from legal activities, (ii) improving policing and deterrence, and (iii) strengthening the criminal justice system while promoting reintegration of ex-convicts.
  - “Shared economy”:
    - Formally integrate rent-share and P2P accommodation through regulations, standards, registration, data sharing and taxation, combined with “high-end” branding, higher quality services, and adequate physical tourism infrastructure to mitigate adverse effects on income, employment, and overcrowding.

### Medium-term priorities
- Ensure continuous and sustainable tourism development through vocational training and diversification of source markets and attractions.
- Develop programs connecting local industries and local communities to the tourism value chain to ensure equitable and sustainable growth.
- Promote formal tourism degrees and tourism graduate programs to mitigate shortages in skillsets and skilled labor.
- Pursue strategic and diversified marketing, including leveraging ICT platforms, to reduce saturation and concentration risks:
  - North America comprises 75 percent of arrivals at present.
  - Tourists still focus on a small number of attractions.

*Source: wpiea2019267-print-pdf (IMF Working Paper chapter).*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019267-print-pdf.pdf_