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Beyond Ratings Weekly Digest

Your briefing on augmented financial risk analysis

N°147 ▪ 31st May 2018


Is Ecotourism the Panacea for Nature Conservation?

Ecotourism has become the fastest growing sector within tourism industry. This sector is often seen as a sustainable way to preserve ecosystems as it ensures regular income and necessitates conservation of landscapes in order to attract tourists. It is presented as an example of fruitful marketization that gives a prize to a resource that had no value before, which eventually permits to avoid its gradual degradation. Could it be that ecotourism reconciliates nature with the market?

A recent report casts some doubt on this. ‘Losing the Serengeti: The Maasai Land that was to Run Forever’ by the Oakland Institute (California) investigates cases of Maasai evictions with violence in Tanzania to grant foreign tourists access to wildlife zones. The report claims that tens of thousands of herders have been driven off, access to watering holes has been restricted, homes have been burned with the apparent complicity of the government in order to leave room for well-off Safari amateurs.

Granted licenses have notably included for the UAE’s royal family to conduct private hunting trips, with an airship specially built for them. The two safari business companies that are implicated, one from the US and another from the UAE, deny the accusations. It has been a couple of decades now that Maasai villages have contested land sales, which would have been completed without their consent. Beyond the inequity of such practices, the reports states that the safari business leads to biodiversity loss, as hunting constitutes one of the main proposed attractions. Cases of animal kills regularly agitates the Internet and the media, such as the recent story of the US dentist who killed “Cecil the Lion”, one of the most treasured animals in Zimbabwe. Such customs question the appropriateness and the sustainability of this economic activity, in a time of “biological annihilation”.  It may be also noted that such a business most of the time requires long-distance flights, which generates important carbon emissions, aggravates climate change and eventually threatens ecosystems’ stability.

Not all ecotourism initiatives are so exposed to criticism. The International Ecotourism Society defines ecotourism as “responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education”, and in that sense, the practices described below could not be included in that definition. By the way, the organization proposes certification programs in order to distinguish genuine ecotourism and sustainable tourism businesses from others that would make empty claims. There are examples that are considered as successful, such as in Kenya, or in Costa Rica where nature conservation has become a national leitmotiv. However, even in such an advanced nature-conserving country, ecotourism as an economic pillar remains a matter of debate, as there is always a tension between the capacity of ecosystems to admit visitors – that always constitute a kind of perturbation – and the sector profitability, that may lead operators to build bigger and more comfortable infrastructures, which in turn can put a pressure on ecosystems. The sustainability of this business will be at the cost of a strong limitation in its development. It should also be noted that a vast ecotourism sector often constitutes a disruption for local economic activities.

In any case, the question of the transportation remains central: the increase of human flows around the world has always played an important role in environmental perturbation. This was illustrated in the past by the diffusion of invasive species, which have been devastating in many places, and today by climate change (transport accounting for 20% of the CO2 emissions coming from fuel combustion). In particular, if we consider the carbon emissions budgets rich countries may allow themselves to consume with the view of a more or less stabilized-climate world, there is little development to expect for the ecotourism sector, except from local visitors that would not need to cross half of the globe to come.

As a reminder, the United Nations General Assembly adopted 2017 as the International Year of Sustainable Tourism for Development.

Hadrien Lantremange, Analyst  –  Source: Beyond Ratings



Sovereign Risk

Is the ECB speeding up?

On June 14th the European Central Bank (ECB) could decide to end its quantitative easing (QE) this year and hike interest rates towards the middle of 2019, ECB board member Sabine Lautenschlaeger said on Tuesday, the June 29th. She brushed off the soft patch and said the fate of the ECB’s EUR 2,550 Bn money-printing program could be sealed at a meeting in Riga on June 14th, earlier than indicated by most other policymakers. “June might be the month to decide once and for all to gradually end net asset purchases by the end of this year”, Lautenschlaeger said during a University lecture. “A first hike around the middle of 2019 is not entirely out of the ballpark”.

One thing is certain. The appointment of Luis de Guindos, a Spanish dove, as Vice-president of the ECB, gives way to a hawk to replace Mario Draghi in October 2019. Jens Weidmann, the well-known German hawk, serves as a favourite in this race (please see the insight on January 25th, 2018 for more details on political issues around the ECB’s Executive Board). Therefore, if the ECB starts to raise key interest rates as early as June 2019, it is certain that the next President of the Frankfurt-based monetary institution will not be begging to continue raising key interest rates. It will be a question of a few months before the ECB really enters a tightening cycle of its monetary policy with Jens Weidmann at the helm.

Julien Moussavi, Head of Economic Research  –  Sources: Beyond Ratings, Reuters


The topsy-turvy state of global obesity

Obesity (BMI* >30) prevalence per income group (actual/projected)

Obesity is a major risk factor for noncommunicable diseases such as cardiovascular diseases, diabetes, musculoskeletal disorders and some cancers (breast, ovarian, prostate, liver, gallbladder, kidney, and colon). Worldwide obesity has nearly tripled since 1975 to reach 650 million adults (18 years and older), and its prevalence has grown from about 4% in 1975 to about 18% in 2016. But the demographics of obesity depend on several factors, including sex, country wealth, rural-urban and household revenues. For example, females are more likely to suffer from obesity than males (15% vs 11% in 2016) and low-income countries count fewer obese people than high income countries (6.8% vs 24.6%).

Projections for high income countries are alarming; without any action or trend changes, about one third of their populations could be obese by 2025. For these countries, obesity is most prevalent amongst the urban poor, and affects and one segment in particular: urban women in the poorest households. Indeed, it appears that revenues impact overweight females much more than males. Moreover, women tend to be in charge of food shopping. Interventions that target them could thus have positive impacts for the whole household’s health.

*Body mass index (BMI) is a simple index defined as a person’s weight in kilograms divided by the square of his height in meters.

Emeric Nicolas, Head of Statistics  –  Sources: Beyond Ratings, World Bank, WHO, CDC 

Carbon/Climate Change

The carbon intensity of GDP tends to decrease, but…

Carbon and resource intensity of employment (2000-14 or latest year available)

The relationship between economic activity, greenhouse gas emissions and the use of natural resources is often underlined. For example, there tends to be a significant relationship between GDP, energy use and, thus, GHG emissions, even if energy efficiency gains and shifts in the energy mix allow to progressively reduce the carbon intensity of GDP in many countries.

However, employment-related trends generally attract less attention, and this is one of the interesting aspects of ILO’s World Employment Social Outlook report. In this work they look at the employment’s intensity in terms of GHG emissions and material extraction in key regions. Unsurprisingly the results show broad disparities across regions and a different economic picture than with GDP. Based on GDP, developing countries can have high intensities compared with developed countries, given the structure of their economies and the added value they generate. It is, however, less the case based on jobs. The size of the subsistence sector in regions (as Asia & the Pacific and Africa) can limit intensities, while relatively high labour productivity levels (as in the Americas) can result in higher impacts per worker.

Moreover, it can be noted that while the carbon intensity of GDP tends to grow, GHG emissions or material extractions per worker have increased between 2000-2014 (which illustrates well the need to look at several complementary indicators when analyzing countries). There is good news according to ILO’s analysis, however, despite the decoupling challenges as far as jobs are concerned: “While climate change mitigation measures may cause short-term job losses, the report shows that a just transition to a more sustainable economy offers much potential for job creation and the promotion of decent work.”

Guillaume Emin, Project Manager  –  Sources: Beyond Ratings, ILO, ILOStat, WDI, Material Flows Data


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Photo credit via Visualhunt/CC BY-SA or other: Front page ▪ Credit 1: CECAR – Climate and Ecosystems Change Adaptation R; Credit 2: Tony Webster; Credit 3: Kiefer.; Crédit 4: NASA Goddard Photo and Video / Research notes ▪ Credit 1: DnDavis (via; Credit 2: zhu difeng (via Fotolia); Credit 3: Mny-Jhee (via Fotolia); Credit 4: xmentoys (via Fotolia)


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