Green Investment and Sustainability Challenges in Tourism

As the global tourism industry continues to develop, the challenges faced in terms of sustainability are also increasing. This growth also creates a series of challenges related to sustainability aspects. The challenge of balancing meeting tourist demand while preserving the environment is increasingly becoming complex. So, in this context, understanding and overcoming sustainability challenges is very important to ensure the long-term sustainability of the tourism sector while maintaining the sustainability of the earth and its resources for future generations.

What are the main sustainability challenges facing the tourism sector today?

Among the various challenges faced, one of the main challenges is climate change and carbon emissions from tourism. Tourism plays a role in producing significant greenhouse gases through various media such as transportation, accommodation and various other activities. This sector's dependence on fossil fuels and its contribution to the climate crisis has had significant negative sustainability impacts in several places. According to the World Travel & Tourism Council (2021), the travel and tourism sector is responsible for around 11% of global emissions. Especially transportation, as an important sub-sector in tourism that stands out as a major source of greenhouse gas emissions.

Another challenge is high energy consumption. Tourism often puts pressure on natural resources such as water, energy and land. Large demands on water resources, energy use in accommodation, as well as changes in land use in infrastructure development require energy consumption. In the hotel context, energy consumption in hotels can average up to 176.92 kWh/m2/year, with air cooling as the largest contributor to energy consumption (Final Report Benchmarking Specific Energy Consumption in Commercial Buildings, 2019).

Water shortages and misuse of water due to tourism can also be a serious challenge for some tourist destinations and local communities. A hotel consumes an average of 1,500 liters of water per room per day which far exceeds the needs of local residents in water-stressed areas (Sustainable Hospitality Alliance, 2018). In some areas, tourism consumes more than eight times the amount of water compared to the local population. In fact, with current hotel standards, hotels located in areas with sufficient water supply will have a significant impact if they are placed in areas with limited water availability.

Waste and pollution are also outcomes of tourism activities. Tourism produces large volumes of waste, including plastic pollution, which can harm the local environment, marine ecosystem and natural landscape. Inadequate waste management and waste disposal infrastructure further exacerbates this problem. According to The Wall Street Journal, Indonesia ranks second after China in terms of marine pollution. As many as 3.20 metric tons of plastic waste that is not managed properly (mismanaged plastic waste) and 1.29 metric tons of marine plastic (plastic marine debris) enter global waters every year. Tourism activities in coastal areas certainly also contribute to the pressure placed on the environment. These activities directly contribute to marine pollution while tourism activities also depend on the sea as an attraction for tourists.

To overcome one of the main challenges in the tourism industry, green investment can overcome problems ranging from management related to tourism to impacts that have the potential to reduce the attractiveness of tourist destinations and the value of existing tourism assets.

What is Green Investment?

There are various definitions of green investment that are currently understood and used. Based on the definition from the OECD (Organization for Economic Co-operation and Development), green investment refers to assets that are defined as "green", for example renewable energy companies or carbon credits. However, green investment can also be carried out in the form of an investment layer (overlay investment) - related to other "green" aspects, for example the integration of climate change or ESG (environmental, social and governance) elements in a general investment approach or SRI (sustainable investment) compliance or socially responsible) legally.

How can green investment contribute to reducing the environmental impact of the tourism industry?

Tourism is often associated with negative effects on the environment. The arrival of tourists can significantly influence the places visited. All forms of consumption behavior of various types of resources in tourist attractions always have an impact. Green Investment can play an important role in reducing the environmental impact produced by the tourism sector. By channeling financial injections into sustainable practices, infrastructure improvements and technology, these investments can encourage positive transformation and practices that pay more attention to ecological aspects in the tourism sector. Therefore, implementing green investment can support the development of sustainable tourism practices so as to reduce negative impacts on the environment.

An example of a major green investment project in Indonesia can be seen from the Mandalika Special Economic Zone (KEK) in Indonesia, which is managed by the Indonesia Tourism Development Corporation (ITDC) and collaborated with the Global Green Growth Institute (GGGI) in 2016-2017 to encourage the use of green investment. renewable energy on existing infrastructure. Through the "Mandalika Urban Tourism and Infrastructure Project (MUTIP)" project, 541 public street lights were installed using solar energy, 20 motorbikes and other modes of transportation were using electricity, and Sea Water Reverse Osmosis (SWRO). This procurement is part of the management's commitment to sustainable tourism development. According to ITDC management, the green & clean energy procurement carried out will provide the initial foundation for creating the development of 50 MW of solar panels in the Mandalika SEZ in the future, the investment of which may reach 75 million US Dollars.

In this case, it appears that Mandalika is paving the way for the development of renewable energy which at the same time can reduce its demand for fossil fuel-based resources. Such transformations will significantly reduce contributions to climate change. The success of the project will not only benefit the destination itself but can also be an inspiration for the wider tourism industry.