By Linh PMP
The economy of sustainability
In the 1950s, under the pressure of energy shortage, Costa Rica invests in R&D for renewable energy. Until now, 90% of the electricity in the country comes from sustainable sources and the nation has become the global experts at hydroelectric plants (Pratt, 2016). In 1983, one year after abandoning the central economic model, Costa Rica started following an aggressive environmental plan that boosted the volunteer protection of forest. Until now, the country has maintained 1/3 of the land as national parks and more than 50% forest cover (Pratt, 2016). These are the momentums that empower growth in tourism, business, and agriculture.
In the study of La Fortuna (eco-tourism case) vs Tamarindo (mass tourism case), it was statistically significant that La Fortuna tourism brought more benefits to local residents (higher education, more stable income with more equal distribution, and less social problems such as drugs and prostitution) (Gonzalez, 2008). Plog’s curve suggests that those “venture tourists” (who seek for authenticity in sustainable eco-tourism and adventures) spend more, explore more frequently, and relate more to the community (Gonzalez, 2008). Moreover, maintaining on the right side of Plog’s curve (with venture tourists) will require less intense infrastructure investment, which is more appropriate for a small economy like Costa Rica. Recognizing the significant impacts, Costa Rica is on the way to build the country brand of sustainable and authentic tourism.
Plog’s Curve (Gonzalez, 2008)
In the business sector, Florida Ice & Farm (FIFCO) is an example of successful implementation of sustainable strategies in Costa Rica. The action programs of “responsible alcoholic consumption”, “employee’s Choose To Help”, “water use efficiency”, and “sustainable suppliers and distributors” have benefited company in many ways. Thanks to the sustainable awareness campaigns, he brand reputation is highly valued by the consumers, the public, and not less importantly, the potential employees. Thanks to energy use efficiency, the operating costs have gone down, and reduced insurance expenses (Florida Ice & Farm: Sustainability Champion from an Emerging Economy, 2012).
As more companies like FIFCO want to be more sustainable, there are more opportunities for energy solution businesses like EcoSolutions to thrive. EcoSolutions has successfully assisted various clients with energy analyses and proposals. The company has been constantly growing and plans to expand to Latin American region. Interestingly, EcoSolutions does not find a direct competitor at the moment in Costa Rica, which suggests a space for more upcoming changes and competitions in the market.
In the agriculture sector, recognizing that intensive consumption of water and agrochemical caused soil erosion, agricultural runoff, and diminishing local wildlife, more eco-friendly initiatives have been promoted (Umana, 2014). Late 2016, pesticide-free rice farming (Eco Arroz) used plants and insects as natural barriers to protect crops, utilized farm wastes as fertilizers and optimized the irrigation system (Arias, 2016). The rice produced in this eco-friendly method is also more nutritious than the traditional one.
The involvement of multi-stakeholders
Implementing sustainable strategies is challenging because of the conflicts among various stakeholders involved. During class, we had a simulation to discuss the next steps to solve the case of policies for rice sector. As the background information, in early 2010, Costa Rica’s agricultural AMS (Aggregate Measurement of Support) was six times as much as WTO’s maximum level of commitment, which risked the sanction from WTO (Umana, 2014). The question is how to conduct the desired policies from the various perspectives of COMEX (Ministry of Foreign Trade), Con Arroz, large farmers, small farmers, exporters, consumers, and environmental agencies. While large farmers may want to maintain the subsidies, small independent farmers, whose livelihoods have not really been improved from the subsidies, may want to divert the subsidies to other technology know-how supports. COMEX, consumers and exporters, however, are more concerned about the sanction by WTO as well as the increasing consumer prices if keeping the subsidies. For environmentalists, the subsidies that encourage too intensive agriculture are against their desire. This group of environmentalists and scientists should be very supportive alliances to help provide solutions for a more productive and sustainable agriculture in Costa Rica. Overall, any changes can bring huge impacts on different stakeholders, so it is important to take steps with a long-term plan and assisted training if needed, to smoothen the transition.
The involvement of multi-stakeholders can also be seen in a micro-level, in the case of building and implementing sustainable strategies at FIFCO. The case study walked us through the different steps of making stakeholders get involved in the triple bottom line strategy (Florida Ice & Farm: Sustainability Champion from an Emerging Economy, 2012). Starting the process by the consultations and dialogue with stakeholders, FIFCO further understood the public perceptions and expectation regarding its social and environmental footprints, collected ideas and strengthened the relationships with relevant parties. This was followed by the executive plan, the objective statements, the evaluation with balanced scorecard and sustainability reporting (following GRI standards), which created trusts and transparency for those stakeholders.
The power of human resources
Since 1930, the amount that Costa Rica has been investing in education is above the average for a developing country (Pratt, 2016). “There is an effective national system for job training, and a large number of universities” (Trejos, 2009). Besides, workers’ rights are highly respected in the country (Trejos, 2009).
These human capital investments have paid off. Higher quality labor has led to higher FDI and shifted the country from heavy agriculture to more services, including “high-value ecological and adventure tourism, and professional and business-related services such as software, back offices, medical services, etc” (Trejos, 2009). Especially, more women are active in the workforce such as consulting and engineering, actively contributing to the economy.
Remarkably, those, who had studied and worked in developed countries before coming to Costa Rica, have also brought tremendous impacts to this country. Ramon Mendiola, the CEO of FIFCO, a sustainability champion, is an MBA alumnus of Kellogg (USA). Gisela Sanchez, FIFCO’s Director of Corporate Affairs, also graduated from the same school. All of our professors in the study tour in San Jose have worked/studied in other developed nations such as US, UK, or Switzerland. The well-versed international experience, blended with local understanding, can be seen as another talent engine that boosts the nation.
Spending three days solo-travelling, I got to know more local people. Many of whom I have met spoke good English and had good service attitudes. One local woman (that I randomly met on the bus) introduced me an e-learning site (www.uned.ac.cr) that she used for self-learning. She works in a hot spring spa in the daytime and studies at night. She said many people she knew also studied on the same site. She is an live example for the claim that “the Costa Rican worker is trained, disciplined, creative and industrious” (Trejos, 2009). It should be the key to the sustainable success of the nation. However, it is noted that the education system in the country has been growing slower than needed, which suggests another innovative phase of education investment.
I am impressed by the story of a nation making its own way to be among the most successful cases of value contributed by tourism to poverty solution (though being rejected by World Bank with the tourism development proposal in the 1940s). I admire the fact that Costa Rica turned their disadvantage of energy shortage into the advantage of the top hydroelectricity plant experts. Coming from Vietnam, a tropical nation also on the way to build a country brand, I found the Tico stories highly relevant and inspiring in terms of developing sustainable tourism, a competitive agriculture, and growing human resources with education and innovative leadership. Pura vida!
Umana, V. (2014). Rice in Costa Rica: Policies, Interests, Commitments, and Coherence with Sustainable Development. INCAE Business School.
Arias, L. (2016). Costa Rica Promotes Pesticide-free Rice Farming. Retrieved 2016, from The Tico Times News: http://www.ticotimes.net/2016/10/18/pesticide-free-rice-costa-rica
Florida Ice & Farm: Sustainability Champion from an Emerging Economy. (2012). Retrieved from Balas.org: http://www.balas.org/BALAS_2013_proceedings_data/data/documents/p638456.pdf
Gonzalez, C. (2008). Different Tourist Destinations and Challenges in Costa Rica: The cases of Tamarindo and La Fortuna.
Pratt, L. (2016). Understanding Costa Rica: through the lens of trade and investment .
Trejos, A. (2009). Country role models for development success: The case of Costa Rica. Econstor.