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22 Sep 2021

Building back better: Resilient tourism enterprises for responsible recovery in the Hindu Kush Himalaya

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Anu Kumari Lama a, Nanki Kaur a, Padmakshi Rana b, Nagakarthik MP c, Shripathi Hadigal c, Mewang Gyeltshen a and Akriti Manandhar a

a International Centre for Integrated Mountain Development
b Nepal Communitere
c SELCO Foundation India

 

Mountains, unique yet sensitive tourism destinations to climate and other external shocks (Photo: Jitendra Bajracharya)

 

Climate change, compounded by the global pandemic, has created unprecedented challenges for mountain communities in the Hindu Kush Himalaya (HKH) region. In fact, COVID-19 has exacerbated pressures faced by mountain communities, whose livelihoods are already at risk from climate change impacts. These shocks are especially pronounced in the mountain communities of ICIMOD’s eight regional member countries (RMCs), which rely heavily on tourism. Tourism is one of the key sectors in the RMCs – Afghanistan, Bangladesh, Bhutan, China, India, Nepal, Myanmar, and Pakistan. It generates revenue and supports economic activities, job creation, and the development of micro, small, and medium enterprises (MSMEs). In the mountain regions of the HKH, MSMEs make up about 95 per cent of the private sector and are an important source of employment. Within the tourism sector of the RMCs, MSMEs support millions of jobs and contribute significantly to the national GDP. In India, the tourism and travel services contribute over 9 per cent to the GDP and in Pakistan, over 7 per cent. In Nepal, the sector employs over one million people, contributing about 8 per cent to the GDP. However, climate change, combined with the impacts of COVID-19, has made the tourism sector extremely vulnerable. The tourism industry in Nepal is experiencing a loss of USD 241 million a year due to climate change impacts. Further, amid the COVID-19 pandemic, tourist arrivals in the country dropped by more than 80 per cent, which has hampered businesses and caused job losses.

Climate adaptation in the HKH requires a huge investment, ranging between USD 3.2 to 4.6 billion a year by 2030 and USD 5.5 to 7.8 billion by 2050. In a likely scenario where these investments are not fully made, tourism is a most vulnerable sector. When tourism is hit, communities and MSMEs that depend on it will suffer. They are likely to experience huge, simultaneous impacts across the economic, social, and livelihood fronts, resulting in dire social and economic outcomes.

But amid this crisis lies great opportunity. Global and local governments have recognized the role played by MSMEs and have prioritized climate action in their COVID-19 recovery plans. Climate change mitigation and multi-stakeholder collaboration through bottom-up investments is one of the proposed pathways for achieving a prosperous future in the HKH region. This has created opportunity for the RMCs, decision makers, investors and mountain communities to collaborate for a #ResponsibleRecovery of tourism and move towards tourism that is resilient, creates green jobs, and brings inclusive and sustained growth. In the HKH region, this crisis is seen as an opportunity to #BuildBackBetter by establishing tourism resilience and sustainability as the new norm.

Building on the HKH Call to Action which was welcomed and affirmed in a Ministerial Declaration, in this blog, we outline how small and medium tourism enterprises in Nepal are integrating renewable energy solutions into their business models to promote sustainability and resilience in the wake of climate and COVID-19 crises, and how their efforts are helping pave the path towards a low-carbon economy, green job creation, and inclusive and sustained growth in tourism.


Tourovation Hub: Innovation for resilient tourism enterprise development

 

Resilient entrepreneurship framework

 

Climate change and COVID-19 shocks demand a significant shift in the way tourism enterprises are conceived and operated. To build resilient enterprises, it is necessary to take concerted climate action. This means placing renewable energy and energy efficient (RE&EE) solutions at the heart of sustainable business development.[1] Resilient enterprises are those that are able to absorb, adapt, and/or transform (AAT) the total value proposition and strategic orientation to climate and other shocks. A resilient tourism enterprise is able to maintain, improve, or fundamentally change its economic value proposition alongside its social and environmental aspects against climate and other external shocks. The ability of enterprises to AAT and thereby increase climate resilience hinges on the strategic orientation – entrepreneurial (value driven by entrepreneurship), market (value in response to market demands), and management capacity (values, capabilities and operating structures) – of the entrepreneurs. However, such entrepreneurs do not operate in isolation but within an entrepreneurial ecosystem. The sustainability of a resilient enterprise is influenced by various enabling factors – entrepreneurs, investors, and policy enablers. On the whole, resilience of an enterprise is determined by its ability to AAT and recognize the interplay of value proposition, strategic orientation, and the entrepreneurial ecosystem. Resilient tourism enterprise development requires a systems approach and a framework that is comprehensive and dynamic in nature so that it can address systemic shocks emanating from climate change and other crises such as COVID-19. Entrepreneurs in the tourism sector need to re-engineer their business model by rethinking their value proposition to create goods and services that are resilient to current and future shocks. The re-engineering aspects include co-design and co-development of innovative and bankable business models that integrate low-carbon emission solutions, eco-efficiency approaches, cost reduction, and creation of green jobs and enterprises.

Bilateral meeting with Nepal Communitere to facilitate Tourovation Hub Pilot (Photo: Anu K Lama/ICIMOD)

 

In collaboration with Nepal Communitere[2] (NC) and SELCO Foundation, India[3], our Renewable Energy and Energy Efficiency Capability for the Hindu Kush Himalaya (REEECH) Initiative has established the Tourovation (Tourism+Innovation) Hub in Nepal. The Tourovation Hub is an entrepreneur-led sustainable business incubation service centre that aims to support small tourism entrepreneurs to find innovative ways to integrate RE&EE solutions into their sustainable business model to create green and resilient enterprises. Through an 18-month long sustainable business incubation programme, the Tourovation Hub will provide mentoring, capacity building, and networking support as well as business advice to ideate, incubate, and accelerate sustainable and resilient business models at the intersection of tourism and RE&EE solutions.

The Tourovation Hub programme will be spearheaded through active and strong engagement of the Steering Committee (SC) members. The SC members represent diverse ecosystem players from RE (Gham Power, Wind Power Nepal), tourism (Nepal Tourism Board), water harvesting (Smart Paani) and banking (NMB Bank), who will provide strategic direction and guidance to entrepreneurs. Additionally, SC members will help entrepreneurs gain access to networks, services, and financing opportunities.


The Tourovation Hub’s journey

Inception: The Tourovation Hub’s journey began with an inception study that explored existing tourism business and RE landscapes, as well as the challenges and opportunities faced by entrepreneurs in integrating RE&EE solutions. The study team informed collaborating partners on how tourism entrepreneurs can integrate such solutions and approaches to build resilient enterprises. This was followed by the selection of proactive, passionate, and visionary tourism entrepreneurs[4] for ideation. The selection was jointly made by ICIMOD, SELCO Foundation, and NC based on predefined criteria. Some of the entrepreneurs already had experience adopting RE/EE technology solutions in their business, while others aimed to adopt them during the incubation phase of the programme. The selected enterprises are diverse in nature (resorts, hotels, lodges, homestays/farmstays, trekking companies, cooperatives, and green commerce) and represent different geographic regions of Nepal, from the Terai lowland (Chitwan) to the high Himalaya region (Dolpo). Further, 25 per cent of the businesses are co-owned by women, and 30 per cent of participants in the incubation programme were women. Forty per cent of the businesses are owned and operated by indigenous communities.

Ideation:

Design Sprint to ideate customized sustainable business model (Photo: Anu K Lama/ICIMOD)


The selected entrepreneurs underwent an intensive three-day design sprint in October and November 2020. Cue, a design studio in Kathmandu, Nepal, with the support of NC, designed and delivered two 3-day design sprints that helped entrepreneurs identify challenges and opportunities, map out actors, generate business ideas, and ideate eight business prototypes that integrated RE&EE solutions into their business. There was no shortage of ideas, which ranged from solar lighting, cooking, space heating, converting waste to energy, to establishing RE&EE demonstration sites, green commerce/platforms, to operating training services. To validate the viability of such ideated prototypes into realistic and practical business solutions, industry experts were invited to interact with and advise the entrepreneurs. Experts from the Alternative Energy Promotion Centre (AEPC), Smart Paani, and The National Association of Community Electricity Users-Nepal (NACEUN) provided insightful information on solar power, water harvesting, rural energy, and investment opportunities to strengthen the viability of the business prototypes.

Incubation:

Master classes on integrating climate services and information and gender and social inclusion for developing sustainable business model (Photo: Anu K Lama/ICIMOD)


The eight enterprises have undergone a seven-month business incubation journey (November 2020 to May 2021). This has allowed the entrepreneurs to design and develop sustainable and resilient business models while integrating RE&EE solutions and innovations identified during the design sprint. During this period, they received monthly masterclasses and bi-monthly business and monthly financial coaching sessions curated and run by NC and ICIMOD along with external experts (Gham Power, Wind Power, NMB Bank, Federation of Nepalese Chambers of Commerce and Industry, and Story Cycle, among others). These sessions cover topics related to RE&EE solutions and approaches, GESI, climate resilient tourism and tourism climate services, greenhouse gas emissions tracking, energy financing, marketing, and communication and outreach. The masterclasses, coaching, and expert sessions have been designed to support the enterprises in applying knowledge, tools, and skills for integrating RE&EE solutions, building value propositions, and strengthening the strategic orientation to create resilient enterprises. Seed funding of NPR 200,000 (approximately USD 1,680) is being provided to each enterprise to adopt RE solutions that will potentially contribute towards achieving the incubation milestones.

Acceleration: Two to three out of the eight enterprises will be selected for securing financing, after which they can move towards the acceleration phase (June–December 2021). Businesses with RE&EE solutions and approaches that demonstrate a holistic value proposition and strategic orientation, and integrate different players of the ecosystem with a focus on environmental, social, and economic outcomes, will be prioritized for additional financing to scale up their sustainable business models. Such businesses will get an opportunity to pitch and present their impact story to diverse lenders, donors, investors, banks, and financial institutions for acceleration financing. Pre- and post-investment business coaching will be provided to ensure funds are appropriately used to achieve acceleration milestones, focusing on growth, scalability, increase in sales and revenue, and green jobs creation within a comprehensive resilient enterprise framework. As part of the acceleration process, a ‘Green Tourism Expo’ will be organized to build a marketplace where green tourism enterprises can list their goods and services, network, showcase businesses, and learn about the adoption and promotion of RE&EE solutions within Nepal’s tourism.

Reflecting on the journey

Nepal’s tourism sector and entrepreneurs are facing climate change and COVID-19 crises at the same time. The compounded nature of these crises has had devastating social and economic consequences. There is an urgent need to build the resilience of tourism enterprises against such combined shocks. This requires innovation, which entails re-conceptualizing resilience as a comprehensive framework, which not only enables entrepreneurs to AAT, but also strengthens their value proposition and strategic orientation, engaging all enablers of their ecosystems and re-engineering the sustainable business model to move towards #ResponsibleRecovery pathways to #BuildBackBetter.

In this regard, the Tourovation Hub is an innovative and timely intervention. Innovative because it recognizes the critical role of small and medium enterprises in the transition to a low-carbon economy and hence integrates clean energy solutions for green and resilient enterprise development on the ground. Timely because the integration of RE&EE solutions is currently gaining momentum. From a policy perspective, the government of Nepal is committed to addressing climate change impacts on tourism. The National Climate Change Policy, 2019 recognizes technology and knowledge for risks associated with climate change impacts as one of the major challenges. The policy recognizes the importance of using RE&EE solutions in tourism for zero emission and aims to contribute to economic prosperity and social well-being by building a climate-resilient society – one that promotes green economy, ecotourism, effective technology development, and information service delivery; strengthens capacity of locals; and is GESI responsive. From an RE perspective, the environment for RE technology is becoming favourable. First, the cost competitiveness of RE has made this technology the most affordable and promising sector to be integrated as business solutions. Second, the RE subsidy policy 2016 focuses on achieving universal access to clean, reliable, and affordable RE solutions by 2030. The Tourovation Hub is a collaborative initiative, rallying entrepreneurs, investors, and policy makers at the local, regional, and global levels to develop resilient enterprises for a low-carbon economy, green jobs creation, and inclusive and sustained growth in tourism.

With strong partnerships among different ecosystem players within the enterprise, the Tourovation Hub has provided an excellent base for getting the enterprises off the ground. Two priorities should be established to ensure that the Tourovation Hub contributes to local, regional, and global climate and sustainable development agendas such as #HKHCalltoAction, #HKH2Glasgow, #ClimateAction, and #COP26. The first priority is to manage the different aspects of the comprehensive resilience framework – policy, technology, investment, Environment and Social Safeguards (ESS), partnerships, and capacity building support; the second is to increase the scale and speed of green and resilient enterprise development. The road to #ResponsibleRecovery to #BuildBackBetter is filled with opportunities for the tourism sector. The journey towards resilient tourism enterprise development has begun on a right note in that regard.

[1] Sustainable business model is the holistic value logic that encompasses economic, environmental and social goals in the value network (Rana et al., 2020).

[2] Nepal Communitere, a female-led Nepali not-for-profit organization, is an open and inclusive community-led innovation hub for bold innovators and creative change makers, harnessing new ideas to help address social and environmental challenges.

[3] SELCO Foundation seeks to inspire and implement socially, financially, and environmentally inclusive solutions by improving access to sustainable energy.

[4] Selected entrepreneurs: Green Coins, Himalayan Companion Treks and Expedition, Hotel Trekkers Paradise and Restaurant, Nana Hotels and Resorts, National Cooperative Federation of Nepal, Original Organic Farm, Sanskriti Farm and Research Centre and Tibetan Lodge