Ecotourism and agritourism developments
Ecotourism and agritourism developments
Business Model Description
Develop joint ecotourism and agritourism projects between communities and private businesses where communities establish infrastructure (such as roads, bird watching facilities, fences, camping areas or tourist information points) while the private sector invests in such facilities through for example hotels, guest houses, ecotouristic trails or transportation means.
Expected Impact
Create job opportunities in disadvantaged communities, improve community infrastructure and protect culture traits and ecosystems in rural areas through ecotourism and agritourism.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Armenia: Gegharkunik
- Armenia: Vayots Dzor
- Armenia: Lori
Sector Classification
Services
Within the services sector, tourism is a key contributor to the Armenian economy, with a 4.5% share in GDP in 2018. Travel and tourism has grown significantly in the last years, from 1 million incoming tourists in 2013 to 1.65 million in 2018 (4).
Under the Government Programme 2019-2023, tourism is a priority sector to drive economic development (1, 2). International partners provide grants for developing sustainable rural economies. Business activities in tourism is tax exempted in the close-to-border communities of Armenia, which are also priority areas for eco-tourism development (5).
Armenia is located in one of 36 “biodiversity hotspot” sites on the planet, which support nearly 60% of the world’s plant, bird, mammal, reptile and amphibian species, with a very high share of those species as endemics. This means that Armenia may offer rich opportunities for ecotourists (3, 21).
Air travel costs to Armenia are high and travel schedule is not convenient. This could affect the overall number of incoming tourists and the attractiveness of the country as an international tourist destination (21, 24, 25, 26).
Hospitality and Recreation
Ecotourism and agritourism have high development potential in Armenia, and may contribute to job creation and rural community development, as well as environment and biodiversity protection (1, 21, 22, 24).
Government programmes support the development of the tourism sector, including through assistance in organizing and participating in local and international expos and festivals, tax benefits for eco-tourist firms in remote areas, and enhancement of supporting infrastructure via public-private partnerships (1, 3).
Ecotourism development will have a key social role by minimizing the inequality between regions and Yerevan, by creating places of work in remote regions, and enabling sales of local products to tourists (21, 26).
Leisure Facilities
Pipeline Opportunity
Ecotourism and agritourism developments
Develop joint ecotourism and agritourism projects between communities and private businesses where communities establish infrastructure (such as roads, bird watching facilities, fences, camping areas or tourist information points) while the private sector invests in such facilities through for example hotels, guest houses, ecotouristic trails or transportation means.
Business Case
Market Size and Environment
5% - 10%
3 million tourists expected per year by 2030.
It is estimated that the annual number of foreign tourists visiting Armenia will reach 3 million by 2030, reaching 11.25 million overnight stays, and the tourism sector will grow at an anticipated 9% annual rate (24, 25).
Indicative Return
20% - 25%
Based on discussions with businesses operating in the tourism sector, a medium-sized company engaged in ecotourism in Armenia can achieve an IRR of 20-23% (24).
Investment Timeframe
Short Term (0–5 years)
Construction of a hotel, as a potential investment in this space, usually takes 1-2 years, and may be shorter for ecotourism set-ups, where investment requirements for accommodation facilities may be lower. The timeframe to generate returns is below five years (21, 24, 31).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - CapEx Intensive
Market - High Level of Competition
Impact Case
Sustainable Development Need
Rural areas of Armenia suffer from lower development levels and limited employment opportunities (21, 24, 34).
The environment in Armenia's rural areas suffers from negative impacts of economic activities, and accessibility of potential tourism site is hampered by the lack of infrastructure, and Armenia is not well known as a potential tourism destination (21, 24, 25).
Gender & Marginalisation
Areas outside the capital city Yerevan are disadvantaged with lack of well paid, good quality jobs, Women and youths suffer from higher than average unemployment rates (21, 31, 34).
Expected Development Outcome
Improved living conditions in rural areas through the creation of wider business opportunities and quality and well paid jobs for community residents.
Enhanced protection of the environment and promotion of local cultures through awareness raising and improved knowledge about the protection of the planet and traditions.
Enhanced overall economic development and regional and global competitiveness through the promotion of Armenia as a tourism destination.
Gender & Marginalisation
Minimised inequality between regions and Yerevan, by creating places of work in remote regions, and enabling sales of local products to tourists (21, 26).
Primary SDGs addressed
8.5.1 Average hourly earnings of employees, by sex, age, occupation and persons with disabilities
8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate
12.b.1 Implementation of standard accounting tools to monitor the economic and environmental aspects of tourism sustainability
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Outcome Risks
Infrastructure required to provide and access ecotourism and agritourism developments may have come with negative environmental effects.
Impact Risks
High air travel costs and inconvenient flight schedules may discourage international tourists from traveling to Armenia.
Impact Classification
What
Ecotourism and agritourism creates job opportunities, improves community infrastructure and protects ecosystems in rural areas.
Risk
Ecotourism is a proven model that supports sustainable development, but the increased number of tourists can create environment and community challenges if not managed well.
Impact Thesis
Create job opportunities in disadvantaged communities, improve community infrastructure and protect culture traits and ecosystems in rural areas through ecotourism and agritourism.
Enabling Environment
Policy Environment
Tourism is a priority sector in Armenia's Government Program 2019-2023 to drive economic development; ecotourism and agritourism are covered under action item 233 (1).
Ecotourism and ecotourism are highlighted as high potential areas for development in the Tourism Development Concept (26).
Financial Environment
Financial incentives: International financial institutions and public partners provide grants for developing sustainable rural economies, many of which cover ecotourism projects (24, 26, 31).
Fiscal incentives: Touristic business activities in Armenia's close-to-border regions, which are suitable for ecotourism and agritourism, are tax exempted under the Law on Tax Exemption of Economic Activities in Border Regions (28).
Regulatory Environment
Ecotourism and agritourism constructions are subject to licensing and the preliminary right on construction according to the N Government Decree 2408-N, and is based on engaging third party contractors (29, 30).
Marketplace Participants
Private Sector
Ecotourism and agritourism firms such as Urtsadzor Eco House and Ranger Campus in Khosrov forest, Ecokayan Dilijan in Dilijan region, and Parz Lake park in Tavush region.
Government
Ministry of Economy; Ministry of Education, Science, Culture, and Sport; Tourism Committee, state reserves and sanctuaries such as the Khosrov State Reserve, Zangezur, Dilijan, Gnishik and Lake Arpi.
Multilaterals
Several international financial institutions and multilateral banks support the promotion of Armenia's tourism sector, such as the World Bank, European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ABD).
Non-Profit
Ecotourism Association of Armenia; "My Armenia" Project by the Smithsonian Institute.
Public-Private Partnership
The establishment of tourism hubs or zones in locations such as Tsakhkadzor, Goris and Tatev through public-private partnerships in tourism (33).
Target Locations
Armenia: Gegharkunik
Armenia: Vayots Dzor
Armenia: Lori
References
- (1) Government action program 2019-2023, https://www.gov.am/am/Five-Year-Action-Program.
- (2) Action plan of the Government of the Republic of Armenia 2018 – 2022, https://www.gov.am/files/docs/2920.pdf.
- (3) Critical Ecosystem Partnership Fund, https://www.cepf.net/node/1996.
- (4) Statistical Committee of Armenia, https://www.armstat.am/am/?nid=12&id=01001.
- (5) Law on exempting business activities in border adjacent communities from taxes, https://www.gov.am/files/docs/2920.pdf.
- (21) Armenia: South Corridor Tourism Development Strategy, World Bank, 2015, http://documents1.worldbank.org/curated/en/528101467988937597/pdf/103149-WP-P146596-Box394855B-PUBLIC-Armenia-Tourism-Corridors-Development-Strategy-March-2015.pdf.
- (22) Armenia’s National Development Strategy 2014-2025.
- (23) Ministry of Environment of the Republic of Armenia, http://mnp.am/.
- (24) UNDP interviews with stakeholders, 2019.
- (25) World Economic Forum’s Tourism Competitiveness Index, 2019, http://www3.weforum.org/docs/WEF_TTCR_2019.pdf.
- (26) Tourism Development Concept, https://www.mineconomy.am/media/6480/Tourismdev.pdf.
- (27) Ministry of Economy and World Bank, Local Economy and Infrastructure Development Project, PPP projects in tourism https://mineconomy.am/media/13614/tragir.pdf.
- (28) Law on Tax Exemption of Economic Activities at Border Regions, https://www.arlis.am/DocumentView.aspx?docid=94419.
- (29) Law on Licensing, https://www.arlis.am/DocumentView.aspx?DocID=150834.
- (30) Government Decree No 2408-N of 29 December 2005 on Construction and Demolishion Permission, https://www.arlis.am/DocumentView.aspx?DocID=22687.
- (31) FDI Sector Scan, Tourism Armenia, World Bank, 2018, https://documents1.worldbank.org/curated/en/641391561524705078/pdf/Foreign-Direct-Investment-Sector-Scan-Tourism-in-Armenia.pdf.
- (32) My Armenia Project, Smithsonian Institute and USAID, https://myarmenia.si.edu/en/about-us.
- (33) Ministry of Economy, Tourism sector information, https://www.mineconomy.am/page/89.
- (34) Social Snapshot and Poverty in Armenia. 2019, Statistical Committee of Armenia, https://www.armstat.am/am/?nid=82&id=2217.