The Road to Machu Picchu ... and Beyond

Economics Photography

My younger brother and I are pretty seasoned travelers. We've soaked at luxury rentals in Malaysia, gone on safari in Tanzania, dogged along in package tours in Tuscany, and slept in eco-lodges in Galapagos. But this past winter, on what should have been a pretty standard trip to Machu Picchu in Peru, we got a taste of some of the harder realities of tourism.

After heavy rains threatened the climax of our journey, we finally made it to the fabled, ancient site of Machu Picchu, where we took our cursory afternoon hike around the magnificent grounds, and returned to the train station to await our return to the provincial capital of Cusco. In the short time we had been sightseeing at the ruins, however, the same rains that had delayed our arrival had washed out the train tracks—the only means of departure from the small town of Aguas Calientes at the base of Machu Picchu. We, along with thousands of other tourists, suddenly found ourselves stranded for five nights in the Andes Mountains.

While many backpackers camped in the town square and took advantage of the meals provided by the Peruvian government, my brother and I were fortunate enough to enjoy the comfort of a hotel all week. We quickly befriended Henry, a hotel employee, who took us to his favorite bars and restaurants in town and kept us abreast of the complicated evacuation procedures making slow progress. Several national agencies and governments were working together to deliver supplies to the town and coordinate an airlift evacuation of the tourists and residents. Markets closed and businesses boarded up as the entire town—entirely dependent on tourism—prepared to leave. With the link to Machu Picchu washed out, the Ministry of Foreign Commerce and Tourism was projecting about  $1 million USD in revenue losses every day.

On the final day of the evacuation, the remaining tourists and residents gathered for a long wait to be airlifted out of the valley. As we huddled for warmth in the mass of people, my brother and I again spied our friend from the hotel staff near the beginning of the line, where he had secured a spot by arriving several hours earlier. Although Henry was excited to return to his young wife and daughter in Cusco, he no longer had a job at the hotel, and he doubted that he would be able to find work elsewhere. He’d been happy to find a job in hospitality, which he thought would give him the opportunity to acquire skills like English language and business management, but these opportunities had failed to materialize. We bid him a hasty goodbye as the local officials pushed a mass of tourists to the head of the evacuation line.

A few days later, we learned that the government had failed evacuate the townspeople of Aguas Calientes. Henry and hundreds of others had to walk the roughly forty miles from Aguas Calientes to Cusco, including the stretch to the town of Ollantaytambo deemed too treacherous for tourists to attempt on foot—several people drowned while trying to cross the same raging river that had swallowed a portion of the railroad.

The government's apparent abandonment of the locals troubled my brother and me deeply. Henry and his friends and fellow employees had taken such good care of us in town—they delivered sewing accessories to repair damaged clothes, ensured we had food and water, and even brought us coffee as we waited for the helicopters that were to eventually leave them behind. But we understood that this evacuation policy was done to protect the most prized components of the $2 billion tourism industry—the tourists.

For developing countries such as Peru, the tourism industry introduces complex issues of economic development and sustainability. On a small scale, individual vacationers (like my brother and me) provide immediate returns by  introducing foreign capital into local service industries. In a sense, we could be viewed as small-scale investors because we represent foreign capital with a potential to attract other small-scale investments. Yet  our future impact on Peru's economy will be limited to the one or two friends who may be inspired by our experiences to also visit the country…  maybe… someday.

On a larger, more long-term scale, tourism in newly industrializing countries presents critical opportunities to lay the foundation for regional economic development by encouraging investment in related sectors (such as telecommunications and education) and the human capital needed to support them.

Next-Generation Tourism

As travelers become increasingly aware of the impact of their consumer choices, both at home and abroad, travel agencies have responded in kind by modifying their products and marketing strategies. Tearfund, a leading relief agency based in the United Kingdom, reports1 that over the past decade, what started as a movement toward ecological sustainability has evolved into a movement toward economic sustainability. Tourists want to reduce their environmental impact while maximizing their capital impact–and when choosing a developing country rather than a luxury destination, many travelers seem instinctively aware that their vacation dollars go farther in terms of both personal value and next-generation potential. One of the greatest impacts of what University of Kent scholar Mark Hampton calls the emerging “backpacker economy” is  the desire to reduce economic leakage—the failure to keep tourist dollars within the local economy—through consumption of regional goods and services.

Economically sustainable tourism is difficult to promote because it is not easily defined. While we can measure environmentally friendly practices with carbon emission monitoring and preservation of natural resources, economic sustainability is less objective and cuts across several disciplines. (In and of itself, the idea of economically sustainable tourism seems paradoxical:  localized economies cannot become sustainable through the traditional definition of reducing dependence on foreign capital.) The challenge of economically sustainable travel is not to reduce dependence on foreign capital, but to introduce capital in a manner that produces sustainable economic development.

A central problem in developing economies is the uneven distribution of capital. While the tourism industry employs great numbers of low-skilled service workers from a local workforce, newly industrializing countries struggle to disburse capital gains to its poorest constituents. Globalization theorists caution that regions where economic development outpaces social development face greater hurdles in their struggle for endogenous economic growth. In such economies, where the local pool of labor is not equipped to handle more skilled positions in management, finance, and technology, the labor force pulls in outsiders. Offering higher-skilled (and higher paid) positions to those outside the local labor force creates great ripples in the economic geography. Along with this capital leakage comes a host of issues related to efficiency, regulation, and uneven development of human resources, as most decision-making follows the flow of capital to often remote corporate locations. This off-shoring of decision-making results in a top-down diffusion of both capital and culture, the latter being the very commodity at stake. Implementing local educational programs for workers to develop skills such as foreign languages and business management is critical to converting short-term tourism gains to long-term investments in human capital and helping to reduce economic leakage.

One of the most promising aspects for newly industrializing countries is concurrent growth in companion sectors. Advances in tourism and technology are mutually beneficial, but long-term technological progress requires more social investment than short-term tourism development. Healthy economies depend on flexible specialization or diversity to adapt and grow, and the relationship between sectors (like health and education) relies on the development of solid networks. But the most important factor in the endurance of such networks—above money, human capital, and natural resources—is trust and reciprocity. If the government continues to prioritize its short-term, fixed returns over the welfare of its own people, the state loses in multiple ways. The most basic components of its economy—the workers—will be unprepared for future development, their faith in the system will be shaken, and the networks upon which healthy economies rely will be unstable.

In the End

Tying these ideas to my own trip to Peru: it is not enough, for example, to restrict the number of visitors to Machu Picchu, to instill quotas for local workers to staff the hotels, to require all the restaurants in town use local food products, or to upgrade the transportation infrastructure. Although all of these actions would contribute to short-run economic gains, the long-term sustainability and growth will always be compromised by weak ground-level links between the people and the agencies that are supposed to look out for them.

And this is why the situation in Aguas Calientes made me question the sustainability of Peru's tourist economy. While tourism is certainly not the only industry subject to such natural catastrophes or other marketplace pressures, the dangers pose economic challenges that may not be present in more fully developed economies. Issues of regulation and agency coordination come under greater scrutiny in less industrialized countries, and thus demand greater organization and guidance in economic planning.

Now that the railroad has been repaired and tourists have returned to Machu Picchu, hopefully the government can take the next steps to convert the coveted tourist dollars into long-term sustainability for the truly most important natural resources—the Peruvian people.

September 3, 2010

Photos copyright Stephanie Lim

1. See, for example, "A Call to Responsible Global Tourism," Tearfund (January 22, 2002).

Latin America, Peru, Tourism