The Social Problem:
Historically, development and investment decisions in coastal resort communities have had mixed results for local populations. While coastal development has generated some social benefits – such as opportunities for employment and education – other problems have affected the community, including seasonal unemployment, health concerns, and the inequitable distribution of economic benefits. Furthermore, increased pollution and resource depletion have stressed ecosystem services and negatively impacted local communities. A recent study conducted in Mexico assessing the environmental impacts of coastal development showed that wastewater discharge, habitat destruction, and other ecological damages in the coastal zone are widespread; in turn, these impacts affect the quality of life of coastal residents and visitors. The Mexican government has responded to these issues by adding more stringent tourism regulations, however, varied levels of resources and enforcement have not adequately addressed these problems. This presents a need for developers and investors to play a central role in determining how coastlines are developed and how to simultaneously secure benefits for themselves, the local community, and the environment.
The Market Problem:
The market for socially responsible investments (SRI) is growing rapidly; by 2005, total SRI assets had grown to $2.29 trillion, or just under 10% of all assets under professional management in the U.S. As a consequence, an increasing number of indexes and assessments have been developed to inform investors about the best allocation of SRI funds – such as the Goldman Sachs Energy Environmental & Social Index and the Calvert Social Index. However, the niche market of responsible property investments (RPI) remains largely under served. In general, the perceived risks and uncertainties due to limited access to adequate and reliable information have kept this investment market potential from being fully realized. Traditionally, SRI analysts have focused on a corporation’s overall record and not on the management practices in specific developments in real estate investment funds. These analysts need a more refined definition of RPI opportunities—“what are the criteria for responsible property investment?”— and a standardized metric for comparison. This metric would allow investors to compare investment opportunities and would create financial incentives for developers to implement environmental and social considerations beyond legal compliance. Finally, the current investment structure lacks a specialized third party to analyze information about benefits and impacts of a responsible tourism development and objectively recommend investment opportunities.
Our Solution:
Coastal EcoVentures has developed a proprietary Scorecard that will help: 1) investors identify and capitalize on financially sound and sustainable projects, and 2) developers to meet green objectives and increase marketability. Our Scorecard is based on the globally standardized Global Sustainable Tourism Criteria (GSTC) with expanded criteria to include sub-issues relevant to coastal developments. Our methodology analyzes the environmental and social performance of a development, and its effects on a project’s financial, risk, and management profile. Our criteria are measured with metrics (“performance indicators”) and weighted to establish an overall score for the project. The methodology thus provides a way to compare the performance of tourism developments competing for scarce investment capital in order to steer investment capital towards the most environmentally and socially beneficial projects.
Our value added will be based on conducting detailed, measurable, and customized analysis specific to coastal environments. Our proprietary Scorecard, the EcoValuator, enables us to differentiate similar projects according to environmental and social performance indicators. We then communicate to investors how these indicators effect a project’ financial, risk and management profile. Developments that successfully address these considerations will, as a result of being evaluated by Coastal EcoVentures, have a competitive advantage over other developments. Coastal EcoVentures will build relationships with investors and developers interested in socially responsible development projects, and create strategic partnerships with non-profit organizations, corporations, and government agencies in order to best address the issues of coastal land use and to secure our market position.
