Tourism & its Impacts on the Economy & Environment

Overview of the Tourism Industry

Tourism is one of the most important industries for developing economies, and Nicaragua is no exception; the tourism industry has the potential to transform the country’s economy and drastically affect its environment, both positively and negatively.

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An image from Nicaragua’s Tourism Campaign

In 2014, more than 1.2 million foreign tourists visited the Central American country. Of the 1.2 million tourists, 60% came from other Central American countries, followed by 25% from the United States. While the tourism industry is booming, Nicaragua is still trying to shake its image of being “unsafe.” Since the beginning of Contra Wars in 1979, foreigners have viewed the region as too dangerous to visit. In reality, however, Nicaragua is actually the safest country in Central America and many people believe it has the potential to capitalize on its tourist industry and become the next Costa Rica.

Among the most popular attractions are: the city of Grenada, the Corn Islands, Lake Nicaragua, the country’s famous volcanoes, and Nicaragua’s beautiful countryside. To see Nicaragua’s natural beauty, please view the PRONicaragua video I included in my “Economic Impacts” section. While the video’s ultimate purpose is to attract investors to Nicaragua, it does so by showcasing Nicaragua’s most spectacular destinations.

Economic Impacts

Tourism has steadily increased over the last 20+ years, and as a result, has contributed immensely to Nicaragua’s economy. Tourism has impacted Nicaragua’s economy in three key places: GDP, employment, and investment.

In total, tourism accounted for 9.1% of Nicaragua’s GDP in 2013. It contributes to GDP in three distinct ways:  direct contribution (accommodations, transportation, tourists’ purchases, etc.), indirect contribution (govt. spending), as well as induced contribution (spending by employees). Moreover, economic projections show tourism’s percentage share of GDP increasing over the next 10 years at a rate that will rank it near the top 30 in the world.

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Figure 1. Tourism’s Percentage Share of the Economy

Nicaraguan tourism accounted for 7.9% of employment in 2013 and is expected to increase to 8.8% by 2024 (ranked 106th in the world). It is important to note that one negative aspect of tourism-related employment is that is often seasonal, and therefore creates many part-time jobs, and only a small number of full-time jobs.

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Figure 2. Tourism’s Percentage Share of Employment

As a result of increasing visitors, the government and outside companies have increased their investments in new buildings, public spaces, and tourist information. Below I have included a video from PRONicaragua, a group that is encouraging investment in Nicaragua’s tourism industry. The video’s goal is to display the natural beauty of Nicaragua that attracts tourists from all over the world and give a brief glimpse at the promising sectors in Nicaragua:


Tourism’s Economic Disparity 

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Figure 3. Hotel Distribution in Nicaragua

A very important note is that while tourism has brought the entire country much in the form of income, employment, and investment, most of this activity has been concentrated on the Pacific coast, specifically in Grenada. As Figure 3 shows, almost 75% of Nicaragua’s hotels are on the Pacific side of the country. While there are tourist attractions throughout the entire country, the autonomous regions on the Atlantic Coast boast tourism that often does not lead to significant economic profits; i.e. backpacking trips versus tourists who stay at hotels and eat at restaurants.

Environmental Impacts


Construction of a New Building in Nicaragua

While tourism has many economic benefits, it has also lead to significant negative impacts on Nicaragua’s environment. As more tourists arrive in Nicaragua, the government and private companies continue to build more infrastructure and encourage tourist activity. As a result, the following environmental issues have arisen:

  • landscape degradation and erosion as a result of new construction and tourists’ desire to collect shells, rocks, and fossils
  • air pollution due to increased transportation and electricity use
  • noise pollution due to transportation, including recreational vehicles and airplanes, and entertainment facilities
  • increased waste and the contamination of water because of sewage from hotels and boats
  • deforestation due to an increased need for supplies

While tourism has had negative impacts on the environment, it has also had a positive impact. As more tourists have begun traveling to Nicaragua, the government and outside organizations have put more thought into maintaining the natural beauty that brings many people to the country. Sustainable tourism, which promotes tourism that has positive impacts on the local environment, economy and people, is seen as a popular way to continue bringing in tourists while simultaneously maintaining the environment. Organizations such as Moon Travel Guides and Morgan’s Rock (http://www.morgansrock.comare just a few of the many organizations in Nicaragua that are attempting to attract tourists with environmental care in mind. These organizations promote tourist attractions, such as surfing or exploring the mountains of Nicaragua, while also encouraging its visitors to be conscious of their impact on the local area.

Furthermore, ecotourism has also become a popular way to preserve the environment and attract tourists to the region. Places like the Domitila Private Wildlife Reserve have formed to encourage visitors to explore the region while protecting the area. While tourism has had negative impacts on the environment, many outsiders are hopeful that sustainable tourism and ecotourism will delay the destruction of Nicaragua’s natural beauty.

In conclusion, Nicaragua’s tourism industry has had a significant impact on the country. More importantly, tourism has the ability to further improve the country’s economy and preserve its environment, but only if the country continues to take positive steps towards investing in the tourist industry and encouraging the industry’s growth.

For more information, please see my Sources page under the “About Nicaragua” tab.