How tourists are bankrolling Island States’ conservation efforts

Island economies need about US$12 billion a year for climate adaptation but receive just over US$2 billion in international public finance

SPECIAL FEATURE | RONALD MUSOKE | Across the turquoise lagoons and coral-fringed shores of the world’s small island nations, nature is both a lifeline and a vulnerability. From the Caribbean to the Pacific and Indian Oceans, many island economies rely heavily on pristine reefs, white-sand beaches, and thriving marine ecosystems to attract millions of visitors every year.

Yet the same environments that sustain tourism, and national economies, are increasingly threatened by climate change, development pressures, and chronic funding shortages. Now, a growing number of island governments are experimenting with a simple but powerful idea: asking visitors to help pay for the protection of the very ecosystems they come to enjoy.

A new analysis by researchers Neel Inamdar and Peter Edwards from The Pew Charitable Trusts highlights how tourism-based environmental levies are emerging as one of the most promising financing tools for conservation in Small Island Developing States (SIDS).

Their report published on March 11 shows that carefully designed visitor fees; whether attached to airline tickets, hotel stays, or recreational activities, can generate millions of dollars annually for environmental protection and climate resilience.

A fragile paradise

The group known as Small Island Developing States encompasses 57 United Nations member states and associate members spread across more than 1,000 islands worldwide. Collectively, they are home to roughly 65 million people, yet their ecological significance far exceeds their population size. These islands contain about 20% of the planet’s biodiversity and 40% of the world’s coral reefs, making them critical guardians of marine ecosystems. But their geography also makes them extremely vulnerable.

Rising sea levels, stronger storms, coral bleaching, and coastal erosion are already reshaping many island landscapes. Tourism infrastructure, fisheries, and coastal communities are increasingly at risk. The challenge is compounded by economic constraints.

According to a 2025 Global Centre on Adaptation report, many island nations carry public debt exceeding 60% of gross domestic product, leaving little fiscal space for environmental protection or climate adaptation programmes.

Meanwhile, the economic structures of these countries tend to be narrow. Tourism, fisheries, and trade often dominate national income streams. When global crises disrupt travel—as seen during the COVID-19 pandemic—government revenues can collapse overnight. This leaves policymakers in a difficult position: balancing immediate economic needs against the long-term health of ecosystems that sustain those same economies.

The climate finance gap

The funding shortfall facing small island nations is stark. According to research by the Global Centre on Adaptation, island economies require about US$12 billion annually in climate finance to adapt to the accelerating impacts of climate change. Yet current international public adaptation finance reaching these countries amounts to just over US$2 billion per year—barely a fraction of what is needed.

Without greater investment, the consequences could be severe. The organization estimates that cumulative climate damages across island economies could reach US$476 billion by 2050. Leaders of island nations have long argued that the global financial system has failed them.

Hilda Heine, the President of Marshall Islands in the Pacific Ocean, warned during the launch of a recent adaptation report, that existing climate financing mechanisms often exclude the very countries that need them most. This, she said, is attributed to complex eligibility rules, long application processes, and stringent risk requirements that makes accessing funds difficult for small governments with limited administrative capacity. The result is a paradox: countries most vulnerable to climate change often receive the least support. In response, many island governments are turning inward—seeking innovative ways to mobilize their own resources. Tourism, it turns out, offers an obvious opportunity.

From visitors to conservation partners

Tourists already contribute significantly to island economies through hotel stays, restaurant visits, and excursions. But policymakers are increasingly exploring ways to connect tourism revenue directly to conservation. Instead of relying solely on general taxes or development aid, several countries have begun introducing earmarked environmental levies—fees specifically designed to fund nature protection.

One of the earliest examples comes from Jamaica, which established its Tourism Enhancement Fund in 2005. The fund is financed through a US$20 levy collected from airline passengers arriving in the country and a US$2 fee for cruise passengers. With visitor arrivals reaching about 4.5 million in the 2023–24 fiscal year, the system generated roughly US$60.5 million, with around US$17 million allocated to the fund.

While the funding does not always go directly to environmental conservation, it supports projects that maintain Jamaica’s tourism product—including infrastructure upgrades, community development initiatives, and improvements in environmental resource management. In effect, the system recognizes that protecting natural assets requires maintaining the broader infrastructure that supports sustainable tourism.

In the Pacific, Palau has taken an even bolder approach. Since 2020, every international visitor arriving in the country automatically pays a US$100 Pristine Paradise Environmental Fee, incorporated into the cost of their airline ticket.

The revenue is carefully distributed among several environmental priorities. Portions go to fisheries protection, local environmental management, airport infrastructure, and the country’s Protected Areas Network Fund. The largest share supports the Palau National Marine Sanctuary, one of the largest protected ocean areas on Earth.

Palau expects the fee to generate roughly US$7 million in fiscal year 2025, a significant contribution for a country with fewer than 20,000 residents. The policy is widely viewed as a model for linking tourism directly to conservation outcomes.

The Caribbean Island of Bonaire has implemented a two-part financing model. A US$75 visitor entry tax, introduced in 2022, replaced earlier room and rental-car taxes. The funds support sustainability initiatives across the island, including infrastructure improvements and environmental education programmes.

In addition, anyone using Bonaire’s waters—divers, snorkelers, swimmers, or kayakers—must pay a US$40 nature fee. That revenue goes directly to Stichting Nationale Parken Bonaire (STINAPA), the nonprofit organization responsible for managing the island’s national parks. In 2025 alone, the entry tax generated about US$14.5 million, while the nature fee contributed another US$3.4 million. For a small island, those funds can make a dramatic difference in conservation capacity.

Other Caribbean nations are quickly following suit. The Bahamas began collecting new tourism levies in 2024: a US$5 sustainability fee and a US$2 tourism enhancement fee for every arriving passenger. These charges are expected to generate about US$80 million in the first year, funding conservation initiatives and community development through the country’s Tourism Development Corporation.

Meanwhile, Aruba introduced a US$20 sustainability fee in 2024 as part of a broader effort to modernize wastewater infrastructure. The island is transferring management of wastewater assets to a specialized entity—Aruba Wastewater Sustainable Solutions—to improve treatment systems, reduce energy consumption, and restore the ecological health of nearby lagoons. Although detailed revenue figures are still emerging, Aruba welcomed more than 1.3 million visitors between late 2024 and late 2025, suggesting the levy could generate substantial funding.

In the Indian Ocean, the Maldives has expanded its environmental financing through a “green tax” on tourists. Beginning in January 2025, the government doubled the tax to US$12 per person per night for most hotel and resort stays.

Revenue from the tax flows into a national fund dedicated to protecting the marine ecosystem and improving infrastructure such as waste management systems and drainage networks. The Maldivian government expects the policy to generate about US$62.5 million in the 2025 fiscal year.

Building trust and accountability

Tourism levies alone, however, are not a silver bullet. The Pew analysis emphasizes that successful conservation financing requires strong governance systems and transparency. Visitors and industry stakeholders must be confident that the money they contribute is actually being used for environmental protection.

Clear earmarking of funds is critical. When tourists know their fees support coral reef restoration or marine protected areas, they are often more willing to pay. Another key mechanism is the creation of conservation trust funds—independent financial institutions that manage environmental financing outside direct government control.

These funds pool resources from donors, governments, and private partners and distribute grants to conservation programs. Because they operate independently and are subject to strict financial oversight, they can ensure funds are used for their intended purpose. Such institutions also play a vital role in linking global funding sources with local conservation projects, helping translate international commitments into tangible environmental results.

Engaging communities and industry

According to the report, another factor in the success of tourism-based conservation financing is stakeholder participation. Local communities, tourism operators, and government agencies must all have a voice in deciding how funds are used.

When communities see direct benefits—such as improved infrastructure, jobs in conservation programmes, or healthier fisheries—support for environmental levies tends to grow. The tourism industry also plays a crucial role. Hotels, dive operators, and airlines often serve as the collection points for environmental fees, making their cooperation essential. In many cases, the industry recognizes that protecting ecosystems is not just an environmental goal but an economic necessity. Without thriving reefs, clean beaches, and healthy marine life, the tourism product itself would quickly deteriorate. 

A model for sustainable development

The concept of using tourism revenue to fund conservation is not entirely new. But the scale and sophistication of these initiatives in island nations are growing rapidly. For small island economies, the approach offers multiple benefits, the researchers noted.

First, it creates predictable domestic funding streams, reducing dependence on international aid. Second, it aligns economic incentives: tourism growth directly increases resources available for environmental protection. Most importantly, it helps close the widening gap between conservation needs and available financing.

As climate change accelerates and international climate funding remains uncertain, island nations are demonstrating that innovative policy solutions can help bridge the gap. Their message is simple but powerful. If visitors come to enjoy paradise, they should also help protect it. And for the world’s small island states—on the frontlines of the climate crisis—that support could make all the difference.