CANCUN Case
          CASE NUMBER:         86 
          CASE MNEMONIC:      CANCUN
          CASE NAME:          Cancun Tourism

A.        IDENTIFICATION
1.        The Issue
     Cancun, once one of most unfettered tropical areas in Latin 
America, is today one of the most visited tourist destinations in 
Mexico.  Cancun is located on an island and is comprised of 
beautiful white sandy beaches, turquoise waters, an abundance of 
coral, and a lagoon that is home to a wide variety of indigenous 
species.  The resulting tourist industry extensively damaged the 
lagoon, obliterated sand dunes, led to the extinction of varying 
species of animals and fish, and destroyed the rainforest which 
surrounds Cancun.  More than 20 years later, the Mexican government 
has moved to limit projects along the coast in an attempt to prevent 
further damage to its already eroded environment.  On June 5, 1993 
President Carlos Salinas de Gortari signed an agreement that created 
conservation zones prohibiting further development.  

2.        Description

     The development of Cancun was instituted by former Mexican 
President Luis Echeverria Alvarez.  Echeverria catalyzed the 
development of Cancun as part of Mexico's long-term national 
development strategy.  On April 29, 1971, Alvarez issued a 
resolution to the ministry of foreign relations, authorizing it 
to "grant permits to credit institutions to acquire, as trustees, 
real estate intended exclusively for industrial or tourist activities 
within a 100 by 50 kilometer wide strip along the coastline.  One 
particular condition for this land provision was that the
acquisition be exclusively utilized for the use and enjoyment of 
individuals, who may be foreigners, either as trustees or as 
holders of registered, non-amortizable real estate certificates. 

     In Cancun, the government joined both ends of the island to 
the mainland with newly constructed bridges, paved roads,
drainage and electricity systems; all of this setting the stage for 
further "development."  The confluence of new resolutions and the
introduction of newly authorized infrastructure expenditures made 
Cancun an attractive place for foreign investment projects.  
 
     In 1974 the Fondo Nacional De Fomento al Turismo (FONATUR) 
was created to supply financial support, at nominal interest rates, 
for the construction of hotels, tourist condominiums, restaurants, 
and other facilities related to tourism.  Since 1974 FONATUR has 
financed approximately 85% of the hotel rooms built in Mexico 
since the agency was first created.  As recently as 1991, investors 
earmarked over $10.8 billion to spur the growth of Mexico's 
tourist industry over a period of three years.  The result of Mexico's 
plan to raise hard currency has been the construction of some 
19,000 hotel rooms, 1.5 million visitors per year, and
approximately 260,000 permanent residents in a once desolate 
area.

     There have been adverse environmental effects as a result of 
the governments drive to develop mega-projects along Mexico's 
coast.  Cancun's carrying capacity has been exceeded to a point 
where the benefits of tourism are beginning to significantly diminish. 
The carrying capacity of Cancun can be defined as the threshold of 
tourist activity beyond which facilities aresaturated (physical capacity), 
the environment is degraded (environmental capacity), or visitor 
enjoyment is diminished (perceptual or psychological capacity).  Among 
these three capacities the latter two are the most relevant to Cancun's 
current situation.

     The unchecked development of Cancun has considerably
contaminated its lagoon in the west.  Parts of the lagoon have been 
destroyed to make room for a major highway systems.  In addition, 
new strains of vegetation species have appeared which can not be 
cultivated in the indigenous environment.  This vegetation often 
washes onto the road producing foul smells which negatively affect 
tourist perceptions.  A nearby rainforest has lost some 60,000 
hectares simply as a result of the development plans.  The erection 
of hotels and restaurants not only destroys wildlife in the rainforests 
but hotel owners are also forced to import exotic plants to replace 
those which they have carelessly destroyed.  It is also apparent that 
in the areas where hotels were constructed, the surrounding environment 
suffered far more environmental damage during Hurricane Gilbert than 
those areas that were preserved in their natural state. 

     The construction of 120 hotels in 20 years has also endangered 
breeding areas for marine turtles, as well as causing large numbers 
of fish and shellfish to be depleted or disappear just offshore. In order 
to prevent further environmental destruction many Mexican conservation 
groups have lobbied the Mexican government to regulate the development 
of Cancun and other tourist hot spots.  The group of 100 and Grupo 
Ecoligista del Mayab (GEMA) see environmental protection as a means of 
protecting the future of tourism in Cancun.  The environmental lobbyists 
believe that further development in the area would only serve to strain the 
environment's carrying capacity.  It would also reduce the beauty of the resort, 
thereby, resulting in a decreased supply of tourists.   The development plans 
would be self-defeating without an effort to preserve natural resources.  

     Americans, who comprise the majority of visitors to the 
island, enjoy the warm tropical climate of Cancun, as well as the 
spectacular natural scenery (see  JAMTOUR case).  A recent trend 
among college students has been an annual visit Cancun during 
university spring breaks.  These students, like most tourists, are 
attracted by Cancun's beautiful beaches, crystal clear waters and water 
activities, such as snorkeling and scuba diving.  In an attempt 
to maintain the high number of tourists, Salinas was convinced of 
the need to preserve the indigenous environmental assets of the 
island.  Ultimately, it was pressure from lobbyists that led President 
Salinas to limit development along Cancun's coast in June of 
1994.

3.        Related Cases

     Keyword Clusters

     (1): Trade Product            = TOURism

     (2): Bio-geography            = TROPical

     (3): Environmental Problem    = DEFORestation

4.        Draft Author: Christopher Clowery  

B.        LEGAL Clusters

5.        Discourse and Status: AGReement and COMplete

     President Salinas agreed to "establish 45 zones along the 
Cancun-Tulum corridor -- development areas with densities of 5 to 
25 rooms per acre -- less than half of that allowed in Cancun, to 
a couple of conservation zones inland and directly on the beach, 
especially in the area of Tulum, in which nothing can be built."  
The accord restricts further development in designated zones.  
The agreement also reduces the densities of projects in the area to 
make them more environmentally sound.

6.        Forum and Scope: MEXICO and UNILATeral

7.        Decision Breadth: 1

     Although the law is domestic in scope it prohibits foreign 
investors from developing on the designated zones set aside for 
conservation.  Although the law is ex-post facto, its purpose is 
to limit further damage to the environment.

8.        Legal Standing: Law

C.        GEOGRAPHIC Clusters

9.        Geographic Locations     

     a.   Geographic Domain:  North America [NAMER]

     b.   Geographic Site:    Caribbean [CARIB]

     c.   Geographic Impact:  MEXICO

10.       Sub-National Factors: Yes

     The legislation involves local and regional zoning laws and 
places density restrictions on development projects along the 
Cancun-Tulum corridor.  The corridor is located on the Yucatan 
peninsula in the territory of Quintana Roo.

11.       Type of Habitat: OCEAN

D.        TRADE Clusters

12.       Type of Measure: Regulatory Standard [REGSTD]

     The law bans developers from settling in the conservation 
zones.  The law also sets standards for the densities permitted 
in areas deemed suitable for construction.

13.       Direct vs. Indirect Impacts: Direct [Dir]

14.       Relation of Measure to Environmental Impact

     a.   Directly Related:             YES TOURism

     b.   Indirectly Related:           NO

     c.   Not Related:                     NO

     d.   Process Related:              YES HABITat Loss

     The legislation has a direct impact on the future of
Cancun's environment.  It will serve to ameliorate the development process 
by forcing investors to scale down the size of their projects.  
In the conservation zones: sand dunes, fish, shellfish, sea turtles, 
trees and estuaries will be protected from future mega-development
projects.  Sea turtles will have their nests protected, less 
trees will be chopped down, sand dunes will be preserved and investors 
will be forced to build in areas distant to the fragile estuaries 
(see SHRIMP case).  Foreign investors 
will be forced to abide by the law, which was intended to halt 
the expansion of a tropical concrete jungle.  The future number of 
tourists will also be constrained by the new law which has 
effectively limited the number of hotel rooms with the new 
density requirements.

15.       Trade Product Identification: TOURism

16.       Economic Data 

     Tourism is Mexico's third largest industry with an industry 
Output: $4 million per day.   Mexico's tourism industry employed 
over 1.8 million persons in 1986.

17.       Impact of Measure on Trade Competiveness: LOW

18.       Industry Sector: TOURism

19.       Exporters and Importers: MANY and MEXICO

E.        ENVIRONMENT Cluster

20.       Environmental Problem Type: DEFORestation 

21.       Name, Type, and Diversity of Species:

     Name:          MANY

     Type:          MANY

     Diversity:     4,569 higher plants per 10,000 km/sq (Mexico) 
22.       Impact and Effect: MEDIUM and REGULatory

     Cancun is not an ecological disaster but laws were necessary 
to help maintain a healthy balance between the resorts and the 
surrounding environment.  The species of animals and fish that 
were encroached upon will be protected within the newly established 
conservation zones.  Limiting the size of development units will 
also help reduce the further destruction of the lagoon, sand 
dunes, and surrounding rainforests.

24.       Substitutes: Eco-Tourism [ECOTR]

     In zones where development is permitted under the new 
legislation, projects will have to be designed at much lower 
densities.  The result will likely be space-efficient low density 
hotels.

F.        OTHER Factors

25.       Culture: NO

26.       Trans-Border:Yes

     To the extent that the accord limits the projects of foreign 
investors who own the majority of hotels in Cancun, the domestic 
regulations in Mexico cross the border.  On the one hand the 
Mexican government has encouraged foreign investment on the coast 
while on the other hand they have asserted sovereignty via the 
new agreement.      

27.       Human Rights: No

28.       Relevant Literature

Boo, Elizabeth.  Ecotourism: The Potential and
	Pitfalls, (Washington D.C.: World Wildlife Fund, 1990). 
Bryden, J.M.  Tourism and Development: A Case Study of The  
	Commonwealth Caribbean, (New York: Cambridge University 
	Press, 1973).
Cohen, E.  "Impact of Tourism on the Physical Environment," 
	Annals of Tourism Research 5/2, 1978, 215-37.
Gayle, Dennis and Jonathan N. Goodrich, Eds.  Tourism Marketing 
	and Management in The Caribbean, (New York: Routledge, 
	1993).
Frueh, Susanne.  Problems in a Tropical Paradise: The impact 
	of International Tourism on Cancun, Mexico, Masters Thesis, 
	(University of South Carolina, Columbia S.C., 1986).
Pearce, Douglas.  Tourist Development, (London: Longman Group 
	UK Limited, 1989).


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