By KEVA LIGHTBOURNE, Guardian Senior Reporter, kdl@nasguard.com

Prime Minister Hubert Ingraham told an international conference Wednesday that climate change has the potential to undermine tourism – the largest economic sector in the Caribbean and Central America.

"Tourism is for many of the small island states the primary economic activity on which their hopes for employment and foreign earnings are pinned, and tourism is hostage to the environment," Ingraham explained, while delivering the closing address to the 31st Conference of the Caribbean Basin held in Miami, Florida.

He said the threat of hurricanes, droughts, floods, landslides, earthquakes, tropical storms has risen, and their occurrence has increased both in frequency and magnitude in recent years, and urgent action is required to strengthen the quality and levels of participation at the international negotiations on climate change for small developing states whose ecological fragility makes them vulnerable to these threats.

Ingraham also noted that urgent action is required to get the level of sensitivity to this serious issue to the point where there is a consensus for action, consideration of the human and economic aspects of climate change and to secure support for natural disaster management in the small countries in the region.

"The ascendancy of tourism in the region highlights both a challenge and an opportunity, especially for the more open island economies in the region.

"Understandably, as these economies expand, the trade imbalance widens, which is presently being aggravated by the phenomenal increase in energy costs now occurring," Ingraham said.

And, he noted that the import-content of tourism spending is such that the opportunity must exist for expansion of the domestic productive capacity of many of these economies without adversely impacting the competitiveness of the jurisdiction.

Ingraham pointed out that the reduction of the import content of tourism can of itself be a major economic policy objective of the region. He also cited the adoption of a serious energy policy.

Ingraham informed that in 2001 domestic oil consumption in The Bahamas amounted to some $273 million or 15 percent of total merchandise imports of $1.856 billion; last year, 2006, it accounted for $706 million, or 27 percent of total imports of $2.621 billion.

"A reversal of this trend seems unlikely, and by the end of this year, the cost of domestic consumption of oil may well be at or close to one-third of total merchandise imports.

"This seems to be a level where alternative sources of energy make sense, and where it is sound economic judgment to revisit the energy efficiency of our lifestyles generally," Ingraham said.

He also spoke on the issue of globalization. The Bahamas' leader said small developing economies are likely to suffer more from the tensions resulting from globalization both because of underdevelopment which offers "less cushioning" from the effect of the transition process, and because the transition process itself is very likely to "demand a greater proportion of our entire economic process."

He said his is especially true for those adjustment problems related to trade liberalization where the benefits of preferential concessions enabled an industry to survive – an industry which might easily constitute 50 percent or more of a national economy.

"This is the reality of a number of our small Caribbean economies long dependent upon exports on preferential terms of a single product, be it banana or sugar for example," Ingraham said.

He explained that in these circumstances it may not be possible to persuade the nationals of these countries of the long-term benefits of free trade. And, Ingraham noted that it might be difficult under such circumstances to persuade a government to chose free trade as a policy.

"It seems then, that if small vulnerable economies are to be persuaded to more assertively embrace globalization and its attendant free trade movement, then their further economic growth and development outcomes must be more clearly defined and their citizenry must also be able to see the benefits clearly," the nation's chief said.

Another source of tension Ingraham pointed to that may arise from global economic integration, relates to the added premium it places on education and skills training and the consequential distinction it strikes between the prospects for the highly skilled and educated and the unskilled and poorly educated.

He charged that "this unevenness is accentuated by the increased mobility which globalization creates for the highly skilled and the well educated. That is itself a considerable challenge to small developing countries that are often unable to create the opportunities necessary to keep their best trained nationals at home."