ECONOMY OF THE ISLAND OF GRAN CANARIA
The Canary Islands are situated between 28 degrees north and 15 degrees west, which comprehend the subtropical belt. Due to the trade winds the north of the islands is very humid, with lots of precipitation; meanwhile the south is more desert. In the 15th century the Canarias were conquered by the Spanish and they exchanged the products with the natives, who until then used agriculture only for self sufficiency.
The economy of the islands was based on three fundaments:
1. Number and quantity of resources available on the island;
2. Commercial relations with other continents;
3. Number of inhabitants.
There are some intrinsic characteristics to the island territories which can be divided into strengths and weakness, like you can see in the next image.
Strengths Weakness
Landscape
Ecologic value
Geo-strategic value (economic or military)
Clime
Extends littoral (that favors tourism and fishing)
Tourism
(the risk of massive tourism)
Territorial fragmentation
Reduced dimension – that implies few natural resources
Economic development is dependent of natural resources
Dependence on infrastructure of transport between islands and continent
Geographic localization is a conditioning to the competitive of some economic activities (coast of transports)
Gran Canaria is an island situated on east of Atlantic Ocean near to the coast of Africa. The trade winds, the Gulf Stream and Gran Canary’s geography make mild climate all over the year, which favours some economic activities like tourism.
The economiy of Gran Canaria is depents on oil. The price of oil is that cheap on the Canary Islands because they don’t have to pay any taxes, which are covered by the government. Actually the local production of energy has this distribution: 96% are produced by termical power plants. The the main used source is oil, only 4% of the energy is coverd by renovable energy (eolic production). For the external use of energy, like transport, the energy comes only from fossil power, (transportation to get to the island – boats and aeroplanes) This shows how the islands economy depends on oil.
Because of the island situation all the tranportacion is made by aeroplane or boat. People come monstly by aeroplane and goods (99,8% ) come by boat.
The tourists, which infulence the islands` economy in a positiv way, are dependent on oil as well, to come to the island.
About the food supply, Gran Canaria have an internacional production and the products that are mainly exported are bananas, tomatoes, cocumbers and also flowers, ornamental plants and plants grown from cuttings (ISTAC), but also the exportation is decreasing in the last years so the economy is more dependent os tourism.
It’s necessary to considerer that the price of the imported products may have changes if the price of the oil increases (which is happening now).
The highest share of working population is employed in the services sector, of these 81% only 30% works directly in the tourim, but also other business have indirectly profits related to turism (like Intern Administracion).
About Gross Internal Product it’s the similar situation, only there the construction sector it’s the second most important – as I say because it’s linked to tourism.
HISTORY OF TOURISM ON THE ISLAND OF GRAN CANARIA
In the second half of the 19th century, Gran Canaria started gaining popularity in European circles as an attractive destination for recreational holidays; a place for people in need of a rest. The first hotel on the island was on the Hotel Santa Catalina (1890) in Las Palmas de Gran Canaria. This is the only hotel dating from the early beginnings of tourism that still open.
In 1912 the Island Council Law was brought into force and the foundation stone for the development of the tourism industry and its related services was laid. This led to a numerous infrastructure projects such as the construction of the airport, water reservoirs and the principal motorway network of the island. During the first half of the 20th century the wars (World War I and II and the Spanish Civil War) impeded further growth. Not even the opening of the then-called Gando Airport (Gran Canaria’s first airport) in 1930 could spark a new boost to the tourism industry. It was only in 1957 when an aircraft from the Swedish airline TSA landed on the island with all of its 54 seats completely booked that tourism really started taking off. This was the first of many charter flights to arrive on the island from that date on.
After Strauss act idea and mass building in the tourist boom of the 1960s, tourism became the main source of income for the island, making Gran Canaria one of the most sought-after tourist destinations in the world.
So Maspalomas is the oldest touristy town in the south coast of Gran Canaria in the Canary Islands. In 1960`s there begun to build only hostels, but in low density. There were around 70 000 – 80 000 of tourists. Later, in 1970’s they had begun to build apartments and hotels. In this time buildings had around 4 - 5 floors. Later was started the age of bungalows. It was similar time like in 1960 (low density), with lower buildings. The entrance of Spain in the EU made possible new construction of luxury hotels, parks, golf courses, services centres, wellness centres. Around the year 2000 there was accepted new act for tourism, because of which they stopped giving licenses for new hotels, but it lasted only until the year 2004. Nevertheless, the buildings for which the licenses were given before and after the act haven’t been constructed due to the crisis.
The island is visited by tourists from different countries. The most of them come from Germany, United Kingdom, Sweden, Denmark and Finland. The highest visit is observed from August till December.
From the 1960s, when there was around 70000 – 80000 of tourists, the number was rising until the Global Economy crises in 2008. From this time tourism on Gran Canaria is decreasing. So tourism has grown from less than a hundred visitors a year at the end of the 19th century to around 3 million of visitors per year in the beginning of the new millennium. In that time the tourists were coming to the southern sand beaches, which in combination with the dunes in that part of the island have brought more wealth to Gran Canaria than banana plantations could ever have done.
CURRENT TOURIST SITUATION ON THE ISLAND OF GRAN CANARIA
According to the history and the statistics that my colleague had explained, we’re going to explain which are the external also geographical influences on this economic sector. We have to say that these elements are stronger in Gran Canaria case because we are on an island, and this complicates all the aspects. We’re going to make a division between positive and negative influences:
- Positives:
- It’s a safe destination, compared for example with the terrorist bomb in a touristic place en Morocco
- Accesible, it’s very near of the principal markets: we can find low cost flights from many places in Europe and it’s reachable in only few hours
- Experience, GC has many years of experience in the tourism sector
- Negatives
- The global crisis have an effect on the tourism not only in the numbers of visitors, but also in consumption - the tourist who decide to come to the island spend less money, stay less nights and change the hotel for the apartment
- Dependence on the oil price
- New competitive offers with low prices and good service, it promotes that the tourist industry in GC have to put competitive prices in order to fight for more tourist
- The following two influences have positive and negative consequences, the infrastructure and more demanding tourist. The positive consequences of infrastructure are: we can offer very good infrastructures (airports, ports, accommodation), but the negative ones are that are no new tendencies and the buildings are old fashioned. New tourist stimulate new offer and work places but many existing structures and services become obsolete
So, what are we doing now? we have different touristic typologies, the most important is sun and sand, environmental tourism, for retired people, young people,… we have to try that all this people spend more money on the island in order to increase our profiles offering new activities to complete the touristic experience: thematic and aquatic parks for the families, adventure sports for youth people, health services and adequate accommodation for retired, visiting natural parks for environmental tourist… we need to know what they need, differentiate between the groups and offer what they expect. This is the diversification and this is the future.
FUTURE POSSIBILITIES
According to the “Tourist model of the Canary islands 2020” the reasons for the changes that are needed in the tourism of the Canary Islands are world economic tendencies, growth of the tourism sector at the global level, reactivation of proximity tourism (with shorter stays and lower budget), new tourist destinations that are emerging, changes in the distribution of expenditure, new models of tourism development, the impact of new information technologies and the creation of the culture of innovation in the tourism sector.
The other important factors that influence tourism, and with that the economy of Canary Islands, are the variety of the tourist offers, the consolidation of the low cost flight companies, aging of the population, decrease of family traditions, new profiles of tourists (activity of the elders, metro sexual, homosexual, business tourism), changes of the organization of the trips and also new strategies of online marketing.
Random interviews made with tourists in the area of Maspalomas showed that they are mostly satisfied with the local offers. Nevertheless, some of them expressed concern about the lack of entertainment in the bungalows and the accumulation of garbage as a consequence of mass tourism. However, most of them were complaining about the sand disappearing from the beaches on the side from where the ocean currents are taking it away, and due to that process there are more and more rocks on the surface. Some of interviewers even claimed that due to that they are probably not coming back next year. So we can look for some basic changes in these results, for example more entertainment offers, looking for solutions for the damaged beaches and improving the system of maintenance of the area.
Although the Canary Islands have recorded a 12 % increase in tourism in the first three months of the year 2011 , which may be attributed to the crises in the countries of North Africa, it is possible that the tourists who now prefer more secure destinations, will return to North Africa after the crises end and that the tourism crisis in the Canaries will worsen. This scenario can effect severely the Canary Islands, because we already know that the tourism has the most important role in the local economy. They would probably need some increased subventions of the government and it would cause some derilict areas, lack of money for maintenance of the area which would attract the tourists even less than before, therefore creating a sort of an enclosed circle. However, there are possible solutions for decreasing the vulnerability of the islands’ economy. The first is the solution to the actual tourist crises. The main key to attract new tourists and keep the actual ones is in diversification of tourism and in going from using the old infrastructure to building new, diversifying the offers. Because the profile of tourists has changed from the beginning of the development of tourism, there have to be changes introduced also in the offer. So the adaptation to the actual market is needed. For example there are more experienced tourists that come looking for specific offers. Due to the aging of population there is an important demand of retired people looking for a calm destination with a pleasant climate, that Canary Islands certainly have. Actually, they go even further than that, because they are getting more active and interested in special offers adapted to their needs. Lately there are a lot of experienced travelers that try to avoid mass tourism and find special alternative offers. Usually they are interested in rural tourism combined with sporting offers. For example hiking tours, renting bicycles, climbing, mountaineering… already from the end of the dictatorship in Spain there tourism dedicated to homosexuals, especially gay couples on Gran Canaria has been developing, so there are possibilities of continuing and developing the offers for them and also putting on the market some offers for lesbian couples, which for now are missing. There is also a possibility of taking advantage of the new built stadium and sport infrastructure which can be used for professional sport tourism.
Lately the telecommunications and logistics have been recorded as a new emerging source of incomes. The main factor for it is the location of the Canary Islands and a new emerging African market which in the future will be gaining importance. So the Canary Islands are turning into the centre of the connections with Africa, and have already been concentrating some foreign companies (for example from United States of America).
The basis of every activity is energy. For an island like Gran Canaria, it’s important to manage the production of the energy and to aim towards self-sufficiency. As we already know its main source is oil, which represents a very vulnerable factor in the economy. A very small part of energy is produced with alternative renewable source of energy (aeolic energy). For now the system is working due to special tax policy of Spanish government which covers some of the expenses of oil but the question is what would happen in case the oil price rises. This way the island has cheap fuel prices, that are much below the European average. If the oil price increases further, it is possible that the Spanish government will not be able to compensate the loss of taxes anymore, and it would have a serious impact on the community. The island’s economy would decrease, it would cause rising prices and also reduce consumption. If the prices of transport rise, the tourist destination would not be viable anymore.
A new energy project which they will start the next year represents a partial solution to this problem. It consists of an aeolic hydroelectric pump storage system in which they will use aeolic energy for pumping water from the Soria dam to Chira, where it will be stored and later transformed to hydro-energy. With this they are planning to cover 15 % of the produced energy. Furthermore, there is a plan to enlarge the system to supply from 55 % to 80 % of the energy. Moreover, there is a possible plan to use aeolic energy for desalinization of seawater which could then be pumped to the dams.
Aeolic hydroelectric pump storage system between the dams Chira and Soria
www.canarias7.es
Due to the dependence on the price of oil its increase seems like a chance for searching for possibilities of alternative energy. There are plans for purchasing more aeolic power plants, including offshore wind farms.
Beside exploiting the wind and hydro energy they are also planning to install photovoltaic power plants, which can be used best in the south of Gran Canaria. Another new energy plan suggests producing energy using the power of the waves, especially in the north of the island.
However, the volcanic island has a huge source of energy, which is its relevant specialty – the possibility of using geothermic energy. Unfortunately, and very surprisingly, there are no existing plans whatsoever for exploiting it. The government have thought about it and for reasons which are totally inexplicable, came to the conclusion that the best place for this is the island of Lanzarote, where due to the existing National park it cannot be done. But there was no contemplating the same possibility on Gran Canaria, which has good possibilities even though it may not be the best.
With all these alternative sources of energy it is planned to enlarge its current share from 4 % to 20 % by the year 2020 (regarding the Kyoto protocol), which represents a great difficulty for numerous countries, and even more so for isolated islands.
Fossil energy on the Canary Islands has always been a resource which they had to import from foreign countries. But the discovering of a gas field in the ocean between Morocco, the Canary Islands and Western Sahara, changes the condition of the island’s energy sources. Several oil companies are interested in drilling this oil. Kosmos, a private American company, is considering the beach and valley of Agando in Tuineje, on Fuerteventura, as a base, believing it to be the best option for political safety and tax reasons. An official approach has apparently been made to the authorities of the Canary Islands and to Madrid. The position of the archipelago in this case has two sides. On the one hand the island could have incomes from the company seat. On the other hand it’s difficult to keep diplomatic relations with both bordering countries. This opportunity for economic success creates an ethical problem for these islands because Morocco and Western Sahara have been in conflict for years. If the gas belongs to Western Sahara it will be essential for that country’s economy, but the limits of the gas field are not yet certain. In case of a conflict any of these three countries can take the gas for their advantage causing a difficult political situation for the islands (www.wsrw.org). However, the government of Gran Canaria does not admit to having plans regarding these gas field close to Africa which could present a possible solution for the energy and economic question of the island.
So after knowing all these facts about the economic situation of the island we can ask ourselves how is going to be its future? Will it be able to confront possible changes of prices of the oil? All we can assume for now is that due to the remaining high dependence on the oil it will probably remain very vulnerable.
Rebeca Maldonado
Ana Rosic
Barbara Lackner
Salomeja Lukaite
Carina Monteiro
Jose Ramon
