Strengthening Sri Lanka’s Tourism Sector Against Climate Risks

The tourism sector is highly vulnerable to climate change, making accelerated climate action essential for resilience. Climate risks in tourism encompass environmental, economic, and social dimensions, impacting stakeholders at local, national, and global levels.

Sri Lanka's tourism sector is a vital pillar of the national economy, experiencing rapid growth. According to the 2023 Annual Statistical Report of the Sri Lanka Tourism Development Authority (SLTDA), the sector contributed 2.5% directly to GDP and generated 429,641 jobs. Any negative impacts on tourism due to climate change would have widespread repercussions, particularly affecting those employed in the hotel industry, as well as various affiliated sectors and livelihoods dependent on tourism-related activities.

Effective climate communication is crucial for making climate and sustainable finance accessible to all stakeholders. Clear communication aligns communities, businesses, and policymakers in mobilizing resources for a sustainable future.

Recognizing the importance of fostering dialogue, the Sustainable Development Council of Sri Lanka and the ClimaComms initiative of SLYCAN Trust jointly hosted the Climate 2.0 Dialogue today. This event brought together key stakeholders, including policymakers, regulators, insurers, tourism industry representatives, and financial experts, to explore innovative insurance solutions that mitigate climate-related financial risks. By examining best practices and challenges, participants aimed to identify strategies to enhance access to affordable and effective climate insurance.

The discussion focused on the accessibility of existing climate insurance products for the tourism sector, evaluating their affordability and availability for different types of tourism businesses, from large resorts to small-scale operators. Participants identified barriers such as high premiums, limited coverage options, and lack of awareness, along with recommendations for improvement and innovation. Additionally, the event explored opportunities for innovation in climate insurance products and models tailored to the specific needs and challenges of tourism businesses. Discussions highlighted the role of new technologies, collaborative approaches, and customized products in addressing the unique risks faced by the tourism sector in Sri Lanka.

The event was attended by representatives from key government institutions, including the Sri Lanka Tourism Development Authority, the Insurance Regulatory Commission of Sri Lanka, and the Sustainable Tourism Unit. Additionally, academics from the University of Colombo and representatives from major insurance companies such as HNB Assurance PLC, Union Assurance, Sri Lanka Insurance Institute, Ceylinco Insurance Limited, Softlogic Life, ActSure Labs, Milliman Sri Lanka, S G Actuarial Consultancy, and AIA Insurance participated. Industry collectives, including The Hotel Association, Sri Lanka Eco Tourism Association, Sri Lanka Tourism Alliance, Sri Lanka Wellness Tourism Association (SLWTA), Travel Agents Association of Sri Lanka (TAASL), and the Chamber of Tourism Industry - Sri Lanka, were also present.

The insights from this session will contribute to policy recommendations and industry guidelines, supporting the long-term sustainability of Sri Lanka’s tourism sector in the face of increasing climate uncertainties.