August 6, 2008 by Jennifer
The Costa Rican government has implemented plans to offset all of the country’s carbon dioxide emissions through budgeting, laws, and incentives. Measures include promoting biofuels, hybrid vehicles, and clean energy. Another key component of the national strategy is a “C-Neutral” label to certify that tourism and certain industrial practices mitigate all of the carbon dioxide they emit.
Under this certification system, tourists and businesses are charged a voluntary “tax” to offset their carbon emissions, with one ton of carbon valued at $10. The money is being used to fund conservation, reforestation, and research in protected areas. To augment the development of the C-Neutral program, the country is cultivating a carbon certificate market that aims not only to boost carbon capture and storage in the nation’s forests, but also help preserve their scenic beauty.
Carbon emissions trading credits are currently being bought and sold through the European Union Emissions Trading Scheme (EU ETS), on the Chicago Climate Exchange (CCX), and through private transactions. Participation in the privately run CCX market is strictly voluntary, and its offerings are much broader in scale and type than its large European counterpart. Investors are buying into this market for a variety of reasons, including increased profits from energy conservation savings, business opportunities in an emerging market, public relations, local mandates, and simple moral imperatives.
So far, the government has disbursed more than US$100 million to land owners who have become forest stewards. In Costa Rica, these lands are commonly called fincas de oxígeno (oxygen farms). With the favorable exchange rate between the US and Costa Rica, the time has never been better to invest in these lands - and to help save the environment while making a good profit.
Posted in Costa Rican Law | Tagged Environmentally Friendly Investing, Carbon Neutral, Carbon Credits | No Comments »
August 4, 2008 by Jennifer
“President Oscar Arias this week signed a $9.2 million loan from the Inter-American Development Bank (IDB) that will be used to finance sustainable development projects in the Sixaola River Basin on the Panama border. Costa Rica will contribute an additional $2.8 million to the effort, for a total budget of $12 million. (The Tico Times, July 18)
The Sixaola basin covers 2890 square kilometers (about 1115 square miles) stretching from the Caribbean coast to the Talamanca mountains in Costa Rica and the Central Mountain range on the Panamanian side. The area encompasses one of the last large tracts of nearly untouched forest in Central America, as well as coastal ecosystems such as wetlands and mangrove swamps.
The project will support the adoption of production practices compatible with the conservation and sustainable use of water, soil and biodiversity. For example, local communities will be involved in improving the management of micro-watersheds. The initiative will also promote alternative income-generating activities based on the sustainable use of natural resources. Ecotourism and infrastructure improvements will also be a focus for the program, with one goal being to tap the economic development potential of the watershed by identifying alternatives for production diversification and opportunities to create permanent jobs.
“With a little help,” Arias said in the speech, “Sixaola can take advantage of its enormous tourism potential and transform it into employment for its young and earnings for its families.”
Posted in Costa Rica Developments, International Relations | Tagged IDB, Sixaola, Sustainable Development | No Comments »
July 31, 2008 by Jennifer
Risk-analysis firm Standard & Poor’s (S&P) has announced an improvement in Costa Rica’s risk rating, moving the country’s credit score up from stable to positive. This revised outlook is a result of a decline in the government’s debt burden, buoyant tax revenues and stable GDP growth.
“The ongoing improvement in the sovereign’s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica’s vulnerability to sudden external shocks, potentially improving creditworthiness,” S&P sovereign credit analyst Joydeep Mukherji said in a statement.
Costa Rica’s entry into the DR-CAFTA free trade agreement should provide protection for the economy should the U.S. economy worsen more rapidly than expected. It could also attract additional investment into the country and specialization in the isthmus over the next few years.
S&P also stressed the importance of the Central Bank’s capitalization project, which would help improve the effectiveness of its exchange policy, boosting liquidity in the country. The firm also noted that the ongoing improvement in the nation’s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica’s vulnerability to other sudden external shocks, potentially improving its creditworthiness even further.
Treasury Minister Guillermo Zuñiga called the rating a vote of confidence regarding the country’s fiscal policies to significantly increase tax revenue, decrease the need to rely on the stock market for financing, improve its long-term debt profile, and reduce debt pressure in the short term.
Posted in Costa Rican Law | Tagged Finance, Fiscal Policy, Risk Ratings | 2 Comments »
July 29, 2008 by Jennifer
Cacao - the “bean” behind chocolate - is native to the Western Hemisphere. (Pronounced “ka-kow,” it is often referred to as cocoa in the United States.) It originated in the Amazon basin and was domesticated throughout northern South America and Central America. Unlike Central America’s big cash crop, bananas, the native cacao plant thrives in shade. This means that chocolate farms are often characterized by a variety of plants and trees; a boon to animals looking for varied habitat.
According to the International Cocoa Organization, cacao was Costa Rica’s most important commercial crop between 1940 and 1970. Statistics from the United Nations’ Food and Agricultural Organization show that Costa Rica exported more than 10,000 metric tons of beans per year In the early 1960s, making our nation one of the world’s leading suppliers at the time.
A blight that struck soon after the boom of the 60s, coupled with the rampant deforestation that reached its peak in the 70s, nearly destroyed cacao production in Costa Rica. In 1999, only 130 metric tons of cacao was exported.
Today, a new trend in the US is helping increase the demand for the raw ingredient in chocolate. A July 16 article in the LA Times, “Chocolate Makers Focus on the Technology of Making Better Chocolate,” describes how boutique chocolatiers across the nation are creating their confections starting with the raw bean, rather than purchasing processed ingredients.
“There’s more interest in chocolate and there’s high enough prices for chocolate to make it feasible to have a small company,” says Steve DeVries of DeVries Chocolate in Denver. This means more interest - and potential profit - in developing cacao farms. Add to this Costa Rica’s Payments for Environmental Services program for overstory reforestation initiatives, and investors can enjoy not only potentially high returns, but also the satisfaction of supporting an environmentally friendly production alternative.
Posted in Uncategorized | Tagged Agriculture, Environmentally Friendly Investing | No Comments »
July 25, 2008 by Jennifer
Costa Rica is one of the world leaders in ecotourism; in fact, the Tico Times reports that the first six months of 2008 saw an increase of 12.5 percent (89,178 tourists) over the same period last year. Because of this, Costa Rica is increasingly investing in environmentally friendly practices.
In addition to the Payment for Environmental Services (PES) programs mentioned previously, the Costa Rican government, in cooperation with the World Bank, is implementing carbon sequestration programs. “Carbon Sequestration” refers to projects that offset harmful emissions by capturing and storing carbon in a manner that prevents it from being released into the atmosphere.
The “El General” Agricultural and Industrial Cooperative Project was created in the Brunca Region in 2005. The project’s goal is to counteract 588,565 tons of CO2e emissions by 2017 through the reforestation of 4140 hectares (approx. 10,230 acres) of privately-owned lands in southeastern Costa Rica.
This will be accomplished by means of a three-year plan to reforest 1200 ha (3000 acres) of pasture lands with natural regeneration and 2,490 ha (6150 acres) of pasture with forest plantations, while agroforestry systems will result in the planting of 180,000 trees on 450 ha (1100 acres) of crop and pasture lands. The project will also generate additional ecological, wildlife, and landscape diversity benefits in the project area.
Together with the PES programs, this project is helping Costa Rica reverse the deforestation crisis of the 1970s, when nearly 150,000 acres/year were being cleared. Initiatives such as these have enabled Costa Rica to achieve its distinguished position as the world’s only tropical nation with a negative deforestation rate.
Posted in Costa Rican Law | Tagged Environment, Reforestation, Carbon Sequestration | No Comments »
July 23, 2008 by Jennifer
Costa Rica is one of the safest and most attractive countries for foreign investment in Latin America. Costa Rica’s telecommunications and transportation infrastructure may be state controlled, but they are the best in the region, and the government is always on the lookout for foreign investment. The economy is being transformed from its long-time dependence on coffee, bananas and cattle to one centered on sectors such as microprocessors and tourism. With its investment-friendly climate and government policies, Costa Rica has become the “Silicon Valley of Latin America,” with companies such as Microsoft, GE, and Western Union making significant investments in the country.
Costa Rica’s numerous free trade zones and tax holiday opportunities are extremely enticing, offering benefits such as exemption from import duties on raw materials, capital goods, parts and components; unrestricted repatriation of profits; 100% tax exemption on profits for eight years, and 50% exemption for the next four years.
To set up operations here, a foreign company must appoint a Costa Rican resident as legal representative, with full power of attorney for all business matters related to the Costa Rican branch. A business license must be obtained from the appropriate municipality, and the company must register with the Costa Rican Revenue Administration, and be included in the Costa Rican Social Security system as an employer.
Although Costa Rica has no exchange controls as such, foreign currency received by resident corporations or individuals must be sold through a Costa Rican bank and capital imported for investment purposes must be registered in order to avoid difficulties with its eventual repatriation.
Posted in Costa Rican Law | Tagged Foreign Investment | 1 Comment »
July 21, 2008 by Jennifer
Export Free Zones are the mainstay of Costa Rica’s export and investment strategy. The Free Zones are, by definition, areas of extra-territoriality for customs and fiscal purposes. These facilities are created specifically to receive imported inputs or raw materials that are manufactured, assembled or marketed as products or services and subsequently re-exported.
Ease of operation, fiscal incentives, monetary and exchange facilities, excellent communications, reliable utilities, access to basic services, and a highly educated labor force provide a firm foundation for the dynamic development of companies set up under the Free Zone system.
Some of the advantages of operating in the Free Zones of Costa Rica are:
- 100% exemption from taxes on capital and assets
- Exemption from taxes on profits
- Independent management of foreign currency
- Streamlined processing of documentation required for installation and operations
The Export Free Zone Corporation provides investors with centralized services to carry out standard procedures. The Corporation is located in the Center of Foreign Trade.
In addition to the Free Zone system, Costa Rica beckons investors and businesses with its geographical location in the center of the Western Hemisphere, and with the productivity of its labor force. Education has always been a national priority in Costa Rica. With schooling both compulsory and free up to the high school level, the tiny nation’s 94% literacy rate is the highest in the Third World.
Posted in Costa Rican Law | Tagged Doing Business in Costa Rica, Free Zones, Investment | No Comments »
July 17, 2008 by Jennifer
Forests provide us with a range of essential goods and services ranging from our most basic needs - food, shelter, clean water, and oxygen - to cultural and recreational joys. However, these ecosystem goods and services are often taken for granted. While the economic value of certain natural products such as timber is reflected through global trade, this often isn’t the case for other environmental goods and services provided by forests.
Costa Rica has created a self-financed system of fees imposed primarily on fossil fuels that help support payments to farmers and landowners who make a commitment to preserve private forest land. This program of Payments for Environmental Services (”PSA” for the Spanish Pagos por Servicios Ambientales) was established in the late 1990s. Payments are issued to qualifying owners of private tracts of land in forested areas, in recognition of the ecosystem services their land provides.
The PSA program is a major advance in ecosystem investments, and ensures that those who benefit from environmental goods and services pay those who provide these services.
For example, users of water from a river running through an upstream forest, such as bottling companies or townspeople who extract drinking water from the river, pay those who manage these upstream forests to ensure a sustainable flow of this service into the future.
Sample payments under the PSA program:
- Conservation: $210/ha ($519/acre) in equal installments over 5 years
- Reforestation: $537/ha ($1326/acre), with 50% paid the first year, 20% the second year, and 10% over the remaining 3 years
- Forest management: $327/ha in equal installments over 5 years.
“To participate, landowners must present a sustainable forest management plan prepared by a licensed forester (regente).” The plan must outline the proposed land use, and include information on land tenure and physical access, plans for preventing forest fires, illegal hunting, and illegal harvesting; and monitoring schedules. Once their plans have been approved, landowners begin adopting the specified practices, and receive payments. (PDF link)
Posted in Costa Rica Real Estate | Tagged Conservation, Environment, Land Use | 4 Comments »
July 14, 2008 by Jennifer
As mentioned in a previous post, the World Economic Forum designated Costa Rica as Latin America’s most competitive tourism destination in 2007. This ranking is borne out as developments such as the Mandarin Oriental and the Cacique Resort are proposed and built in ever-growing numbers.
Costa Rica also led the rankings for Central American Countries of the Future for 2007/08, placing first in five of the seven categories - economic potential, business friendliness, human resources, quality of life, and development and investment strategy.
Overseas companies invested US$ 1.4 billion in Costa Rica last year, equivalent to 6.4% of the Central American nation’s GDP ($320 per capita) and one of the highest levels in all of Latin America. Multinationals such as Intel, Hewlett Packard, GlaxoSmithKline and Allergan have all made recent investments in Costa Rica.
These foreign investment levels are attributable to factors such as high education levels, government support for high-tech industries and, for European investors, the favorable exchange rate between the US dollar–the currency of choice for most international business transactions in Costa Rica–and other foreign currencies such as the Canadian dollar, the British pound and the euro.
And let’s not forget the “climate” part of the title! Costa Rica is often described as Paradise, and the mild climate in the central highlands and tropical coastal areas are a huge draw for immigrants and investors alike. Highs in San Jose average in the mid 70s(F) year-round with lows around 60 degrees, while the Guanacaste region sees similar lows, with highs in the lower 90s.
Posted in Costa Rica Developments | Tagged Development, Economy, Investment | No Comments »
The province of Puntarenas spans most of Costa Rica’s Pacific coast and is, after Guanacaste, one of the hottest regions for development in Costa Rica–which is, itself, among the world’s best investment locations. In 2007, Costa Rica was recognized by the World Economic Forum as the most competitive tourism destination in Latin America.
British property specialists David Stanley Redfern Ltd. are creating the Wyndham Garden development on Jaco Beach, located south of the provincial capital of Puntarenas. When completed, the project will include a 14-story beachfront combination condominium-hotel with 136 fully furnished one- two- and three-bedroom residential units. The resort itself includes infinity pools at three different levels; a fully equipped spa with sauna, steam and massage rooms; gym; restaurant, bar and snack bar; day-care center; jacuzzi and a host of other amenities. Construction is slated to begin later this year and conclude in early 2010.
For many years Jaco Beach has been an ideal destination for those seeking contact with Costa Rica’s natural beauty, breathtaking beaches and a surfer’s paradise, all while enjoying access to a thriving city life. However, most of the existing accommodations are at the budget to mid-range level. The Wyndham Garden at Jaco Beach is a step toward more upscale development in the area and will, no doubt, build interest in still more development in the region.
The closest beach to the Juan Santamaria International Airport, Jaco offers a wide array of retail outposts, restaurants and entertainment venues, and is a growing destination for family-friendly getaways, in addition to being a popular Spring Break destination.
Posted in Costa Rica Developments, Costa Rica Real Estate, Tourism | Tagged Jaco | No Comments »
