Investment in paradise, but at what price? Gentrification in Central America, Costa Rica

Vanessa Rojas Hedström
7 days ago
6 min read

by Vanessa Rojas Hedström

Palm trees, untouched wild beaches, and the promise of a simpler life sounds like something to discover, visit, and maybe even move to. Costa Rica and many parts of Central America are often sold as tropical escape places where worries and routines melt away and life slows down, but behind all this lies a complex reality. In this article, we will analyze this and explore different layers to understand who is benefiting from the growing foreign interest and tourism in countries such as Costa Rica.

STOP GENTRIFICATION graffiti. Wikimedia commons

What is touristification?

Tourism is one of Costa Rica's main sources of income, and Costa Rica's Ministry of Tourism reported an increase of 7.7% in tourists coming to the country in 2024. That is approximately 2.6 million people per year. Costa Rica is dependent on tourism, so these numbers are celebrated by the government. 8.2% of Costa Rica's GDP comes from tourism, which makes it one of the most common sources of employment for the population. This makes many families dependent on the tourism sector.

With the increase of tourists to a country, a phenomenon called tourification follows. María García Hernández and Manuel de la Calle-Vaquero from the University of Madrid define the term tourification as “...The process of transformation of a place into a tourist space and its associated effects.” This means that the infrastructure, places, character, and attractions are created and developed with the vision of attracting tourism. In Costa Rica, the most popular tourist destinations are created for foreigners by foreigners (e.g. Santa Teresa and Tamarindo).

While tourism certainly brings benefits to the country, like economic growth, there have been other consequences, one of them being tourist-driven gentrification.

What is gentrification, and tourist-driven gentrification?

Gentrification is defined by Oxford as “The process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing, and attracting new businesses, typically displacing current inhabitants in the process“. Tourists replace the local communities as cities adapt to the increasing tourism in the country. Tourism-driven gentrification is the same form of socio-economic transformation, but linked to touristification, foreign investment, and degradation in both the ecological systems and the cultural heritage.

According to Maria Silvia Emanuelli, coordinator at the Oficina America Latina of the Habitat International Coalition, the benefit of gentrification does not come from the displacement of locals, but from the development of infrastructure when the new foreign people/residents arrive, creating new jobs. She highlights that part of the issue is that the jobs the locals get are far from their homes since they have to move out, which increases living costs for them.

In an era defined by globalization, global mobility, and interconnected economies, paradise has become a destination for exploitation, intentional or accidental. Places once considered to be on the outskirts of the global economy are now being embedded in transnational capital, tourism, and investment. While foreign investments can lead to the development of new buildings, jobs, and better infrastructure, they come alongside the highest living costs, rent, and groceries. So, the question becomes, who is benefiting from the development? What are the consequences of that development when the locals are pushed out of their neighbourhoods?

Local displacement when global capital arrives

Tourism is Costa Rica's main source of income, and in 2024, around 25% of the population has worked within the tourist sector, mainly in service positions. However, the structure of this sector reveals its fragility and imbalance. This development often benefits foreign owners and investors rather than the locals. Ownership of hotels, resorts, and tour companies remains overwhelmingly foreign, and investors from the U.S., Canada, and Europe dominate the hotel and tourism sector. Meanwhile, local families struggle with rising rent, property taxes, and are unable to compete with the global North, which has suddenly arrived in the country. The local newspaper La Voz de Guanacaste in Costa Rica reported that while this process may promise development and prosperity, its outcomes are deeply uneven, reflecting broader patterns of economic inequality. Tourists replace the local communities as cities adapt to the increasing tourism in the country.

This creates a growing tension between locals and the tourism industry as the development of communities does not apply to everybody, especially not to those who have waited and need it the most. Many families are priced out of their communities. The Tico Times wrote in 2025 that a survey conducted by Costa Rica's National University (UNA) shows that Costa Ricans draw parallels between increasing living costs and gentrification as foreign residents arrive in their communities.

In 2024, Jaime Jover (University of Sevilla) and Natalia Lerena Rongvaux (University of Buenos Aires) highlighted that these dynamics reflect the structural inequality that arrives together with globalization. Inequality is created where there is mobility and when capital flows freely across borders, connecting countries and people, but the profits and benefits remain centralized in the hands of foreign elites. Thus, the global South remains in a position of dependency on the global North.

Mexico City's Roma neighborhood gentrification Wikimedia Commons

Environmental and cultural costs in a global framework

Gentrification in Costa Rica and Central America doesn't just reflect a broader tension between local groups and foreigners, but it also creates a tension between development and sustainability.

The very ecosystems that attract foreign tourists, the rainforests, coral reefs, and wildlife reserves, are under threat from the infrastructure built to accommodate them. Large-scale hotels and resorts built along the Pacific and Caribbean coasts have led to widespread deforestation, beach erosion, and loss of biodiversity. Several national parks in Costa Rica are having issues maintaining the biodiversity and well-being of nature as the number of tourists and visitors to the parks increases. The local newspaper La Voz de Guanacaste in Costa Rica reported that not only do the hotels built on the coastlines, which are dominated by foreign investors from North America and Europe, just change the landscape, but in many cases, they have led to the contamination of black water entering the oceans.

So, how can we keep the benefits of tourism and leave out the negative consequences of gentrification?

The Ministry of Tourism in Costa Rica highlights the importance of developing sustainable tourism. They work according to Costa Rica's National Tourism Development plan, which has the vision to contribute to improving community development.

We need to start rethinking tourism, and one solution can be found in community-based tourism. In Costa Rica, the rise of community-based tourism represents an attempt to re-center power in the hands of local communities. Rooted in principles of self-determination, sustainability, and cultural preservation, this model enables communities to manage tourism on their own terms.

Rather than depending on foreign investment, locals develop and run small-scale tourism initiatives. Tourists get an authentic experience of the local lifestyle, traditions, and environment, while the community maintains control over how tourism is developed and ensures that the profits stay within the community.

Costa Rica’s experience is not an isolated case, and while the integration of local economies into global markets can bring opportunity, it is also at risk of exploitation. Tourism, when unchecked, becomes less a tool of cultural exchange and more a system of extraction, therefore, community empowerment is important in an increasingly interconnected world.

Tourism is an important factor in economic growth, and its cultural exchange is valuable. It's an opportunity to uplift communities, preserve and share traditions, as well as connect people across borders, but it has to be developed with care in order for it to be fair and sustainable.