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Below the surface of Palau’s Jellyfish Lake is an extraordinary yet fearful sight. On this Pacific island nation, 500 miles east of the Philippines, masses of jellyfish create floating, translucent walls, brushing past snorkeler’s arms and blundering into their bodies. Avoiding them is impossible.

But these are no ordinary jellyfish. After centuries of evolution, the inhabitants of the Eil Malk island Jellyfish Lake no longer sting – instead, they use their tentacles to farm algae. Because of this, travellers are flocking to the area and there is a danger that snorkelling in the lake could become too popular for its own good. A murky, film already floats on the water’s surface, due in part to the sunscreen worn by snorkelers as they plough through the jellies.

As a tiny nation of about 20,000 people and 12 inhabited islands (there are more than 200 volcanic and coral islands in total), Palau’s natural treasures are by far the country’s greatest assets, and Jellyfish Lake is just one of them. The Rock Islands of Koror – hundreds of green-topped limestone islands that spread out to the south and west of Koror Island, the most populated of Palau’s islands – are a highly photogenic, tropical paradise. The archipelago is also home to some of the best diving in the world.

But having such attractions and protecting them is a delicate balance. To its credit, Palau has some of the toughest environmental laws on Earth. In 2009, it became the first country in the world to declare its territorial waters as a shark sanctuary. In 2010, that protection was extended to all marine mammals. Some of the Rock Islands are completely off-limits; it is illegal to even take a boat there without special permission. There are also several other jellyfish lakes throughout the islands, but people can only access the one on Eil Malk.

The latest step is a controversial one, however. The Koror state government is dramatically hiking the price of visitor permits for the Rock Islands and Jellyfish Lake. Starting 1 June, the Rock Islands permit will go up from $25 to $50, and the Jellyfish Lake permit will increase from $35 to $100.

By international standards, this is very steep. In comparison, the Environmental Management Charge for the Great Barrier Reef is about $6 per day and the individual entrance permit for the Grand Canyon National Park is $12.

Some of the tour operators that take travellers out to the Rock Islands are happier about this than others. There has been a lot of local debate about how much of the price increase will go to environmental protection and how much will go to filling government coffers.

“It’s a very difficult dilemma for a developing nation,” said Marc Bauman, the director of sales and marketing at Sam’s Tours. “The government is always trying to find ways to become self-sufficient and tourism is a good way [to step towards that]. But it’s a simple fact that the more people you put in the water, the more problems you have with the environment. Just look at the damaged reefs in Hawaii or the Caribbean.”Indeed, Palau’s increasing popularity is part of the problem. After years of attracting 80,000 to 90,000 visitors per year, arrivals shot up by 26% in 2011. The bulk of the extra intake is coming in on package holidays from Taiwan and Japan – and such price-sensitive travellers are the ones likely to be put off by high permit charges for the main attractions.

In among the Rock Islands, it becomes abundantly clear why Palau’s natural resources are such a draw. Boats chug through the channels, with the lagoon waters running from milky greens to deep blues. The islets are uninhabited, acting like giant grey-green studs on the horizon. It is a dazzling visual treat that only gets better under the water. Even with just a snorkel instead of a full diving apparatus, the clarity of the ocean and the range of life within it is staggering. Swimming along the edge of a reef wall, vast shoals flit at jagged angles around each other. In every direction is a cast of thousands, occasionally punctuated by a showboating ray or reef shark.

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