KOROR, Palau — Tommy Remengesau Jr., the president of this tiny Pacific nation, will never forget the day four decades ago when he went sailing on his bamboo raft and returned with more fish than his family could eat.
He figured his parents would be pleased. Instead, his father hit him on the head and lectured him on the principles of conservation.
"I thought I was a hero," the president recalled. "But my father said, 'What are you going to do with the rest of this fish?' I never forgot that lesson."
It's the kind of story told by many Palauans to explain the tradition of preservation that has made their remote Micronesian country a leader in ecological protection in the Pacific.
Now, Remengesau, 50, and his country of more than 300 islands face an environmental challenge that goes way beyond a boy catching too many fish.
This year, the U.S. Army Corps of Engineers is scheduled to complete a long-delayed, 53-mile road around the country's largest island, Babelthuap. The highway will open the shoreline to potential development on a scale unseen in Palau's brief history as an independent nation.
Palau also faces an economic crisis in three years, when the U.S. is to cut off foreign aid that totals 40% of the country's budget. The loss is certain to cause financial hardship, and there is a sense of urgency here to find new sources of income. Many Palauans hope the transition can be made without compromising the country's pristine character.
"Palau is going to have a lot of changes, and there is going to be a lot of pressure to develop," said Noah Idechong, a member of the legislature and a prominent environmental activist. "Palau is going to have to learn to say no."
The former U.S. territory, granted independence in 1994, is renowned for the clarity of its water and the diversity of its coral reefs. One of its prized national assets and natural oddities is a lake with more than 1 million stingless jellyfish. Its noted Rock Islands have long lured divers and naturalists from around the world.
But these days, with the road coming, Palau also is attracting international hotel, casino and golf course developers, who have begun acquiring local partners and making deals.
Idechong, who was awarded the Goldman Environmental Prize in 1995 for his work protecting marine life, worries that economic pressure and the lack of a national land-use plan will lead to reckless development on Babelthuap that could endanger the reefs by destroying mangroves and causing sedimentation.
Others complain that the country is giving too much say over its future to foreign businesspeople who care little about preserving Palau's traditions. A 157-room hotel opened last year by a Japanese chain on the capital island of Koror is staffed almost exclusively by low-paid foreign workers. Guests can spend their entire holiday in Palau without meeting a Palauan.
"In 10 years, without proper planning, we will have flesh and blood but Palau will be a ghost race," said Duane Hideo, former governor of the state of Ngchesar. "Some of the investors are very aggressive, especially the ones that come from Asia -- 'I want this. I want that.' "
Today, two-thirds of the country's economy is based on tourism. Palau is so oriented toward visitors that even the jail in Koror has a gift shop where inmates sell traditional wood carvings.
About 4,600 miles southwest of Hawaii, Palau is one of the world's smallest countries, with a land mass roughly 2 1/2 times that of Washington, D.C. It is also one of the newest: After nearly 40 years as a U.S. protectorate, it now is the world's second-youngest country, behind East Timor.
With a population of 20,300, Palau is so low-key that it has only two stoplights. Both are switched off because motorists complained that they impeded traffic flow.
All told, there are fewer than 20,000 Palauans in the world. About 13,000 live in Palau, with most of the rest on Guam and the U.S. mainland. Tribal ties remain strong in business and politics; the candidate with the largest number of relatives usually wins.
The rest of Palau's population consists of foreign workers, mainly from the Philippines and China, who are employed in the tourist industry and make up nearly three-quarters of the labor force.
Though Pacific islands are often marketed to tourists as paradise, they can be tough places for natives to make a living. Many island nations have few natural resources, a small labor pool and exorbitant prices for imported goods.
With the help of U.S. subsidies, Palau has maintained a per capita income of $6,870, one of the highest in the Pacific. Its leaders hope the country won't have to resort to the kind of questionable moneymaking activities adopted by some of its neighbors.