Tourism, Carbon Dioxide Emissions and Economic Growth: Evidence from Panel Data

Abstract

In many countries, the tourism industry contributes significantly to economic growth and development. Growth in the tourism industry, however, might lead to environmental problems. Carbon dioxide (CO₂) emissions are believed to be one such problem. Given such a scenario, it is reasonable to see that in recent years, the issues of tourism, CO₂ emissions and economic growth have become the concern of many parties – policymakers and researchers in particular. In the literature nonetheless, there are two opposing views pertaining to the relationship between tourism and CO₂ emissions and tourism and economic growth. In the growth model, tourism and CO₂ emissions are believed to have a significant positive effect on economic growth. On the contrary, the CO₂ emissions model asserts that economic growth and tourism industry contribute significantly to CO₂ emissions. Utilizing the panel data econometric technique to analyse the data of 30 selected countries across 19 years (1996–2014), this chapter shows evidence of the relationship among tourism, CO₂ emissions and economic growth. In the growth model, the level of CO₂ emissions significantly affects the economic growth, while for the CO₂ emissions model, total tourist arrivals and the level of energy consumption are statistically significant in affecting the level of CO₂ emissions.