Dirty dance: tourism and environment

ABSTRACT

Tourism was one of the fastest-growing sectors of the global economy before the COVID-19 pandemic, accounting for around 10% of global GDP. This has created a number of challenges including environmental degradation, especially in small island countries where the carbon footprint of tourism constitute a substantial share of carbon dioxide (CO2) emissions. This study investigates the impact of tourism on CO2 emissions in a relatively homogenous panel of 15 Caribbean countries over the period 1960–2019. The results show that international tourist arrivals have a statistically and economically significant effect on CO2 emissions, after controlling for other economic, institutional and social factors. Managing tourism sustainably requires a comprehensive set of policies and reforms aimed at reducing its environmental impact, and curbing excessive dependency on fossil fuel-based energy consumption.

KEYWORDS:

• Tourism
• climate change
• CO₂ emissions
• energy intensity
• mitigation
• adaptation

JEL CLASSIFICATION:

• O40
• O44
• Q40
• Q51
• Q54

Acknowledgements

The author would like to thank the editor, Jonathan Michie, and anonymous referees for their insightful comments that led to marked improvements in the paper. An earlier version of this article benefited from comments and suggestions by Bas Bakker, Katharina Bergant, Emanuele Massetti, Anke Weber, and Karlygash Zhunussova.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from International Financial Statistics (IFS) and World Economic Outlook (WEO) databases, the World Bank’s World Development Indicators (WDI) database, the Global Carbon Atlas (CGA) database, and the International Country Risk Guide (ICRG) database.

Notes

1. Small island states are particularly vulnerable to weather-related disasters. In the Caribbean, the cost of Hurricane Ivan for Grenada in 2004 amounted to 148% of GDP and Hurricane Maria for Dominica in 2017 reached 260%, reflecting both the intensity of hurricane damage and the small size of these economies.

2. The countries included in the sample are Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Suriname. The time span varies for each country according to data availability. Although the emissions data is available since 1960, tourism statistics become available only after 1990 for most countries in the sample. Similarly, the inclusion of government effectiveness as a control variable further reduces the size of the sample due to uneven data availability.

3. Territorial CO₂ emissions are from the use of coal, oil and gas (combustion and industrial processes), the process of gas flaring and the manufacture of cement. Accordingly, the data includes CO₂ emissions from domestic flights, but not from bunker fuels associated with international aviation and maritime operations.

4. The logarithm of real GDP per capita may be collinear with its squared term; thus I demean the logarithm of real GDP per capita to reduce collinearity.

5. For robustness, the empirical model is also estimated including demographic variables such as population and the share of urban population as additional control variables.

6. Additional sensitivity checks are presented in Appendix Table A1 and include the following specifications: (i) without the quadratic term of real GDP per capita; (ii) with the number of international tourists per capita; (iii) excluding real GDP growth; and (iv) excluding trade openness and government effectiveness that have more limited observations compared to other variables.

7. The IMF proposes a differentiated range of carbon taxes for advanced, high-income emerging markets and low-income emerging markets—$75, $50 and $25 per metric ton of CO₂ emissions, respectively (Black 2021). However, it should be noted that CO₂ emissions associated with international aviation and maritime transport (including cruise tourism) destined to the Caribbean could be taxed at a regional level. However, it should be noted that a carbon tax on international aviation would “induce a shift from long flights to medium distance one and a shift from medium distance flights to short distance holidays, [and thereby] disproportionally hit island nations [if] the tax is applied regionally rather than globally” (Tol 2007).