Energy consumption, tourism development, and environmental degradation in Sri Lanka

ABSTRACT

This study examines whether energy consumption and tourism development provide evidence to support the Environmental Kuznets Curve (EKC) hypothesis in Sri Lanka. Results of the study show that carbon emissions, income, tourism development, and energy consumption are cointegrated in the long run. The long-run estimates do not support the presence of the EKC hypothesis in Sri Lanka. Energy consumption adds to environmental degradation in both short run and long run, while tourism development aggravates environmental degradation in the long run. This study recommends that Sri Lanka can reduce environmental degradation without hindering its economic growth; however, it has to increase energy production from renewable resources as the country’s location provides suitable alternatives for energy production in the form of tide and wind energy in the coastal provinces, while the central provinces offer suitable sites for small hydro-electric projects.

KEYWORDS:

• Cointegration
• energy consumption
• environmental degradation
• income
• Sri Lanka
• tourism development