The spillover of tourism development on CO₂ emissions: a spatial econometric analysis

Climate change and tourism's interaction and vulnerability have been among the most hotly debated topics recently. In this context, the study focuses on how CO₂ emissions, the primary cause of global warming and climate change, respond to changes in tourism development. In order to do so, the impact of tourism development on CO₂ emissions in the most visited countries is investigated. A panel data from 2000 to 2017 for top 70 tourist countries are analysed using a spatial econometric method to investigate the spatial effect of tourism on environmental pollution. The direct, indirect, and overall impact of tourism on CO₂ emissions are estimated using the most appropriate generalized nested spatial econometric (GNS) method. The findings reveal that tourism has a positive direct effect and a negative indirect effect; both are significant at the 1% level. The negative indirect effect of tourism is greater than its direct positive effect, implying an overall significantly negative impact. Further, the outcome of financial development and CO₂ emissions have an inverted U-shaped and U-shaped relationship in direct and indirect impacts. Population density, trade openness, and economic growth significantly influence environmental pollution. In addition, education expenditure and infrastructure play a significant moderating role among tourism and environmental pollution. The results have important policy implications as they establish an inverted-U-shaped relationship among tourism and CO₂ emissions and indicate that while a country's emissions initially rise with the tourism industry's growth, it begins declining after a limit.