Impact of Tourism on Carbon Dioxide Emissions: Evidence from SAARC Countries
Abstract
The current study aimed to examine the impact of tourism on carbon dioxide (CO2) emission using the South Asian Association Regional Corporation (SAARC) countries’ panel dataset spanning the time period from (1995-2014). The literature review investigated innumerable studies based on the relationship between tourism and economic growth and reported inconsistent results. However, not many studies have been conducted on SAARC countries so far. Therefore, it was essential to analyse the effect of tourism on CO2 emission in the selected countries. The current study used an annual balanced panel dataset (1995-2014). The data was taken from the KOF Globalization Index and World Development Indicators (WDI). Pedroni cointegration test was applied to examine the presence of long-term association between candidate variables. Fully Modified Ordinary Least Square (FMOLS) test was employed to estimate the vector of cointegration in long-run. At the end, Panel Granger Causality test was applied to analyse the causality between candidate variables. The results showed the presence of a direct relationship between tourism and CO2 emission which creates a dilemma for SAARC countries in the context of environmental degradation. Lastly, the findings of Granger Causality test revealed that one directional causality is running from tourism to CO2 and from economic growth to CO2 emission. The study proposed some policy recommendations of the empirical findings which may help to reap the economic gains and other benefits accruing from tourism sector and to mitigate its negative effects in the form of environmental pollution. Tourism sector is important for SAARC economies, however, it may have serious inverse environmental effects in the long-run. Therefore, the policy makers must consider this threat rising from the tourism sector.The findings would contribute positively to the literature and help policy makers in formulating policies to reduce the negative effects of tourism on CO2 emission or environmental degradation.
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