Is tourism growth a power of environmental‘de -degradation’? An empirical analysis for Eurozone economic space

Abstract

The present study aims to investigate potential causality relationships between environmental quality, energy efficiency, and economy when testing the validity of the Environmental Kuznets Curve (EKC) hypothesis. To this effort, panel data analysis concerning Eurozone member states is put into the process for the period 1996–2019. We conceptualize environmental degradation in terms of greenhouse gas emissions, energy efficiency in terms of energy consumption, and the economy concerning a nation’s Gross Domestic Product (GDP). We include additional tourism indicators in terms of the direct contribution of tourism to GDP and tourism key market segments when testing the hypothesis of EKC. Scarcely in literature, we find empirical research that investigates the heterogeneous nature of tourism in the context of business tourism spending and leisure tourism spending, and the environment. This is an essential question, which seeks ways to optimize human and technical resources and processes, sectoral and organizational, to establish sustainability within the economy. This suggests that a potential gap in the literature might exist. We process contemporary panel regression tests that consider possible structural breaks and cross-section dependence phenomena across panel data. Empirical findings confirm the EKC hypothesis whereas business tourism spending, capital investment spending, and internal travel and tourism consumption negatively impact GHG emissions. Furthermore, Granger non-causality tests suggest that all variables Granger cause GHG emissions. Practical implications call for establishing sustainable energy consumption and tourism spending patterns in the long run.