The dynamic relationship between CO2emission, international tourism and energy consumption in Pakistan: a cointegration approach

Abstract

PurposeThe present study aims to investigate the dynamic relationship between international tourist receipts, economic growth, energy use and carbon dioxide (CO2) emissions in Pakistan over the period 1980-2016. Many researchers have investigated the link between tourism and CO2emissions, but there is no clear picture as the results are contradictory. This study is an attempt to compliment the literature related to tourism and environmental quality.Design/methodology/approachThe study adopted the autoregressive distributed lagged (ARDL) model to investigate the short- and long-run estimates simultaneously. The study further applied Granger causality to find out the direction of causalities. To arrive at long-run robust estimates, the study used dynamic ordinary least squares (DOLS) model.FindingsThe results found that tourist receipts have no significant impact on environmental quality, while growth and energy consumption are the main determinants of CO2emissions in Pakistan. The Granger causality test confirmed unidirectional causalities from GDP and energy consumption toward CO2emissions, while tourist receipts do not affect environmental quality. DOLS technique confirmed the long-run estimates of ARDL model.Research limitations/implicationsThe result of the study complements the literature by adding new evidence regarding the nexus of tourism and environment. Findings of the study are important for policymakers and regulatory bodies to place their focus on the development of tourism sector (services sector) rather than energy-intensive manufacturing activities to sustain the growth of the country in higher quartiles, as tourism receipts have no significant negative externalities toward environment, while energy use is one of the key determinants of environmental degradation.Originality/valueThis study used time series data over the period 1980-2016 for Pakistan to inspect the dynamic relationship between tourist receipts, economic growth, energy consumption and CO2emissions.