The impacts of climate variables and climate-related extreme events on island country’s tourism: Evidence from Indonesia

Abstract

Tourism is one of the main economic sectors, which is impacted by climate change on a global scale. Yet, whether and to what extent climate change influences tourism in island countries with tropical weather has not been fully understood. Here, we seek to fill this gap by evaluating the role of climate variables and climate-related extreme events on the number of international tourists in Indonesia empirically. A panel dataset of 5 provinces in Indonesia, which accounted for more than 80 percent of international tourists traveling to Indonesia between 2008 and 2018, was used to perform a feasible generalized least square (FGLS) regression. Consistent with previous findings, the empirical results show that both temperature and relative humidity particularly explain the variations in the number of international tourists in Indonesia. Every 1% increment of temperature and relative humidity is associated with a decrease in the number of international tourists in Indonesia by 1.37% and 0.59%, respectively. This study also suggests that the effect of climate change and climate-related extreme events is not homogeneous among tourists from different regions. These findings develop novel insights for climate change adaptation for policymakers and the tourism industry in Indonesia as well as in other warm destinations.