THE NEXUS AMONG TOURISM, URBANISATION AND CO2 EMISSIONS IN SOUTH ASIA: A PANEL ANALYSIS

Abstract

Purpose – Tourism and urbanisation are two significant determinants of economic growth and have been identified as top contributors to CO2 emissions. We examine the nexus among tourism, urbanisation, and CO2 emissions in South Asia by providing empirical evidence using panel data analysis. Design – Annual data from 1995-2019 is collected from the World Development Indicator 2020 for five South Asian countries: Bangladesh, India, Sri Lanka, Nepal, and Pakistan. Methodology – Durbin-Hausman panel cointegration and LM Bootstrap panel cointegration tests are conducted to check long-run cointegration. Dumitrescu-Hurlin panel causality test is used to detect causal relationship among the variables. Moreover, the PDOLS, PMG ARDL, c-up FMOLS and Generalised Linear Model are used to estimate long-run coefficients of the variables. Findings – We reveal unidirectional causalities running from urbanisation to tourism, urbanisation to CO2 emissions, and tourism to CO2 emissions. Additionally, when heterogeneity of the variables is taken into account, both tourism and urbanisation show positive and significant effect on CO2 emissions in the long-run. Originality of the Research – To our knowledge, no previous study investigates the relationship among tourism, urbanisation and CO2 emissions is South Asia. Our results will guide policy makers to design policies that will promote urbanisation and tourism growth in an environmentally sustainable way.