Carbon tax and tourism consumption

Nguyen Doan and Canh Phuc Nguyen

Annals of Tourism Research, 2025, vol. 113, issue C

Abstract: This study explores the impact on tourism consumption of implementing a carbon tax. Employing a difference-in-differences model for a sample of 117 countries from 1995 to 2019, we find that a carbon tax has a significant negative effect on domestic tourism spending but a weak positive effect on outbound tourism spending. On average, implementing a carbon tax decreases domestic tourism spending by 12 %. In contrast, such an environmental policy increases outbound tourism. Interestingly, when considering the intermediary channels of income and price level, the mechanism analysis shows suggestive evidence that implementing a carbon tax increases the price level, which is then transmitted to decreased domestic tourism consumption but does not affect outbound tourism.

Keywords: Carbon tax; Kyoto Protocol; Tourism; Spending (search for similar items in EconPapers)
JEL-codes: H23 Q56 Z38 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:anture:v:113:y:2025:i:c:s0160738325000805

DOI: 10.1016/j.annals.2025.103974

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