Tourism development, renewable energy, and environmental quality in Asean: New evidence from panel estimators robust to cross-sectional dependence and heterogeneity

Jen-Eem Chen, Mahyudin Ahmad, Shaliza Azreen Mohd Zulkifli, Yan-Ling Tan and Moh. Solehatul Mustofa

MPRA Paper from University Library of Munich, Germany

Abstract: Tourism is widely recognized as a key driver of economic growth and development, yet its dependence on the energy sector has raised concerns regarding its environmental impact. Aiming to elucidate the roles of tourism and renewable energy in shaping the environmental outcomes, this study investigates the nexus between tourism development, renewable energy utilization, and environmental quality across 10 ASEAN countries over a 25-year period from 1995 to 2019 by employing panel estimators robust to heterogeneity and cross-sectional dependence such as Panel Corrected Standard Errors (PCSE), Feasible Generalized Least Squares (FGLS), and Augmented Mean Group (AMG) that are rarely utilized in the ASEAN context. Our findings reveal that tourism activity contributes to CO2 and greenhouse gas emissions, with a 1% increase in tourist arrivals associated with a 0.1 to 0.3% rise in emissions. Moreover, we observe a significant mitigating effect of renewable energy on tourism-induced emissions. Our analysis also lends strong support to the Environmental Kuznets Curve (EKC) hypothesis, indicating a threshold level of GDP per capita of USD 13,000, beyond which the adverse environmental impact of GDP turns positive. The common dynamic process in AMG estimator is found to raise emissions, implying the ASEAN strategic policies on sustainable tourism and energy cooperation may not yet come to fruition given the region’s heavy reliance on non-renewable energy sources to sustain tourism and meet population demands. We conclude with policy implications aimed at fostering sustainable tourism and development in the region.

Keywords: CO2 emissions; Environmental Kuznets Curve; Environmental quality; Renewable energy; Tourism development. (search for similar items in EconPapers)
JEL-codes: O13 Q56 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ene, nep-env, nep-sea and nep-tur
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