Dirty Dance: Tourism and Environment

DirtyDance:TourismandEnvironment SerhanCevik WP/22/178 2022 SEP ©2022InternationalMonetaryFundWP/22/178 IMFWorkingPaper EuropeanDepartment DirtyDance:TourismandEnvironmentPreparedbySerhanCevik* AuthorizedfordistributionbyAlfredoCuevas September2022 IMFWorkingPapersdescriberesearchinprogressbytheauthor(s)andarepublishedtoelicitcommentsandtoencouragedebate.TheviewsexpressedinIMFWorkingPapersarethoseoftheauthor(s)anddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement. Abstract Tourismwasoneofthefastest-growingsectorsbeforetheCOVID-19pandemic,accountingforabout10percentofglobalGDP.Butithasalsocreatedanumberofchallengesincludingenvironmentaldegradation,especiallyinsmallislandcountrieswherethecarbonfootprintoftourismconstitutesubstantialshareofcarbondioxide(CO2)emissions.ThisstudyempiricallyinvestigatestheimpactoftourismonCO2emissionsinarelativelyhomogenouspanelof15Caribbeancountriesovertheperiod1960–2019.TheresultsshowthatinternationaltouristarrivalshaveastatisticallyandeconomicallysignificanteffectonCO2emissions,aftercontrollingforothereconomic,institutionalandsocialfactors.Therefore,managingtourismsustainablyrequiresacomprehensivesetofpoliciesandreformsaimedatreducingitsimpactonenvironmentalqualityandcurbingexcessivedependencyonfossilfuel-basedenergyconsumption. JELClassificationNumbers: O40;O44;Q40;Q51;Q54 Keywords: Tourism;climatechange;CO2emissions;energyintensity;mitigation;adaptation Author’sE-MailAddress: scevik@imf.org *TheauthorwouldliketothankBasBakker,KatharinaBergant,EmanueleMassetti,AnkeWeber,andKarlygashZhunussovafortheirinsightfulcommentsandsuggestions. I.INTRODUCTION Climatechangeisoneofthemostsignificantthreatstopeople’shealthandlivingstandards,especiallyincountrieswithlimitedeconomicdiversification.Earth’sglobalsurfacetemperaturehasalreadyincreasedbyabout1.1degreesCelsius(°C)comparedwiththepreindustrialaverage,heighteningtheintensityandfrequencyofextremeweatherevents(Figure1).Lookingforward,theriskofdestructiveclimateshocks,includingheatwaves,forestfires,large-scalefloodingandseverestorms,isprojectedtoincreasewithglobalwarmingbyasmuchas4°Coverthenextcenturyandrisingsealevelbyatleast35centimetersabovethelevelrecordedin2000(IPCC2007,2014,2019;2021;Stern2007).Ifgreenhouse-gas(GHG)emissionscontinueincreasingatthecurrentrate,globalwarmingisprojectedtoreach4-6°Cby2100,anunprecedentedshiftwithirreversibleenvironmentalchangesunseeninmillionsofyears(Hansenandothers,2013). Thesedevelopmentsthereforeposeasignificantchallengetodevelopingcountrieswithlimitedeconomicdiversification. Thispaperexplorestherelationshipbetweentourismandenvironment.BeforetheCOVID-19pandemic,tourismwasoneofthefastest-growingsectorsacrosstheworld,accountingfor10percentofglobalGDPandactingasacatalystforeconomicdevelopment,especiallyinsmallislandstates.Whileitbenefitsgreatlyfromcleanenvironment,tourismcontributestoGHGemissionsandotherenvironmentalproblems(Lenzenandothers,2018).ThiscontradictionisevengreaterintheCaribbean,wheretourismaccountsforasmuchas90percentofGDPand80percentofenergy-relatedcarbondioxide(CO2)emissions(Figure2).ThisiswhytherelationshipbetweentourismandCO2emissionsiscriticalforsustainableeconomicdevelopmentaswellastheprotectionofnaturalresourcesthatarethemainpointofattractionforinternationaltouristscomingtotheCaribbeanwithlow-lyingislandsandcaysspreadwithintheAtlanticHurricaneBelt.2Recentresearchshowsthatclimatechangevulnerabilityalreadyhasasignificantnegative Figure1.ClimateChangeandWeatherAnomalies GlobalTemperatureAnomalies GlobalTemperatureAnomalies(2018-2019comparedwith1951-1980average) (DegreesCelsius,deviationfromtrend) 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 188018901900191019201930194019501960197019801990200020102020 Source:NOAA. 2Smallislandstatesareparticularlyvulnerabletoweather-relateddisasters.IntheCaribbean,thecostofHurricaneIvanforGrenadain2004amountedto148percentofGDPandHurricaneMariaforDominicain2017reached260percent,reflectingboththeintensityofhurricanedamageandthesmallsizeoftheseeconomies. -4 -4 -2 effectoninternationaltourismrevenuesacrosstheCaribbean(CevikandGhazanchyan,2021).Forexample,a10percentage-pointincreaseinclimatechangevulnerabilityleadstoadeclineof9percentagepointsintourismearningspervisitor(orareductionof10percentagepointsintourismrevenuesasashareofGDP),evenaftercontrollingforconventionalmacroeconomicandsocialfactors.Buttourismalsocontributestoenvironmentaldegradationandglobalwarming. Thereisgrowinginterestontherelationshipbetweentourismandenvironment,andthisstudycontributestotheliteraturebyempiricallyanalyzingtheimpactofinternationaltourismonCO2emissionsinarelativelyhomogeneouspanelof15tourism-dependentCaribbeancountriesovertheperiod1960–2019andtherebyprovidingrobustestimatesbasedonalternativespecificationsandestimationmethodologies.TheresultsshowthatinternationaltourismhasanstatisticallyandeconomicallysignificantdetrimentaleffectontheenvironmentbyincreasingCO2emissionsacrosstheCaribbean.Anincreaseof10percentininternationaltouristarrivalsisassoci