Greening wallets or worsening landscapes: Exploring carbon footprints of renewable energy, tourism, and financial development indices

Abstract

Sustainable development goals (SDGs) 7 and 13 of the United Nation's 2030 Agenda for Sustainable Development emphasize cheap and clean energy and climate action, respectively. The relentless pursuit of sustainable development has spurred a growing interest in understanding the intricate relationships between carbon footprints, renewable energy practices, tourism, and financial development indices. This research embarks on a comprehensive exploration of the interplay among these critical factors, aiming to unravel the nuanced dynamics that shape our environmental and economic landscape of the top 10 tourist countries from 1991 to 2021. This investigation was conducted through quantile-based modeling, where the long-run estimates are achieved through lower, middle, and higher quantiles. Nevertheless, findings suggest that a 1% increase in tourism development will approximately result in a 0.109% to 0.298% increase in carbon footprint in the lower quantile quantiles, that is, the 10th to 30th quantile. In the middle and higher quantiles (40th to 60th and 70th to 90th), 0.313% to 0.565% and 0.721% to 1.369%, respectively. However, renewable energy and financial development index are the significant sources of reducing carbon footprints from the 10th to the 90th quantiles. Still, the intensity of their impacts is heterogeneous among different quantiles. Empirical findings demonstrate that financial development stimulates a growing demand for environmentally sustainable energy sources. Utilizing renewable energy decreases the presence of greenhouse gases in the environment in contrast to the use of fossil fuels. However, renewable energy, tourism, and financial development indices are concluded to be the cornerstones concerning carbon footprints through their distinct impacts. This study's quantile slope equality and symmetric quantile tests further corroborated the findings. Upon the conclusion of the current study, this research has offered policy implications for regulatory bodies and has deliberated on potential avenues for future investigation.