If tourism induces the EKC hypothesis, how does governance moderate its impact in the EU without the UK?

Abstract

ABSTRACT What happens to the impact of tourism on environmental degradation as the income level of the nations or regions increases? The Environmental Kuznets Curve (EKC) hypothesis asserts that the influence of tourism on CO2 emissions decreases with a rise in income levels. This study captures the role of governance in the tourism-induced EKC hypothesis in the European Union (EU), after Brexit. Given that the United Kingdom (UK) is the most visited country in the region, and tourism is a very vital instrument to economic stability and growth, it would be interesting to inspect the relationship among these variables without the UK. Auto-Regressive Distributed Lags (ARDL) estimates show that tourist arrivals decrease carbon emissions in the long-run, while per capita growth fosters carbon emissions in the long-run. In addition, Quantile Regressions (QR) reveal that, in general, the governance indicators have positive effects on emissions. Moreover, for the first quantile, the TEKC emerges. Finally, regarding the causality relationship, a unidirectional relationship from per capita growth to carbon emission, and from carbon emission to tourism arrivals emerge, while no causal link exists between energy consumption and carbon emissions. Moreover, a feedback mechanism (bidirectional causality) is discovered between per capita growth and tourism arrivals, and energy consumption as per capita growth.