Is the Tourism-Induced Environmental Kuznets Curve Hypothesis Valid in the Most Visited Countries?: A Fresh Insight from Dynamic Common Correlated Effects (DCCE) Approach

Introduction

International tourism, one of the most important components of the service industry, has gained remarkable speed in the last few decades. While the number of international tourists worldwide was 166 million in 1970, it reached 1,460 million in 2019, with a 780% increase (UNWTO, 2020). However, the COVID–19 pandemic, which started in 2019 in Wuhan city of China, caused one of the most severe economic crises since the Great Depression in 1929. Like many other industries, tourism was also negatively affected by this pandemic. Due to the measures taken such as domestic and international travel bans, lockdowns, and limitations on international transportation, the number of international tourists decreased by approximately 1 billion (72%) in 2020 (UNWTO, 2022).

Together with the effects of globalization, the tourism industry playing a role as a source of revenue and employment for many countries is the driving force for economic development. The global revenue from the tourism industry in 2019 was $1.8 trillion and the number of individuals employed in these industries reached 333 million. Moreover, at the global level, the tourism industry constitutes 10.3% of global production, 28% of global service export, and 6.8% in total (WTTC, 2022). In summary, it can be seen that the tourism industry remarkably corroborates economic growth, employment, and exports on a global scale.

Besides its contributions to economic growth, the tourism industry also has environmental effects. This is because, as well as many economic activities, it is a fact that tourism activities might increase the pressure on the environment (Bojanic and Warnick, 2020). For this reason, countries make effort to eliminate the possible negative effects of tourism activities on the environment, protect nature and natural sources, and ensure the development of sustainable tourism. Moreover, increasing tourism activities might cause important environmental damages that cannot be reversed or might be expensive to reverse such as air pollution, loss of natural habitat, and soil erosion. In other words, an increase in tourism activities and the developments such as the construction of hotels, touristic facilities, and infrastructures might cause additional increases in energy consumption, decreases in natural and agricultural lands, and an increase in environmental pollution risk (El–Menyari, 2021).

Recent studies investigate the tourism–induced EKC hypothesis over various environmental pollution indicators. Introduced by Pigram (1980) and then developed by Tisdell (1987), the tourism–induced EKC hypothesis assumes that there is an inverse U-shaped relationship between environmental pollution and tourism activities. Accordingly, it is expected that, in the first phase where environmental awareness is low and environment-friendly production is ignored, the development of tourism activities would increase the environmental pollution to a specific turning point. In the second phase, in which environmental awareness increases and environment–friendly production technology is adopted, it is projected that environmental pollution would decrease with the development of tourism activities (Katırcıoğlu et al., 2018).

In the literature, environmental pollution is represented by indicators including carbon dioxide (CO₂) emissions, sulfur hexafluoride (SF₆), methane (CH₄), nitrogen peroxide (N₂O), perfluorocarbon (PFC), and hydrofluoric carbon (HFC), as well as ecological footprint (ECF). However, it is clear that CO₂ emissions have been more frequently used as an environmental pollution indicator in those studies (Baloch et al., 2019; Uddin et al., 2017). On the other hand, the point criticized is that environmental pollution, as a multidimensional concept, was represented using CO₂ emissions, which is a limited indicator measuring only the air pollution dimension (Solarin, 2019; Yilanci and Pata, 2020). For this reason, rather than CO₂ emissions, recent studies have started using ECF which is a more comprehensive and alternative indicator incorporating the water, air, and soil pollution dimensions. Introduced by Rees (1992) and developed by Wackernagel and Rees (1996), ECF measures the pressure of humankind on nature (demand for natural sources) and consists of six components: carbon footprint, cropland footprint, grazing land footprint, fishing grounds footprint, forest land footprint, and built-up land footprint (Global Footprint Network, 2022).