THE NEXUS BETWEEN CARBON DIOXIDE (CO2 ) EMISSIONS AND INTERNATIONAL TOURIST ARRIVALS IN SRI LANKA

Abstract

Environmental quality has a significant impact on tourism demand. In the study, environmental quality was proxied by carbon dioxide emissions, following previous empirical studies. The study aims to examine the effect of carbon dioxide emissions on international tourist arrivals in Sri Lanka from 1995-2019 using Johansen co-integration, Vector Error Correction, and Granger causality econometric models. According to the results of the Johansen co-integration test, there is a long-run relationship among the variables, and Vector Error Correction model confirmed that carbon dioxide emissions and the consumer price index affect international tourist arrivals negatively, and the gross domestic product and exchange rate affect international tourist arrivals positively for the Sri Lankan economy. However, the results confirm that carbon dioxide emissions cannot significantly explain the variation in tourism arrivals in the short run. According to the Granger causality test results, there is a unidirectional relationship between carbon dioxide emissions and international tourist arrivals in Sri Lanka. To attract more foreign visitors, the government should pay more attention to reducing and controlling carbon dioxide emissions.