Tourism, institutional quality, and environmental sustainability

Abstract

This study endeavours to examine the influences of tourism and institutional quality and their association on environmental sustainability. Specifically, the study uses principal component analysis to construct three reduced environmental sustainability indices for 134 countries from 2002 to 2015 (based on data availability). First, the reduced environmental sustainability indices are mostly improved in low- and middle-income countries, while they are degraded in several high-income countries. Second, improvements in institutional quality, especially regulatory quality, government effectiveness, control of corruption, and rule of law, are found to support environmental sustainability. Third, both international and domestic tourism spending are found to degrade environmental sustainability. Lastly, it is surprising to find that negative environmental effects of international tourism are exacerbated in countries with good institutional quality. These results call for more prudent policy-setting for the tourism industry, aimed at sustainable tourism development.