Revisiting the Dynamics of Tourism, Economic Growth, and Environmental Pollutants in the Emerging Economies—Sustainable Tourism Policy Implications

Tourism contributions to economic growth and well-being have been widely acknowledged; however, its impacts on the environment demand an integrated approach to policy improvement across institutions in the emerging economies for the development of sustainable tourism practices. This study investigates the causal relationship between tourism, economic growth (GDP, capital investment), energy consumption, and environmental pollutants in developing economies, explicitly focusing on the case of Pakistan. Various econometric procedures and techniques were applied to test the proposed hypotheses. The findings suggest that economic growth support tourism development. Tourists’ arrivals have a significant positive impact on energy consumption, capital investment, and CO₂ emissions; besides, environmental pollutant (CO₂) causes negative effects on tourism. The results suggest that a 1 unit increase in tourism increases CO₂ emissions metric tons per capita by 0.26 units in the long-run. A 1 unit increase in capital investment increases CO₂ emissions metric tons per capita by 0.21 units, and a 1 unit increase in energy consumption increases CO₂ emissions metric tons per capita by 0.51 units in the long-run. In the short-run, a 1 unit increase in tourism, capital investment, and energy consumption rises CO₂ emissions metric tons per capita by 0.045, 0.04, and 0.08 units, respectively. Sustainable tourism remains a sole option in developing economies to enhance the competitiveness of tourism as a tool for friendly developments. Thus, tourism policies are needed to be integrated with overall economic, environmental, and energy policies to encourage the shift towards sustainable tourism development to minimize environmental pollution.