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The impact of carbon pricing on tourist destinations: Shifts in demand, supply and emissions in the European aviation market

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  • Fageda, Xavier
  • Oesingmann, Katrin

Abstract

This paper provides novel evidence of the impact of the European Union Emissions Trading System (EU ETS) as applied to the aviation sector on tourist destinations. We use annual data at the route level for the period 2010–2022 and consider a sample comprising a large set of European cities of origin, on the one hand, and tourist destinations in Europe, North and West Africa and the Middle East, on the other. We apply a difference-in-differences analysis to a matched sample and find that the EU ETS has led to less emissions, less flights and to a lower extent less seats. In contrast, we do not find a negative impact of the EU ETS on passenger numbers. While the attractiveness of tourist destinations in Europe does not seem to have been affected by the EU ETS, our results suggest that it has promoted greater efficiency in airline operations.

Suggested Citation

  • Fageda, Xavier & Oesingmann, Katrin, 2025. "The impact of carbon pricing on tourist destinations: Shifts in demand, supply and emissions in the European aviation market," Economics of Transportation, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:ecotra:v:42:y:2025:i:c:s221201222500022x
    DOI: 10.1016/j.ecotra.2025.100414
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    References listed on IDEAS

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    1. Xavier Fageda & Jordi J. Teixidó, 2025. "Technology Diffusion in Carbon Markets: Evidence from Aviation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(12), pages 3949-3984, December.
    2. Fageda, Xavier & Oesingmann, Katrin, 2025. "Intercontinental air travel in the era of carbon pricing: demand and hub shifts," Transportation Research Part A: Policy and Practice, Elsevier, vol. 200(C).

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