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The Impact of a Carbon Tax on International Tourism

Author

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  • Richard S.J. Tol

    (ESRI)

Abstract

A simulation model of international tourist flows is used to estimate the impact of a carbon tax on aviation fuel. The effect of the tax on travel behaviour is small: a global $1000/tC would change travel behaviour to reduce carbon dioxide emissions from international aviation by 0.8%. This is because the imposed tax is probably small relative to the air fare. A $1000/tC tax would less than double air fares, and have a smaller impact on the total cost of the holiday. In addition, the price elasticity is low. A carbon tax on aviation fuel would particularly affect long-haul flights, because of high emissions, and short-haul flights, because of the emission during take-off and landing. Medium distance flights would be affected least. This implies that tourist destinations that rely heavily on short-haul flights (that is, islands near continents, such as Ireland) or on intercontinental flights (e.g., Africa) will see a decline in international tourism numbers, while other destinations may see international arrivals rise. If the tax is only applied to the European Union, EU tourists would stay closer to home so that EU tourism would grow at the expense of other destinations. Sensitivity analyses reveal that the qualitative insights are robust. A carbon tax on aviation fuel would have little effect on international tourism, and little effect on emissions.

Suggested Citation

  • Richard S.J. Tol, 2007. "The Impact of a Carbon Tax on International Tourism," Working Papers 2007.34, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2007.34
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    References listed on IDEAS

    as
    1. Greening, Lorna A., 2004. "Effects of human behavior on aggregate carbon intensity of personal transportation: comparison of 10 OECD countries for the period 1970-1993," Energy Economics, Elsevier, vol. 26(1), pages 1-30, January.
    2. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
    3. Andrea Bigano & Jacqueline M. Hamilton & Richard S.J. Tol, 2004. "The Impact Of Climate On Holiday Destination Choice," Working Papers FNU-55, Research unit Sustainability and Global Change, Hamburg University, revised Oct 2004.
    4. Jacqueline M. Hamilton & David J. Maddison & Richard S.J. Tol, 2003. "Climate Change And International Tourism: A Simulation Study," Working Papers FNU-31, Research unit Sustainability and Global Change, Hamburg University, revised Sep 2003.
    5. Andrea Bigano & Jacqueline M. Hamilton & Maren A. Lau & Richard S.J. Tol & Zhou Yuan, 2004. "A Global Database Of Domestic And International Tourist Numbers At National And Subnational Level," Working Papers FNU-54, Research unit Sustainability and Global Change, Hamburg University, revised Nov 2004.
    6. Witt, Stephen F. & Witt, Christine A., 1995. "Forecasting tourism demand: A review of empirical research," International Journal of Forecasting, Elsevier, vol. 11(3), pages 447-475, September.
    7. Wohlgemuth, Norbert, 1997. "World transport energy demand modelling : Methodology and elasticities," Energy Policy, Elsevier, vol. 25(14-15), pages 1109-1119, December.
    8. Jacqueline M. Hamilton, 2002. "Climate and the Destination Choice of German Tourists," Working Papers FNU-15, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2003.
    9. Andrea Bigano & Maria Berrittella & Roberto Roson & Richard S.J. Tol, 2004. "A General Equilibrium Analysis of Climate Change Impacts on Tourism," Working Papers 2004.127, Fondazione Eni Enrico Mattei.
    10. Schipper, Youdi & Rietveld, Piet & Nijkamp, Peter, 2001. "Environmental externalities in air transport markets," Journal of Air Transport Management, Elsevier, vol. 7(3), pages 169-179.
    11. Tae H. Oum & Waters, W.G. & Jong Say Yong, 1990. "A survey of recent estimates of price elasticities of demand for transport," Policy Research Working Paper Series 359, The World Bank.
    12. Schafer, Andreas & Jacoby, Henry D., 2005. "Technology detail in a multisector CGE model: transport under climate policy," Energy Economics, Elsevier, vol. 27(1), pages 1-24, January.
    13. Jacqueline M. Hamilton & David J. Maddison & Richard S.J. Tol, 2004. "The Effects Of Climate Change On International Tourism," Working Papers FNU-36, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2004.
    14. Andrea Bigano & Jacqueline M. Hamilton & Richard S.J. Tol, 2005. "The Impact Of Climate Change On Domestic And International Tourism: A Simulation Study," Working Papers FNU-58, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2005.
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    Citations

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    Cited by:

    1. Mayor, Karen & Tol, Richard S.J., 2007. "The impact of the UK aviation tax on carbon dioxide emissions and visitor numbers," Transport Policy, Elsevier, vol. 14(6), pages 507-513, November.
    2. Bakhat, Mohcine & Rosselló, Jaume, 2013. "Evaluating a seasonal fuel tax in a mass tourism destination: A case study for the Balearic Islands," Energy Economics, Elsevier, vol. 38(C), pages 12-18.
    3. Mayor, Karen & Tol, Richard S.J., 2009. "Aviation and the environment in the context of the EU–US Open Skies agreement," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 90-95.
    4. Pagoni, Ioanna & Psaraki-Kalouptsidi, Voula, 2016. "The impact of carbon emission fees on passenger demand and air fares: A game theoretic approach," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 41-51.
    5. repec:ris:jspord:0956 is not listed on IDEAS
    6. repec:eee:jaitra:v:63:y:2017:i:c:p:84-94 is not listed on IDEAS
    7. repec:gam:jsusta:v:9:y:2017:i:7:p:1247-:d:104856 is not listed on IDEAS
    8. Karen Mayor & Richard S.J. Tol, 2007. "The Impact of the EU-US Open Skies Agreement on International Travel and Carbon Dioxide Emissions," Papers WP191, Economic and Social Research Institute (ESRI).
    9. Andrea Bigano & Jacqueline M. Hamilton & Richard S.J. Tol, 2008. "Climate Change and Tourism in the Mediterranean," Working Papers FNU-157, Research unit Sustainability and Global Change, Hamburg University, revised Feb 2008.
    10. González, Rodrigo & Hosoda, Eiji B., 2016. "Environmental impact of aircraft emissions and aviation fuel tax in Japan," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 234-240.
    11. Karen Mayor & Richard S. J. Tol, 2008. "Scenarios of Carbon Dioxide Emissions from Aviation," Papers WP244, Economic and Social Research Institute (ESRI).
    12. repec:eee:touman:v:55:y:2016:i:c:p:326-336 is not listed on IDEAS
    13. repec:eee:touman:v:31:y:2010:i:2:p:285-290 is not listed on IDEAS
    14. Mayor, Karen & Tol, Richard S.J., 2008. "The impact of the EU–US Open Skies agreement on international travel and carbon dioxide emissions," Journal of Air Transport Management, Elsevier, vol. 14(1), pages 1-7.
    15. Martín-Cejas, Roberto Rendeiro, 2010. "Ramsey pricing including CO2 emission cost: An application to Spanish airports," Journal of Air Transport Management, Elsevier, vol. 16(1), pages 45-47.
    16. Karen Mayor & Richard S. J. Tol, 2008. "European Climate Policy and Aviation Emissions," Papers WP241, Economic and Social Research Institute (ESRI).
    17. Karen Mayor & Richard S. J. Tol, 2008. "Aviation and the Environment in the Context of the EU-US Open Skies Agreement," Papers WP240, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    International Tourism; Tax; Carbon Dioxide; Aviation;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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