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The Impact Of A Carbon Tax On International Tourism

  • Richard S.J. Tol


    (Economic and Social Research Institute, Dublin)

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.

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Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-120.

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Length: 30 pages
Date of creation: Nov 2006
Date of revision: Nov 2006
Publication status: Published, Transportation Research D: Transport and the Environment, 12 (2), 129-142
Handle: RePEc:sgc:wpaper:120
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  1. Richard S.J. Tol & Andrea Bigano & Jacqueline M. Hamilton, 2005. "The Impact of Climate on Holiday Destination Choice," Working Papers 2005.4, Fondazione Eni Enrico Mattei.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Wohlgemuth, Norbert, 1997. "World transport energy demand modelling : Methodology and elasticities," Energy Policy, Elsevier, vol. 25(14-15), pages 1109-1119, December.
  13. 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.
  14. 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.
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