Nexus Between Tourism, Environmental Degradation, and Economic Growth: Evidence From Non-Linear ARDL and Causality Estimation

Abstract The purpose of this study is to assess the asymmetric associations of environmental degradation, and economic growth with Pakistan's tourism demand. To fulfil this purpose, “non-linear autoregressive distributed lag” (NARDL) modelling was performed on the time series data collected from Pakistan for 26 years. The unit root test, co-integration test, long-run estimation, and NARDL estimations were applied to the data to generate findings. The present study revealed the presence of significant asymmetric associations between environmental degradation and tourism demand and economic growth and tourism demand. It is found that the increase and decrease in economic growth cause the tourism demand of Pakistan to increase. Results further indicate that the increase in environmental degradation in Pakistan causes its tourism demand to reduce. The current study tends to be theoretically significant and practically beneficial for Pakistan's policymakers. It will help them realize the role of economic growth of the country and environmental degradation in shaping Pakistan's tourism demand and thus help them develop and implement better policies for the growth of the tourism sector.