The Mediating Effect of Economic Factors and Energy Consumption on the Relationship between Tourism and Carbon Dioxide Emissions

Abstract
Introduction
Nowadays, amid growing environmental degradation, integrating environmental considerations into economic activities has become a key priority for countries worldwide. Consequently, numerous researchers and economists have examined the impact of various economic factors on environmental quality. Given the critical importance of reducing CO₂ emissions-as a primary indicator of environmental quality-and the unavoidable direct and indirect effects of tourism on environmental pollution, this study investigates the impact of tourism on CO₂ emissions in MENA (Middle East and North Africa) countries over the period 1990-2023. The analysis explicitly considers the mediating roles of economic growth, foreign direct investment (FDI), and energy consumption, employing panel data ARDL (Autoregressive Distributed Lag) modeling along with the Sobel test. The findings reveal that tourism exerts a positive and statistically significant effect on CO₂ emissions in both the long run (coefficient = 0.658) and the short run (coefficient = 0.132). Moreover, economic growth, FDI, and energy consumption all positively influence CO₂ emissions across both time horizons. The Sobel test results for the mediating variables-economic growth (5.201), FDI (1.962), and energy consumption (2.274)-all exceed the critical value of 1.96, confirming that each plays a statistically significant mediating role in the relationship between tourism and CO₂ emissions. These results indicate that tourism not only directly deteriorates environmental quality but also indirectly increases CO₂ emissions by stimulating economic growth, attracting foreign direct investment, and raising energy consumption.
Introduction
Tourism is a multidimensional economic activity that significantly influences environmental quality. The rise in carbon dioxide (CO₂) emissions associated with tourism development may stem not only from direct sources-such as transportation and infrastructure-but also from indirect channels driven by underlying economic dynamics. Specifically, tourism can stimulate economic growth, attract foreign direct investment (FDI), and increase energy consumption, all of which may, in turn, contribute to higher CO₂ emissions. While the direct environmental impact of tourism has been widely examined in the literature, its indirect effects-mediated through key macroeconomic and energy-related factors-have largely been overlooked.
Addressing this gap, the present study investigates both the direct and indirect effects of tourism on CO₂ emissions in MENA countries over the period 1990-2023. Emphasizing the mediating roles of economic growth, foreign direct investment, and energy consumption, the analysis employs the panel data Autoregressive Distributed Lag (ARDL) approach in conjunction with the Sobel test to assess the significance of these indirect pathways.
Research Method
It is worth noting that the ARDL (Autoregressive Distributed Lag) approach is employed in this study due to its notable advantages. In particular, the ARDL framework accommodates variables integrated of different orders-specifically, a mix of I(0) (stationary) and I(1) (non-stationary) series-without requiring pre-testing for unit roots beyond confirming that no variable is I(2). In the context of panel data, the ARDL method offers three distinct estimation structures: the Mean Group (MG), the Dynamic Fixed Effects (DFE), and the Pooled Mean Group (PMG) estimators. To determine the most appropriate and efficient estimator among these alternatives, the Hausman specification test is applied. Following model estimation, the Sobel test is utilized to formally assess the statistical significance of the mediating roles played by economic growth, foreign direct investment, and energy consumption in the relationship between tourism and CO₂ emissions.
Findings
The empirical results indicate that tourism exerts a statistically significant positive effect on CO₂ emissions in both the long run (coefficient = 0.658) and the short run (coefficient = 0.132). Similarly, economic growth, foreign direct investment (FDI), and energy consumption all demonstrate positive and significant impacts on CO₂ emissions across both time horizons. The Sobel test results confirm the mediating roles of these variables, with test statistics of 5.201 (economic growth), 1.962 (FDI), and 2.274 (energy consumption), all exceeding the conventional critical value of 1.96 at the 5% significance level.
These findings imply that tourism not only directly contributes to environmental degradation through increased emissions but also indirectly exacerbates CO₂ emissions by stimulating economic growth, attracting foreign direct investment, and raising energy consumption. Consequently, the environmental footprint of tourism extends beyond its immediate operational impacts, operating through key macroeconomic and energy-related channels.
Conclusion and Policy Implications
Based on the empirical findings, the following policy recommendations are proposed to mitigate the environmental impact of tourism-particularly its contribution to CO₂ emissions-while supporting sustainable economic development in MENA countries:

Strengthen Environmental Regulations in Tourism Zones: Enforce comprehensive environmental laws targeting tourism-related activities, including limits on energy consumption, stricter controls on transportation emissions, and systematic monitoring of waste management in resorts and recreational areas.
Balance Tourism-Led Growth with Environmental Safeguards: While tourism can improve economic conditions, policymakers should implement measures to manage the adverse indirect effects of tourism-driven economic growth and FDI on environmental quality, including integrating environmental impact assessments into tourism development plans.
Promote Cleaner Production Technologies: Prioritize investments in cleaner and more efficient production technologies and encourage a shift toward less carbon-intensive input combinations. This can help countries move toward the downward-sloping portion of the Environmental Kuznets Curve and avoid high-pollution equilibrium.
Implement Efficient Energy Pricing Policies: Introduce optimal energy pricing mechanisms, such as removing subsidies on fossil fuels and adopting tiered or dynamic pricing, to discourage excessive energy consumption and reduce associated emissions.
Screen and Regulate Foreign Direct Investment: Establish stricter screening criteria for incoming FDI to discourage investments in environmentally harmful sectors. Incentives should be redirected toward green, sustainable projects aligned with national climate goals.
Accelerate the Transition to Renewable Energy: Actively promote the substitution of fossil fuels with renewable energy sources (e.g., solar, wind) in both tourism infrastructure and the broader economy to decouple economic activity from carbon emissions.