The impact of carbon emissions on international tourist flows in Singapore

Chang, Kah Chun and Lee, Shi Qian (2026) The impact of carbon emissions on international tourist flows in Singapore. Final Year Project, UTAR.

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Abstract

This study examines the long-run and short-run relationships, alongside the causal direction, between carbon dioxide emissions (CO2) and international tourist arrivals (TA) in Singapore from 1995 to 2024, while controlling for Gross Domestic Product (GDP) per capita and Foreign Direct Investment (FDI). Utilizing a quantitative time-series approach, the empirical framework relies on Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root testing, the Autoregressive Distributed Lag (ARDL) bounds test for cointegration, and the pairwise Granger causality test. To ensure the statistical reliability of the regression parameters, diagnostic tests for normality, heteroskedasticity, and serial correlation were also conducted. The unit root test results indicate a mixed level of integration among the variables at (0) and (1), validating the application of the ARDL model. The ARDL bounds test confirms a stable long-run cointegrating relationship, as the calculated F-statistic of 4.2176 exceeds the upper critical bound of 3.67 at the 5% significance level. The long-run coefficient of CO2 is positive and statistically significant, revealing that a 1% increase in CO2 emissions is associated with a 7.1258% increase in TA on average. Conversely, FDI exhibits a significant negative long-run impact, where a 1% rise in FDI leads to a 3.29% decline in arrivals, suggesting industrial investment competition with tourism resources. Finally, the Granger causality test reveals a unidirectional causality flowing from TA to CO2 emissions, implying that tourist inflows drive energy consumption and carbon emissions rather than the other way around. These findings provide critical policy insights regarding the decarbonization of tourism infrastructure under the Singapore Green Plan 2030.

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