The dynamic linkage between renewable energy, tourism, CO2 emissions, economic growth, foreign direct investment, and trade.

Because of the lack of econometric studies in relevance to the link between tourism and renewable energy, the goal of this study is to remedy this lack and to explore the causal relationship between renewable energy consumption, the number of tourist arrivals, the trade openness ratio, economic growth, and carbon dioxide (CO2) emissions for a panel of 22 Central and South American countries, spanning the period 1995-2010. The empirical findings document that the variables under investigation are cointegrated, while short-run Granger causality tests illustrate unidirectional causalities running from: i) renewable energy to CO2 emissions and trade; ii) tourism to trade; and iii) economic growth to trade and tourism. In the long-run, there is evidence of bidirectional causality between renewable energy consumption, tourism, trade openness and emissions. Thus, renewable energy and tourism are in a strong long-run causal relationship. Moreover, long-run fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) estimates highlight that tourism and renewable energy contribute to the reduction of emissions, while trade and economic growth lead to higher carbon emissions. Therefore, encouraging the use of renewable energy and tourism developments, particularly green tourism, are good policies for this region to combat climate change.