The nexus of tourism, renewable energy, income, and environmental quality: an empirical analysis of Pakistan

In the current study, we investigate the dynamic association of tourism, renewable energy, income, foreign direct investment (FDI), and carbon dioxide (CO(2)e) for Pakistan over 1990–2017. We established four plausible hypotheses and verified by employing the autoregressive distributed lags model and Granger causality based on vector error correction model (VECM). Considering the cointegration relationship between the variables, the outcomes of autoregressive distributed lags suggested that tourism increases economic growth, and economic growth induces tourism in the long-run, thus confirming tourism-led development, and growth-led tourism hypothesis; similarly, the tourism generates CO(2)e emissions, which supported the tourism-led emission hypothesis. The role of renewable energy consumption found to be a significant moderator, thus helping to enrich tourism, accelerating economic growth, and combating CO(2)e in the country. VECM causal results indicated the significant bidirectional causal linkages between tourism and economic growth—another causality found between tourism and CO(2)e. There is one-way causality from FDI and renewable energy towards income simultaneously. Overall, the designers of policies will find this study useful for policymaking at government levels for smooth economic growth, investment, and sustainable tourism sector.