Linking tourism flows and biological biodiversity in Small Island Developing States (SIDS): evidence from panel data

Small Island Developing States (SIDS) are characterized by high levels of biodiversity that are under threat. Simultaneously, the tourism sector plays a key role in many of these economies. In this paper, the Hausman-Taylor estimator is used to investigate a tourism demand function in SIDS in which...

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Bibliographic Details
Published in:Environment and development economics 2013-08, Vol.18 (4), p.392-404
Main Authors: Teelucksingh, Sonja S., Watson, Patrick K.
Format: Article
Language:English
Subjects:
Biodiversity
Demand (economics)
Developing countries
Development economics
Economic factors
Economics
Ecotourism
Environment
Environmental economics
Estimators
Expenditures
Foreign exchange rates
International policy
Islands
LDCs
Natural resource management
Prices
SIDS
Special Section on Biodiversity-based development in Small Island Developing States
Threats
Tourism
Trends
Variables
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Summary:Small Island Developing States (SIDS) are characterized by high levels of biodiversity that are under threat. Simultaneously, the tourism sector plays a key role in many of these economies. In this paper, the Hausman-Taylor estimator is used to investigate a tourism demand function in SIDS in which marine and terrestrial biodiversity play a key role, in addition to the traditional economic and price variables. This estimator allows for both the presence of time-invariant variables, a standard feature of environmental data, and the existence of endogenous covariates. Levels of biodiversity are found to have a significant influence on tourism in SIDS and, in particular, a test for redundant variables shows that the biodiversity variables are jointly significant. This justifies their inclusion in a tourism demand function, over and above the conventional economic factors, and points to the importance of national and international policy in protecting the biodiversity of SIDS.
ISSN:1355-770X
1469-4395
DOI:10.1017/S1355770X13000120