Abstract
This study investigates the mediating role of environmental taxes in the relationship between climate change and international tourism, while examining heterogeneity across global income groups. Using a balanced panel of 214 countries from 2015 to 2024, the analysis applies a Generalized Structural Equation Model (GSEM) and validates findings through a Praise–Winsten regression as a robustness check. Results indicate that climate change negatively impacts global tourism performance (international arrivals and receipts), though the magnitude of impact varies by income groups: highest in low-income economies and lowest in high-income countries. Also, environmental tax mediates the climate change-tourism relationship, channelling the negative impact in low-income economies, and yielding positive adaptive effects in high-income countries. The findings highlight the policy imperative of aligning environmental taxes with countries’ income level to curb the negative impact of climate change on tourism performance.
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