Tourism’s Influence on Economic Growth and Environment in Saudi: Present and Future

Reports from the World Tourism Organization indicate that tourism activity has been increasingly booming; this sector is essential for economic growth and may affect the environment. Tourism is one of the key strategic sectors for planned growth in Saudi Arabia’s Vision 2030. This study is designed to evaluate the long-termning association between tourist arrivals, growth domestic product (GDP), and CO2 emissions in the Kingdom of Saudi Arabia (KSA). The data related to these variables were assessed for the period 2010 to 2020. The autoregressive distributed lag (ARDL) bounds results revealed that there are long-established relations between tourist arrivals and growth domestic product and tourist arrivals and CO2 emissions. The dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) model outcomes were compatible with the outcomes of the ARDL model. In reference to the Granger causality test, tourist arrivals cause (affect) the GDP. Such a result confirms the conception that tourism encourages economic growth. No causality runs from tourist arrivals towards CO2 accumulation. This result may reflect the governmental effort to reduce CO2 accumulation and/or to perform tourism activities in a sustainable way. The results predicted that the growth rate of tourist arrivals, GDP, and CO2 accumulation equal 0.0023, 0.048, and 0.0169, respectively, during the forecast period (2021–2030), which appeared to be increasing for tourist arrivals and GDP and decreasing for CO2 accumulation. The study recommended that, to increase economic growth, tourist arrivals should be increased alongside performing tourism activities in a sustainable way. These findings point to the benefits of governance in ensuring effective policies to decarbonize the environment, and policy proposals are put forward accordingly.