Sustainability and Tourism Growth in the Mediterranean Countries: A Panel Data Analysis

This study investigates the long-term relationships among tourism activity, energy consumption, economic development, and CO2 emissions using panel data for 15 Mediterranean Basin countries observed at 17 time points between 1994 and 2022. Pooled OLS, country fixed-effects, and two-way fixed-effects models, with gross capital formation included as a control variable, indicate that per capita energy consumption exhibits the strongest and most robust positive association with per capita CO2 emissions. In the preferred TWFE specification, tourist arrivals, per capita income, and gross capital formation are not statistically significantly associated with per capita CO2 emissions when inference is based on country-clustered standard errors. Driscoll–Kraay inference, the Common Correlated Effects Pooled Estimator, and an annualized first-difference specification confirm that the positive association between energy consumption and CO2 emissions remains consistent across alternative specifications. A composite Sustainability Index developed in the study reveals substantial disparities across countries: Malta, Italy, France, and Israel display comparatively strong sustainability profiles, whereas Bosnia and Herzegovina, Tunisia, Algeria, and Egypt remain relatively vulnerable within the study sample. Overall, the findings underscore the importance of integrating renewable energy, improving energy efficiency, and adopting low-carbon tourism strategies to support sustainable development in the Mediterranean region. The reported regression coefficients should be interpreted as conditional associations rather than causal effects.