Does tourism increase CO2 emissions and health spending in Mexico? New evidence from nonlinear ARDL approach

This study investigates the nexus between tourism, CO2 emissions and health spending in Mexico. We applied a nonlinear ARDL approach for the empirical analysis for the time period 1996-2018. Mexico receives a large number of tourists each year, tourism improves foreign exchange earnings and contributes positively to the economic growth. However, tourist activities impose a serious environmental cost in terms of CO2 emissions which increase health spending. The empirical findings suggest that tourism leads to CO2 emissions which resultantly causes a high level of health spending in Mexico. Both short-run and long-run findings reported a significant positive association between tourism, CO2 emissions, and health expenditures. Therefore, the government needs legislation to reduce CO2 emissions, besides the use of renewable energy could also help to reduce the CO2 emissions and health expenditures in society. This study does not support to reduce the health expenditure, rather it suggests optimal utilization of the funds allocated to the health sector.