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Water resources and tourism development in South Asia: an application of dynamic common correlated effect (DCCE) model

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Abstract

The current study explores the relationship between water resources and tourism in South Asia for the period of 1995–2017. The study employs the CIPS unit root test for stationarity of the variables and the CD test for cross-sectional dependence among cross-sectional units. As for the long-run parameters, a novel technique, known as dynamic common correlated effect (DCCE) model, is used which was recently developed by Chudik and Pesaran (J Econ 188:393–420, 2015b). The outcomes from the DCCE method suggest that water resources have a positive impact on tourism in South Asia. It is also proven that ignoring cross-sectional dependence among the cross-sectional units may bring about misleading outcomes. The findings of the study can be helpful for policymakers to understand the role of water resources in boosting tourism and contributing to the economic prosperity of South Asian countries.

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Notes

  1. https://www.wttc.org/-/media/files/reports/economic-impact-research/regions-2019/world2019.pdf

  2. We employed principal component analysis (PCA) using reviews to construct governance index of various components of governance from World Bank data (including rule of law, government effectiveness, voice and accountability, absence of violence, political stability, regulatory quality, and control of corruption).

  3. The study constructed infrastructure index following Palei (2015). In this study, infrastructure index was developed by using basic physical infrastructure, i.e., transport infrastructure, telecommunication infrastructure, water sanitation, and energy infrastructure.

  4. We employed xtwest command for Westerlund cointegration.

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Acknowledgments

We would like to acknowledge the contributions of research participants to this paper.

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All the authors contributed equally.

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Authors and Affiliations

  1. Department of Management Sciences, The Superior College, Lahore, Pakistan

    Muhammad Saeed Meo

  2. Universiti Utara Malaysia, Changlun, Malaysia

    Saeed Ahmad Sabir

  3. Department of Finance, School of Economics & Management, Beihang University (BUAA), Beijing, People’s Republic of China

    Hira Arain

  4. Department of Economics, The women university, Multan, Pakistan

    Raima Nazar

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  1. Muhammad Saeed Meo
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  2. Saeed Ahmad Sabir
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  3. Hira Arain
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  4. Raima Nazar
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Correspondence to Raima Nazar.

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Highlights

1. The current study explored the relationship between water availability, governance, infrastructure, exchange rate, and tourism in the south Asian context.

2. The study has employed CIPS unit root test and CD test for cross-sectional dependence, while for long-run parameters, a novel technique known as Dynamic common correlated effect (DCCE) model, is used which is recently developed by Chudik and Pesaran (2015b).

3. The DCCE model accommodates heterogeneity, cross-sectional dependence, and stationarity, which is not possible in other long period based econometrical models.

4. It is confirmed from the results that there is a negative relationship between exchange rate and tourism. However, governance, infrastructure, and water availability have a positive relationship with tourism in the South Asian context.

5. It also proves that ignoring cross-sectional dependence among the cross-sectional units may cause misleading outcomes.

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Meo, M.S., Sabir, S.A., Arain, H. et al. Water resources and tourism development in South Asia: an application of dynamic common correlated effect (DCCE) model. Environ Sci Pollut Res 27, 19678–19687 (2020). https://doi.org/10.1007/s11356-020-08361-8

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