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Climate Change Challenges for Aviation and Tourism Peter Forsyth Monash University ABARE Climate Change Workshop Canberra February 5, 2008 Themes: How climate change impacts on tourism, and how tourism impacts on climate change

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climate change challenges for aviation and tourism
Climate Change Challenges for Aviation and Tourism

Peter Forsyth

Monash University

ABARE Climate Change Workshop

Canberra February 5, 2008


How climate change impacts on tourism, and how tourism impacts on climate change

Issues arising from the impact of climate change mitigation policies on tourism

research team
Research Team

Sustainable Tourism Cooperative Research Centre funded research

Centre for Tourism Economics and Policy Research:

Ray Spurr (UNSW)

Larry Dwyer (UNSW)

Thiep Van Ho (Monash)

Daniel Pambudi (Monash)

Serajul Hoque (Monash)

Peter Forsyth (Monash)


Climate Change impacts on tourism

Tourism impacts on climate change

Aviation- specific aspects

Climate change policies and their impacts on tourism



climate change impacts on tourism
Climate Change Impacts on Tourism

Tourism relies heavily on the natural environment, especially in Australia

Change will mean natural attractions will be damaged, or even destroyed

Great Barrier Reef; Kakadu; ski fields; beach areas

Impacts mainly negative for Australian attractions- a few could be positive

A matter for case by case assessment (STCRC study proposed)

Other countries both more and less affected- Australia likely to lose out in terms of visitor numbers, on balance


May be feasible to halt or minimise damage in several cases (not all)

E.g. Snow making on ski fields; barrages to prevent flooding

Case by case assessment needed- what is feasible, and cost effective?

Adaptation is costly

Who will pay for it? Users? Earmarked funds (from carbon permit sales?)

assessing the cost
Assessing the Cost

Need physical projections of effects and damage

Factor in adaptation costs

Project loss of tourism visitation

Estimate loss of expenditure from inbound visitors (to region, state, Australia)

Estimate the welfare losses (consumers surplus) to Australian tourists

Model economic impacts of changed expenditure patterns (using a computable general equilibrium model)

All these to be done in projected STCRC study

tourism impacts on climate change
Tourism Impacts on Climate Change

Matter of measuring the “carbon footprint” of tourism- how much of GGEs does it produce?

What is “tourism”? – not in the accounts

A combination of parts of several industries- accommodation, aviation, etc

Direct emissions from tourism- e.g. from use of aviation and motor vehicle fuel

Indirect emissions- e.g. From hotel use of electricity

Two alternative approaches- production and expenditure based

production and expenditure based footprints
Production and Expenditure Based Footprints

Production: emissions from production by the various components of the tourism industry, as defined in the Australian Tourism Satellite Account

Expenditure: emissions from providing tourists will goods and services, including aviation to Australia

Draft production based carbon footprint now prepared- for release soon


Ground component includes direct and indirect

Aviation includes direct only

Based on Lundie, Dwyer and Forsyth (2007); BA carbon calculator


Aviation attracts particular attention as a source of GGEs

Around 2% of world total GGEs

GGEs from aviation likely to be more damaging than surface emissions (suggested multiplier, 2.7) – but this issue is controversial

Aviation becoming more fuel efficient, at about 1% PA

Little scope for big shifts to alternative technologies in short/ medium term (next 15 years)

Aviation demand growing quite rapidly

Total GGEs from aviation will grow moderately rapidly, and share of total GGEs will grow over the medium term

Hence, aviation is controversial

impacts of climate change mitigation policies
Impacts of Climate Change Mitigation Policies

Could have carbon tax, or tradable permits

Various carbon prices: Low $20/tonne; High, $50 per tonne

Can allow for higher damage by aviation – use factor of 2.5

impacts on trip costs low scenario
Impacts on Trip Costs- Low Scenario

% increase in total trip cost

Low carbon price, low damage

GROUND Air Fare Total

NZ 4.1 2.4 3.6

HK 3.0 2.8 2.9

UK 3.7 3.4 3.5

impacts on trip costs high scenario
Impacts on Trip Costs- High Scenario

% increase in total trip cost

High carbon price, high damage

GROUND Air Fare Total

NZ 10.4 15.0 11.7

HK 7.6 17.4 10.9

UK 9.1 21.2 14.7

implications for tourism
Implications for Tourism

Carbon pricing will affect outbound and inbound tourism (latter probably more)

Impact quite significant under “bad” case scenario

Price increase over a period of years

Partial equilibrium results: General equilibrium results would be less negative for tourism- other changes, such as lower exchange rate, would help tourism

Of tourism industries, only aviation would be likely to be awarded many free tradable permits- most of tourism industries simply pay higher prices for inputs

issues 1 policy revenues and adaptation costs
Issues- 1: Policy Revenues and Adaptation Costs

Major costs will be imposed on tourism by climate change- loss of markets, adaptation costs

Tourists will pay more under climate change mitigation policies, but other industries and governments gain higher revenues

Who should pay for costs of adaptation?

Should revenues be earmarked?

issues 2 tourism as a footloose export industry
Issues-2:Tourism as a “footloose” Export Industry

Special consideration may be given for “footloose” export industries (which may shift offshore and produce GGEs there)

Tourism and aviation are more footloose than most industries

Could consider exemption of international aviation from climate change policy (e.g. ETS) (except where other partner country includes aviation)

Cost: higher cost of meeting home targets

Benefit: less loss of tourism benefits

Benefit: lower GGEs in competitor countries

Balance of costs and benefits unclear

issues 3 aviation cost pass through
Issues-3:Aviation Cost Pass Through

It has been assumed that airlines will pass through to passengers the costs (value) of permits/taxes 100%

Passengers will respond- and reduce travel

Airlines may have difficulty in passing though the full cost- especially in the short run

Impact of climate change policy will be less than under full pass through

But what if airlines are given free permits?

Do they pass through the cost ($0) or the value (quite high) of the permits?

Little impact on travel if the former is the case

issues 4 aviation special measures in order
Issues-4: Aviation-Special Measures in Order?

Aviation a growing source of GGEs, even with new technology and climate change policies

Many call for additional measures on aviation- restrictions on travel, extra taxes etc

May be popular, but poor environmental economics

Under the ETS, overall costs to the economy are minimised by facing all industries with the same carbon price- some adjust more than others

Special measures on aviation add to costs

But do not reduce GGEs in total (set by the ETS)

In sum: special measures directed to aviation add to costs but achieve nothing by way of reductions of GGEs


Costs of climate change on tourism quite high for Australia

Tourism contributes to GGEs through use of transport and indirectly, electricity

Climate change policies will add to the cost of tourism, but the net impact needs further research to establish

Aviation is a controversial area, and it poses a number of issues to be resolved

Best handled thorough part of an overall climate change policy rather than by special measures


CTEPR/STCRC Climate Change Policies and Australian Tourism (2007)

Lundie, Dwyer and Forsyth, Journal of Sustainable Tourism, 2007


Thank You!