Global Value Chains and National Tourism Carbon Competitiveness

Abstract

With the emergence of global value chains (GVCs), imported products and services play a critical role in the quality and quantity of tourism services. What to import and how much to import thus concern the trade-offs of maintaining economic prosperity, reducing domestic and global carbon emissions and improving tourism carbon efficiency at destinations. This study clarifies the relationship between tourism and GVCs and presents an environmentally extended input–output model to assess the distribution of tourism’s economic and environmental effects in global segments. We argue that GVCs increase a nation’s tourism carbon competitiveness and relieve global carbon pressure when imports (1) are high in carbon contents but low in economic linkage, (2) facilitate the transition of domestic businesses toward better energy efficiency, and (3) are produced with a lower carbon intensity than the domestic production technology. An empirical case of the bilateral travel between Taiwan and Japan is applied.

Keywords

tourism carbon footprint global value chains tourism linkage tourism leakage environmentally extended input–output model

Introduction

In the past 50 years, national economies have become interconnected, in which the design, production, assembly, package, transport, marketing, or management are easily outsourced to foreign production (UNEP 2013). Reflected in this globalization pattern, global value chains (GVCs), which describe the full range of activities that firms require from multiple suppliers across different geographic areas to bring a product or service together, have begun to emerge. Recognized by the Organization for Economic Co-operation and Development (OECD), World Trade Organization, and World Bank, participation in GVCs contributes to economic growth and job creation in the long term through the gains of product specialization, cost efficiency, and knowledge and technology spillovers (OECD-WTO-WBG 2014).

Research on GVCs focuses on evaluating the shifting pattern of global production, understanding the governance of GVCs, and identifying its role in shaping a nation’s comparative advantage (UNEP 2013). Although GVCs are receiving increasing attention in carbon emissions research (Ferrarini and De Vries 2015; Hertwich and Peters 2009), this topic is rarely addressed in the tourism context, given that standard tourism carbon footprint assessments typically limit their research scope to a predefined territory, tracing only the emissions that are produced domestically (Becken and Patterson 2006; Patterson and McDonald 2004; Meng et al. 2016). This standard approach in tourism applications is consistent with the Kyoto Protocol (KP) concept, which specifies that the national boundary is the computational basis in measuring greenhouse gas (GHG) emissions and defines a country’s mitigation responsibility (IPCC 2006). This philosophy precludes emissions that are associated with international aviation, international bunker transportation, and embedded emissions through imports. In other words, the traditional approach focuses mainly on a country’s ability to minimize tourism carbon emissions in the domestic value chain and places less emphasis on the dynamics of imports and their significance in supporting both local economic activities and their embedded carbon emissions.

Overlooking GVCs in the tourism context, however, leaves two issues unaddressed. First, our ability to collaborate with other regions to locate products and services with a lower intensity of environmental pollution than what are produced domestically is limited. Substituting high-polluting local products and services with energy-efficient imports improves local carbon intensity and alleviates pressure on the global carbon base. This factor is extremely critical to confirm whether embracing international trade can aid in the decrease of global emissions, the ultimate goal of our actions. If imports are produced with inferior energy efficiency than domestic goods, the pollution and mitigation responsibility are transferred to other countries and an increase of the global carbon base is expected.

Although several studies have begun to address the importance of imports in portraying the full responsibility of the tourism carbon footprint from the consumption accounting principle, their calculation approach assumes that the emissions embedded in imports are generated using technology that is identical to the domestic production structure, referred to as “domestic technology assumption.” This approach is applied to Australia (Dwyer et al. 2010), Wales, UK (Munday, Turner, and Jones 2013), Taiwan (Sun 2014), and Spain (Cadarso et al. 2015). Such an assumption allows destinations to easily grasp the differences in carbon responsibility if products and services are provided by firms that are located in the domestic region versus at other areas. However, to assess whether imports are produced with better energy efficiency, the production structure and energy use patterns of the imported country need to be incorporated into the evaluation model. Thus, connecting the destination with key trade partners to assess the carbon intensity of imported products against locally produced goods becomes an important step in evaluating whether international trade can actually benefit local and global tourism carbon efficiency.

The second issue with regard to connecting tourism carbon emissions with GVCs is the challenge of maintaining a balance between economic output retention and carbon reduction. Adopting international products and services, although reducing the carbon burden domestically, comes with a direct short-term cost of revenue leakage because payments for imports reduce the domestic economic impacts on GDP, employment, and personal income. A high level of economic leakage is perceived as an unsustainable direction because it generates negative outcomes that reduce the function of poverty alleviation, displace and exclude local producers, and increase our dependence on foreign companies and capitals (World Tourism Organization 2004). What to import and how much to import thus concerns the trade-offs of maintaining economic prosperity, reducing domestic and global GHG emissions and improving tourism carbon efficiency at destinations. This trade-off issue requires a systematic examination in order to reach the Pareto efficiency so that the minimum pollution will be emitted by the given tourism economic output. Thus, the efficiency or tourism competitiveness mentioned in this paper refers to the carbon intensity, the amount of GHG emissions per dollar GDP.

The purpose of this study addresses the above two issues: first, by providing an evaluation framework to analyze tourism receipts, revenue retention, and carbon emissions from the global value chain perspective. Economic and environmental linkage and leakage measurements are defined first to quantify the flow of international trade in the tourism context. An analytical procedure using the environmentally extended multiregional input–output (EEMRIO) model is then presented to quantify the distribution of value added and carbon emissions by the global segments at the destination country, the departure country, and the rest of the world (RoW). Based on this information, tourism carbon intensity can be calibrated for different respective geographical segments, allowing destinations to assess whether GVCs contribute to the carbon competitiveness of a country and to evaluate the trade-off between economic retention and carbon mitigation. The second purpose is to apply this framework to the bilateral travel between Taiwan and Japan. We use this example to illustrate that market force measurements (such as net inbound travel flow and positive tourism surpluses) share little information regarding the tourism competitiveness of a country; instead, the linkage and leakage patterns provide clear insights into where national tourism carbon efficiency can be improved.

The structure of this article is as follows: the next section introduces and defines the concepts of tourism linkage and leakage, which are critical steps in quantifying the interregional flow in global value chains. Based on these two concepts, the interplay between GDP, carbon emissions, and carbon efficiency under different levels of trade openness is clarified. The third section provides the analytical framework with the calculation formula to calibrate tourism carbon efficiency across regions for the bilateral travel flow. The fourth and fifth sections present the empirical tourism results for Taiwan and Japan followed by a discussion and conclusion.

Tourism Linkage and Leakage

The concept of tourism linkage describes the intersectoral relationships between tourism industries and their suppliers, domestically and internationally. The functions of the tourism services require a wide range of support from other firms to provide intermediate inputs (such as agricultural products, energy or bedding) and services (such as marketing, telecommunications, or legal consulting). The linkage of the tourism industry with other economic sectors is perceived as being deep and diverse, creating a strong indirect economic effect in revenue, jobs and value added for suppliers and contributing to the diversification of the economic structure (United Nations 2010). The UN World Tourism Organization (WTO) and World Travel and Tourism Council (WTTC) all recognize the importance of this rippling effect, and on every occasion when the significance of tourism is noted, both direct and secondary effects are placed side by side.

The same linkage concept also applies when tourism carbon emissions are under consideration. When addressing and calibrating this environmental externality, both energy consumption for the tourism industry directly serving visitors and indirect and induced materials and services are taken into account, presenting a complete picture of a carbon footprint (CF) concept (Gössling 2000). This approach reveals the carbon emissions responsibility of tourism industries and their suppliers. Empirical applications of tourism CF analysis have documented the scale of direct and indirect carbon emissions. Depending on the type of tourist consumption considered, the indirect effect of carbon emissions can match the size of direct tourism emissions (Dwyer et al. 2010; Patterson and McDonald 2004; Sun 2014; Kelly and Williams 2007; Konan and Chan 2010; Whittlesea and Owen 2012).

Tourism leakage, on the other hand, describes the process in which tourism foreign receipts do not reach and stay at the local destination but leak out to the tourist-generating region or the RoW (Mitchell and Ashley 2007; Sandbrook 2010). International trade is one of the main contributing factors for tourism leakage because, as the world moves toward reducing trading barriers, both primary (labor and capital) and secondary factors (materials and services) are easily provided by foreign sources. As a result, the leakage phenomenon can occur at the production process of tourism industries and during the supply chain stage. This signals an immediate revenue loss for the individual country.

Although economic leakage generally leads to the challenges of revenue retention, the adoption of imports equates to an export of CO₂, transferring carbon emissions, which should have been produced domestically, to foreign countries—referred to as carbon leakage. In the tourism context, this reduces the scale of the tourism carbon footprint and the responsibility of mitigation for the destination from the production-accounting principle (Munksgaard and Pedersen 2001; Peters and Hertwich 2008). Empirical studies have found that foreign-sourced production plays a critical part in tourism supply chains that is mainly associated with energy supplies, products in hospitality services, and the components of various types of souvenirs that visitors purchase. Emissions from imports are estimated to be 17% of the national tourism carbon footprint for Australia (Dwyer et al. 2010), 25% for Taiwan (Sun 2014), and more than 50% for Spain¹ (Cadarso et al. 2016). Such dependence on foreign productions is expected to be much more significant for small countries and island destinations because of a limited scale of industrialization and scarce natural resources.

In sum, linkage and leakage effects reveal a more complete picture of the economic influences and environmental consequences. The linkage effect describes the production patterns, quantifying the interrelationship between the tourism industry and suppliers, whereas the leakage effect explains the trade pattern, differentiating the ultimate benefits or pollution that the individual country receives. In essence, the linkage and leakage concepts highlight an important truth, which is that no destination can claim 100% of the tourism revenue from GVCs as the world continues to become globalized. Similarly, no destination holds full responsibility for its total tourism carbon footprint. When one destination aims to maximize tourism receipts, other regions receive spillovers of both economic and environmental effects. Measuring the spillover effect allows us to trace the distribution of tourism value added and carbon emissions by the host nation, the origin nation, and the RoW. In addition, this information benefits our understanding regarding the trade-off between economic outputs and carbon responsibilities.

We use Figure 1 to demonstrate three trade-off curves between GDP, carbon emissions, and carbon efficiency. Part I demonstrates the interplay between economic output and carbon emissions. When one country aims to keep 100% of the tourism value added, it will produce all products and services domestically without any adoption of imports, subsequently leading to a full and maximum responsibility for the direct and indirect tourism carbon footprint (point A in Figure 1). In reality, economic liberalization allows a certain degree of trade openness, and countries start to negotiate the types and amounts of imports with trade partners. This moves a country down the line from point A to point B in Figure 1 to enjoy the benefit of a smaller carbon burden but at the cost of reduced GDP. This trade-off curve is concave to the origin, indicating that products and services that carry the largest energy consumption intensities with a minimum economic linkage effect in the domestic supply chain can be easily located and outsourced to foreign producers at the beginning stage of trade liberalization, ceteris paribus. With more imports considered, the marginal effect of international trade on improving local carbon emissions is diminished (point C). Losing GDP in exchange for a smaller carbon emissions base at this stage is no longer a preferred option.

Part II in Figure 1 explains the same trade-off relationship but uses two related variables: the economic retention rate of GDP and the carbon leakage rate. The economic retention rate measures the percentage of value added that remains at the domestic production segment, whereas the carbon leakage rate calibrates the percentage of carbon emissions that are outsourced. Both variables proxy a standardized optimal status that a destination aims to achieve—a large economic retention status and a small carbon responsibility at the domestic territory. The benefits of using the standardized measurements allow destinations to benchmark themselves against other regions and help establish a global tourism environmental competitive index when multiple countries are compared side by side.

With information on GDP and carbon emissions in part I, we can further calculate tourism carbon intensity, measured as the amount of GHG emissions per dollar GDP (part III of Figure 1). This ratio presents a domestic opportunity cost of reducing X units of GHG emissions by relinquishing one dollar of GDP. Part III of Figure 1 demonstrates that the carbon intensity ratio will improve first (from A′ to B′) toward the energy-efficient status and then deteriorate (from B′ to C′) as the marginal benefits of international trade in reducing domestic emissions decrease along with the level of trade liberalization. Using this type of analysis, the destination is able to evaluate its current status on the curve and search for a combination of domestic and foreign-sourced products to improve its domestic carbon intensity. In other words, international trade provides a channel for destinations to locate a local optimization solution because it reduces the scale of the national tourism carbon footprint per dollar GDP. It is noted that if these imports are produced with the best clean technology, then a global optimization solution is located where the worldwide carbon footprint base can also be best relieved.

Evaluation Framework

Bilateral Tourism

This study builds its analysis based on a bilateral tourism evaluation framework that involves the outbound travel flow between a pair of countries. In this context, both countries serve as a departure point for their residents traveling abroad and as a host country for inbound visits. This symmetrical relationship in tourism receipts outflow and inflow provides a suitable context for analyzing their relative carbon competitiveness because of the following considerations. First, the carbon footprint of an international trip starts from the moment when visitors leave their residences. The complete measurement and mitigation of trip emissions require a global perspective that goes beyond the final destinations and that extends to the departure country because the latter plays a critical role in providing related services (mainly transportation) immediately before and after the international trip. The bilateral framework places departure and destination countries under analysis concurrently, not only presenting a complete picture of the carbon footprint but also allowing both regions to collectively seek solutions to reduce trip emissions. Second, two countries with a large volume of mutual travel are typically close trade partners to each other, bearing the largest share in value added and carbon emissions in international trade segments. Using the bilateral tourism framework as a starting point allows us to compare and evaluate tourism carbon efficiency of one country against the other to provide a clear status. Naturally, the pairwise comparison can be expanded and performed for all important inbound markets simultaneously—forming a multi-lateral travel analysis framework and allowing the destination to rank its own performance against individual countries in a further analysis.

Analysis Framework

The analysis framework consists of the following steps: (1) providing definitions on tourism linkage and leakage for international travel; (2) defining tourism linkage and leakage indicators; and (3) calculating the tourism linkage and leakage ratio based on the environmentally extended input–output (EEIO) model.

Step 1: Definition of tourism linkage and leakage

In the literature on interindustry linkages, backward linkages (BLs) are a widely accepted concept for measuring the relationship between the directly affected industry and its upstream suppliers. The commonly accepted approach to quantifying BL is to use the Leontief supply-driven (LSD) multiplier (Cai, Leung, and Mak 2006). The scale of the LSD multiplier depends on the interindustry relationship for a given economy in terms of how much intermediate input is needed to produce one dollar of final product across different industries.

Different from tourism linkage, various definitions and measurements of tourism leakage have been proposed (Mitchell and Ashley 2007). In this study, we adopt the definition of the United Nations (2010), for which tourism leakage can occur at two levels—referred to as structure leakage and economic leakage (Figure 2). Structure leakage occurs when outbound tourism services are provided by domestic businesses at the country of origin, capturing the revenue retained by national registered airlines (A1 in Figure 2) and domestic travel agencies serving outbound travel customers at the place of origin (A2). This leakage pattern is mainly determined by the travel pattern of local residents in their preferences for choosing national airlines over foreign competitors based on considerations of branding, route availability, price differences, flight frequency, and timing. It is also a matter of the proportion of travelers who prefer package tour (PT) over free and independent travel (FIT) because the PT format requires travel agencies to provide intermediary services (booking and guiding) for a risk-minimization experience, for which there will be assistance in matters of language, spatial orientation, and cultural barriers. In the regard, a share of international tourism expenditures will not reach the destination country, which is defined as structure leakage.

Economic leakage, on the other hand, describes the tourism revenue that reaches but does not remain at the destination country due to the direct and indirect adoption of imports, such as food, bedding, or consulting services. It can occur due to the limited capacity of the local tourism industries to provide an adequate quantity or proper quality of products for their customers, the price differences between domestic and imported goods, or the proliferation of off-shoring or multinational corporations (Wood 2008). While the agglomerated tourism is service dominated, the direct economic leakage can occur for the “shopping” (B1 in Figure 2) where tourists’ preference for imported souvenirs (e.g., a brand-name perfume) will siphon away certain revenue while only leaving the trade and transportation margin at the local economy. In addition, the secondary effect, that is, transactions through the supply chains, is also found to adopt a high level of imported inputs and services (C1 and C2). Overall, the revenue retained by destinations is direct visitor spending minus imported souvenirs (A3 – B1), and the indirect economic transactions occur within domestic supply chains (B2 + C3). How large the economic leakage ratio is depends on (1) the type of products and services that are purchased by inbound visitors, (2) the import ratio for these respective products and services, (3) the ratio of off-shoring operation, and (4) the regional trade pattern between the bilateral countries and the RoW.

Both structure leakage and economic leakage create monetary outflow, referred to as overall leakage. The process starts with structure leakage, which is then followed by direct and indirect economic leakage at the local economy. For example, visitors from country A enjoy the local food at country B, which is produced using sun-dried tomatoes imported from country A and rice from the RoW. This then leads to the first-round leakage (indirect economic leakage) for a proportion of tourism receipts leaving country B. The production of sun-dried tomatoes in country A may require airtight containers from country B and wrapping paper from the RoW to complete packaging, representing second-round leakage and additional revenue for country B and other regions. A complex international trade pattern then is established as a result to support one-way international travel activity. Each international trade signals the exchange of value added across countries and represents a form of leakage as its monetary transactions leave the predefined region. These complex trade patterns can be measured in both GDP and GHG, providing a parallel comparison between economic and environmental linkage and leakage.

Step 2: Indicators

To capture the hidden international trade under the provision of tourism services, two indicators are presented. The first indicator, the overall leakage effect, measures the proportion of global transactions that occur at the departure country and RoW (equation 1). This equals to 1 minus the share that a local destination receives in GVCs, measured by GDP and GHG emission indicators, respectively. The second indicator, tourism GHG efficiency at the departure point, the destination country, and the RoW, respectively, evaluates the environmental externality in delivering per dollar tourism GDP (equation 2).

\begin{array}{l} Overall leakage effect in GDP (GHG emissions) \\ for the destination country = \\ \frac{\begin{array}{l} d i r e c t a n d i n d i r e c t G D P (G H G e m i s s i o n s) \\ g e n e r a t e d a t t h e d e p a r t u r e c o u n t r y a n d R o W \end{array}}{d i r e c t a n d i n d i r e c t G D P (G H G) g e n e r a t e d} \end{array}

\begin{array}{l} Tourism GHG efficiency for the global segment i = \\ \frac{t o t a l G H G e m i s s i o n s g e n e r a t e d i n t h e s e g m e n t i}{t o t a l G D P g e n e r a t e d i n s e g m e n t i} \end{array}

where i = the departure country, the destination country, and the RoW.

Three tourism GHG efficiency indicators are calculated for different global segments, respectively, and the scope of each is explained as follows.

Tourism GHG efficiency at the original country: this ratio reflects the environmental performance of the travel agencies, national-registered airlines at home for serving outbound tourism, and production sectors that provided products and services to the destination country.

Tourism GHG efficiency at the destination country: this illustrates the carbon efficiency of the agglomerated tourism services and their domestic suppliers. It also includes the national registered airlines of the destination country for the provision of international aviation services.

Tourism GHG efficiency at the RoW: the third efficiency indicator concerns the major trading partners for the imported products and services that are key to the function of tourism industries.

Step 3: Computation formula

To quantify the effect of tourism linkage and leakage in both the economic and environmental indexes, the environmentally extended input–output (EEIO) model is perceived as being a suitable tool from a macro-level approach that traces the resource consumption and waste production flow² across regions (Miller and Blair 2009; Minx et al. 2009). In the case of tourism evaluation, the EEIO model first estimates the direct GDP and direct carbon emissions effect for the tourism industries serving the travelers at the destination and the departure country, respectively. This calculation is to multiply visitor spending by sectors ( Y ) with the corresponding value added ratio ( V ) and GHG emission ratio ( C ) based on the local production technology by sectors (equations 3 and 4). In this step, it is necessary to figure out visitors’ expenses at the departure country and destination country, respectively, as each will be applied with the respective production coefficients at different geographic segments. The embedded multicountry trade structure ( A matrix) further allows the upstream transactions to the suppliers, domestically and globally, to be traced (equations 5 and 6) (Reis and Rua 2009). The matrix results display the carbon emissions and value added by sectors (n) and by regions (m), allowing us to calculate the share of distribution by global segments at the home country, the country of origin, and the RoW.

Direct value added effect = V Y

Direct GHG effect = C Y

\begin{array}{l} Total value added effect (direct and indirect effect) \\ = V {(I - A)}^{- 1} Y = V B Y \end{array}

\begin{array}{l} Total GHG effect (direct and indirect effect) \\ = C {(I - A)}^{- 1} Y = C B Y \end{array}

where

V is the value added matrix, the diagonalized value added coefficient per unit monetary output for n industry of m country;

C is the GHG emissions intensity matrix, the diagonalized GHG emissions coefficient per unit monetary output for n industry of m country;

Y is the total amount of inbound visitor consumption by sectors n for the departure country and the destination country, respectively;

A is the production technical matrix from the multiregional IO transaction table; and

(I−A) ⁻¹ or B is the Leontief inverse matrix from the multiregional IO transaction table.

Bilateral Travel between Taiwan and Japan

Japan and Taiwan are selected as an empirical application to demonstrate the importance of GVCs when assessing tourism carbon performance. These two destinations are island countries that share several commonalities in the tourism development path. From the demand side, both areas have experienced an amazing tourism growth rate in recent years, ranking as the first and second fastest growing areas among the top 50 tourism destinations worldwide, with Japan reporting an annual growth rate of 29.4% in international arrivals in 2014 and Taiwan embracing a 23.6% growth rate (World Tourism Organization 2015). In addition, Japan and Taiwan are important destinations for each other, sharing more than one million visits to each region annually (Taiwan Tourism Bureau 2016). This high volume of mutual visits extensively relies on aviation services, which are energy intensive and play a critical role in the magnitude of total tourism emissions. From the supply perspective, Japan and Taiwan are close trade partners to each other, with a high volume of import and export activities across many industries. Intercountry transactions generate a complex trade pattern in immediate GDP leakage and carbon reduction, making EEIO analysis a suitable tool for untangling this issue.

To calculate the distribution of tourism GDP and tourism carbon emissions by global segments, the following three parameters are required: (1) visits and visitor spending profiles, differentiated by items and by the regions where the money is spent; (2) bilateral flight service by national and foreign airlines; and (3) the global multinational input–output table. For the first parameter, both Taiwan and Japan tourism satellite account (TSA) report inbound visitor spending profiles on local transportation, lodging, dining, and recreational services (Japan Tourism Agency 2015; Taiwan Tourism Bureau 2012). In addition, shopping expenditures for 10 major categories for both destinations are available through official sources. This rich data set allows us to identify the economic and environmental linkage pattern for individual souvenir products, such as pastries, T-shirts, or electronic appliances. The itemized analysis greatly improves the estimation accuracy because each souvenir product comes with its own distinct production process and energy content.

To calculate structure leakage, travel agency commissions and international airfare are treated separately. For the first perspective, travel agency commissions are determined by the number of PT visitors traveling outbound, the average tour fee per person, and the profit margin of the travel agencies. The first two parameters are obtained from the Taiwan Tourism Bureau (2012) and the Japan Tourism Agency (2015). Although the profit margin of the travel agencies is not disclosed in the public information for both countries, we use the average profit ratio, 10%, reported by the American Society of Travel Agents (ASTA 2014) to provide a ballpark estimate.

To calibrate the airfare retained at the departure country, we obtain the total number of the bilateral passengers served by the respective Taiwanese and Japanese airlines for their mutual visits (Civil Aeronautics Administration 2012). This information also portrays the flight capacity, flight frequency, route availability, and loading factors of the aviation industry from both sides. Coupled with the average spending on international airfare per passenger (Japan Tourism Agency 2015; Taiwan Tourism Bureau 2012), the proportion of airfare that incurs to national airlines versus foreign airlines can be identified. The issue of whether to include international flight service into the national economic and GHG impact estimation has been treated differently in the literature (Sun 2014). Considering that both Taiwan and Japan are island destinations, international aviation cannot be easily displaced for developing international travel, and their significance in emissions should not be overlooked either. In this regard, the impacts for international aviation between the two countries are calculated and assigned to the countries where the airlines are registered. This approach not only highlights the sheer influence of aviation but also reveals the hidden cost in our travel consumption.

In this study, the World Input–Output Database (WIOD) is adopted as the backbone source to describe the multinational trading pattern. This data set includes the input–output tables for 43 countries and a model for RoW,³ covering the period from 2000 to 2014 (Timmer et al. 2015). In addition to monetary transactions, the WIOD supplies environmental accounts, documenting energy use, carbon emissions, water use, land use, and material use from 1995 to 2009. In this model, we use 2011 WIOD IO tables, 2011 tourism satellite account for Taiwan and Japan, and the latest 2009 WIOD CO₂ emission coefficients. Year 2011 is chosen as the reference base because this year is the most recent year for which tourism data from both countries are available.

Visitor spending data then match with IO sectors for the corresponding industries. For souvenirs expenditures, transport margins and trade margins are estimated separately, which then links with the land transportation sector and retail trade sector, respectively. The remaining value of shopping expenses is paired with the appropriate manufacturing sectors, depending on the type of souvenirs. Because of data limitation, following two assumptions are employed in the analysis: (1) all visitor shopping items are assumed to be manufactured domestically, and (2) the share of business travels is set to zero. For the first assumption, it is possible visitors may purchase imported products (such as a Coach bag in Taiwan or an iPhone in Japan), which are considered as a form of leakage in our definition. However, no official data are currently available for the share of directly purchasing imports in the visitor shopping pattern, preventing us from considering this factor in the model. We acknowledge that not taking into account the imported souvenirs purchased by tourists will underestimate the leakage effect in both GDP and carbon emissions. Second, while we believe a proportion of TSA expenditures are directly associated with business travel, which is generally considered as an intermediate input cost for firms, the share of business travel expense is also currently unavailable through official statistics. Therefore, treating business travel expenditure as the final demand may overestimate the true economic and environmental consequences.

Results

Visitor Spending

In 2011, there were approximately 1.3 million visitors traveling from Japan to Taiwan, generating a total of US$2,286 million⁴ foreign receipts, of which 29% were for local lodging expense, 22% for international airfare, 17% for shopping expenses, 12% for food-related souvenirs, and 11% for dining (Table 1). In contrast, approximately 1 million Taiwanese residents made visits to Japan, and their trip expenses totaled approximately US$1,316 million. The largest share of Taiwanese trip expenses goes to international airfare (30%), followed by shopping (26%), lodging (19%), dining (14%), and textile-related souvenirs (10%). Approximately 40% of visitors from both countries participated in package tours. The overall spending pattern indicates that Japanese visitors prefer to stay at high-quality hotels, pay for entertainment services, and purchase pastries and Chinese tea in Taiwan whereas Taiwanese visitors bear more financial burdens in airfare but in comparison are gourmet seekers and more inclined to purchase electronic appliances, clothing, shoes, and manga in Japan.

Table 1.

Bilateral Tourism Spending between Japan and Taiwan.

Segment	Japanese Visitors to Taiwan (US$ Millions)	%	Taiwanese Visitors to Japan (US$ Millions)	%	Net Tourism Spending in Taiwan (US$ Millions)
Number of visitors (in 1000s)	1,295		994		301

International airfare	510	22	391	30	263
Taiwanese airline	274	12	211	16
Japanese airline	126	6	97	7
Other airline^a	109	5	84	6
Tour commission at departure country	54	2	34	3	-20
Spending at destination
Hotel	662	29	244	19	417
Restaurant	252	11	180	14	71
Transportation	171	7	85	6	86
Entertainment	232	10	32	2	200
Miscellaneous	29	1	6	0	22
Shopping	378	17	344	26	34
Food products	267	12	71	5
Textiles products	39	2	131	10
Manga, DVDs, anime, etc.	0	0	8	1
Cosmetics, medicine	16	1	72	5
Consumer electronics	0	0	28	2
Other	56	2	33	3
Subtotal	1,722	75	891	68	831
Grand total	2,286	100	1,316	100	1,114

This includes Cathay Pacific airline, Delta Airlines, United Airlines, and Jetstar.

The flight capacity of international transport was not equally shared by two-side airlines due to an open-sky policy. In 2011, 54% of bilateral passengers were served by Taiwanese-registered airlines, 25% by Japanese-based airlines, and 21% by third-country carriers (Civil Aeronautics Administration 2012). This leads to larger revenue for Taiwanese-based airlines than Japanese-based carriers, estimated to be 485 million and 223 million, respectively. Third-country carriers, such as Cathay Pacific, United Airlines, Delta Air Lines, and Jetstar, received a total of 293 million.

In terms of market performance, Taiwan received the dominant share of inbound arrivals, net tourism receipts, and flight capacity of the bilateral travel between the two sides in 2011. Gross net tourism foreign earnings of $1,114 million were reported for Taiwan.

Economic and Environmental Impacts

The economic and environmental impacts of visitor spending in the destination countries due to bilateral travel are reported in Table 2, differentiated by the departure country, the destination country and the RoW. From the perspective of Japanese traveling to Taiwan, the figure of $2,286 million in spending is distributed at home (8%) for Japanese-registered airlines and travel agencies, the destination country of Taiwan (87%), and the RoW (4%) for third-country registered airlines. The figure of 2,286 million in spending has a total (direct + indirect) economic impact of 4,463 million in sales and 2,238 million in value added. The sectors that received the highest value added are “hotels and restaurants,” “entertainment services,” and “real estate activities” in Taiwan. To support the provision of 2,286 million in tourism products and services, tourism industries are estimated to produce 943 kilotons of CO₂ in Taiwan or 1,597 kilotons of CO₂ globally if emissions from the suppliers are taken into account. Approximately 59% of the total carbons are emitted in Taiwan, for which the sectors that are responsible for the largest carbon emissions are “air transportation” (19%), “hotels and restaurants” (10%), and “entertainment services” (8%).

Table 2.

Economic and Environmental Impacts of Bilateral Tourism Travel between Japan and Taiwan.

	Direct Spending (US$ Millions)	Direct CO₂ (Kilotons)	Direct + Indirect Sales (US$ Millions)	Direct + Indirect VA (US$ Millions)	Direct + Indirect CO₂ (Kilotons)
Japan visitors to Taiwan
Origin	191	79	450	208	114
Destination	1,996	759	2,934	1,571	943
RoW	98	154	1,080	459	540
Total	2,286	992	4,463	2,238	1,597
Taiwan visitors to Japan
Origin	245	238	360	140	279
Destination	996	117	1,902	914	250
RoW	75	154	589	246	337
Total	1,316	509	2,851	1,300	866

In terms of the outbound travel from Taiwan to Japan, this market incurred direct spending of 1,316 million, generating a total effect of 2,851 million in sales and 1,300 million in value added across global segments. The top three sectors that benefited the most in value added are “hotels and restaurants” and “retail trade” in Japan and “air transportation” in Taiwan. This reflects the fact that more than half of the flight capacity is served by Taiwanese-based carriers, therefore securing a higher proportion of Taiwanese outbound visitors’ spending at the home country. To support the travel services consumed by Taiwan visitors, a total effect of 866 kilotons of carbon emissions is produced, of which 279 kilotons are produced in the territory of Taiwan, 250 kilotons in Japan, and 337 kilotons in the RoW. The sectors that produced the most carbon emissions are “air transportation” in Taiwan, “air transportation” in China, and “air transportation” in Japan. This result demonstrates the dominance of air services by carriers from Taiwan and China (Cathay Pacific) for serving this international route and the high carbon intensity nature of their air services in delivering one dollar output.

The high-volume bilateral travel activities between Japan and Taiwan also benefit other regions economically. In total, the RoW (the sum of 38 regions) receives 1,669 million in sales and 705 million in value added. The top three countries that receive the highest value added are the United States, China, and Australia, which have close trade relationships with Taiwan and Japan. These countries benefit by supplying intermediary products and services, especially “agricultural and dairy products” and “mining and quarrying products.” The value added generated at the RoW is found to be higher than that in the country of origin, indicating a stronger economic leakage effect than the structure leakage effect for both Taiwan and Japan based on the current production structures. Naturally, this economic spillover bears an environmental cost, given that the total effect of carbon emissions at the RoW is estimated to be 877 (= 540+337) kilotons.

Economic and Environmental Linkage and Leakage

Using information in Table 2, leakage ratios can be calculated and discussed from the perspectives of destinations. For Taiwan, the structure leakage of inbound Japan visitors is approximately 12.7%, of which 8.4% stays in Japan and 4.3% goes to the RoW. This is a relatively good performance compared to the 24.3% structure leakage rate for Japan, of which 18.6% goes to Taiwan and 5.7% to the RoW. The difference in structure leakage is primarily the result of the flight capacity between the two sides.

The overall leakage, measured as the share that is secured by other geographic segments, is estimated in GDP and carbon emissions. The butterfly chart in figure 3 presents a parallel comparison between the GDP retention share and the carbon footprint share by the departure country, the destination country, and the RoW for the bilateral travel between Japan and Taiwan. The left-side bar to the center of the butterfly char represents the GDP share, whereas the right-side bar specifies the share of the total carbon footprint. For every country, the ultimate goal is to maximize the share of GDP that is kept in the domestic economy while reducing the share of carbon emissions in the domestic production lines.

In terms of economic performance in bilateral tourism, both countries face a 30% tourism GDP leakage rate, with approximately 10% of GDP flowing back to the country of origin and 20% going to the RoW. Although the economic performances are similar for both regions, the environmental leakage pattern is very different. In terms of carbon emissions, Taiwan reports a 41% carbon leakage in the total tourism carbon footprint, of which 7% is emitted in Japan and 34% at the RoW (the top three countries: China, United States, and Russia). In other words, Taiwan holds responsibility for 59% of the total carbon footprint for inbound visits from Japan. In contrast, when Taiwanese visitors travel to Japan, 71% of the total carbon footprint is emitted outside the destination of Japan, of which 32% is categorized as belonging to Taiwan and 39% to the RoW (the top three countries: China, United States, and Russia). In other words, Japan secures 70% of the GDP but holds responsibility for only 29% of the total carbon footprint for inbound visits from Taiwan.

Finally, we present the carbon efficiency performance for the bilateral tourism travel between Japan and Taiwan. To serve the outbound travel of Japanese visitors to Taiwan, the country of origin (Japan) generates 0.55 kg CO₂ to deliver one dollar of GDP output; Taiwan also has an excellent carbon performance, reporting 0.60 kg CO₂ per one dollar of GDP, leaving energy-intensive products and services to foreign productions (RoW). In a parallel analysis, when Taiwanese visitors travel to Japan, the destination itself (Japan) bears a very low environmental cost (0.27 kg CO₂/GDP) because high-polluting air transportation is largely served by Taiwanese and third-country carriers. As a result, the largest carbon inefficiency is reported for Taiwan (origin), producing approximately 1.99 kg CO₂ to generate one dollar of GDP, followed by RoW, 1.37 kg CO₂/GDP.

Table 1 and Figures 3 and 4 provide a clear contrast to judge which region is the major beneficiary in the bilateral tourism development context. The standard approach to measuring a country’s tourism performance is based on market-oriented indicators of net inbound travel flow and tourism surpluses (Prideaux and Kim 1999; World Tourism Organization 2016). Following this perspective, Table 1 documents the sheer scale of economic spending and the net balance of payments, in which Taiwan appears to be the winner because it receives the dominant share of inbound visits, receipts, and even air transport capacity for bilateral travel between the two sides. However, when the leakage and linkage effects, both in economic and environmental impacts, enter the picture, Japan surpasses Taiwan in terms of its ability to secure a higher share of tourism GDP (70%) but a lower percentage of carbon emissions responsibility (29%) in GVCs (Figure 4). In addition, the tourism carbon intensity of Japan is 55% more efficient than the performance of Taiwan (0.27 kg CO₂/GDP vs. 0.60 kg CO₂/GDP). From these perspectives, Japan demonstrates comparative advantages over Taiwan in terms of its ability to produce clean and carbon-efficient services in domestic production lines as well as in collaborating with foreign suppliers for energy-intensive products and services. In particular, allowing foreign carriers to take a major share of international air services under the open-sky policy has shifted a great proportion of carbon responsibility to other regions where these carriers are registered.

Discussion

Global Tourism Carbon Performance Index

Incorporating GVCs into the tourism analysis framework produces several distinct advantages. First, the importance of international trade and services for the provision of local tourism activities is recognized, allowing a country to assess economic and environmental trade-offs at the departure country, the destination country, and third regions. Especially, as national tourism expands, other industries will decline or grow, leading to interindustry effects on the national GDP and emission changes. When complemented with a general equilibrium model (such as a Computable General Equilibrium model), the proposed framework would allow policy makers to further evaluate the net effect on the global and national carbon emissions, a key and relevant objective.

Second, derived from the proposed EEIO analysis, two measurements are recommended to evaluate the tourism destination competitiveness in carbon emissions, namely, (1) the share of GDP and carbon emissions that are obtained in GVCs and (2) the carbon efficiency performance per dollar GDP at the destination economy. The first indicator, the share of GDP and emissions in GVCs, measures the relative economic welfare that a destination can secure and the percentage of global carbon responsibility. On the other hand, the second indicator reflects the opportunity cost of delivering one dollar of tourism GDP, benchmarking the destination against others. We feel that both measurements are well suited to compile a global tourism carbon performance index for individual countries as they collectively document comprehensive environmental responsibility as well as a country’s efficiency in its tourism carbon emissions. These two measurements highlight three essential factors of competitiveness—the ability to convert sales into GDP, the ability to produce tourism services based on minimum energy consumption, and the ability to rely on international trade and services to improve the agglomerated domestic tourism carbon efficiency.

The first ability, converting sales into GDP, relates to the business advantage of retaining the proportion of sales as employee salaries, business profits, and tax dollars (the definition of GDP). How to improve the value added of a business service has been empirically addressed for the aviation sector (Tretheway and Markhvida 2014), travel agencies (Dolnicar and Laesser 2007; Tsai, Huang, and Lin 2005), and tourism industries in general (Blake, Sinclair, and Soria 2006). These studies find that a fierce price competition strategy through cost cutting is no longer a preferred option to guarantee a business competitive strength. Rather, process innovation through information and communication technology (ICT), product redevelopment, branding, marketing or supply chain integrations are among the key recommended strategies to add value to these services. In turn, these strategies allow firms to secure a higher proportion of sales as welfares for employees, owners and local governments.

The second ability reflects the scale of energy consumption that is required to support tourism services, a proxy for current production technology. This agglomerated tourism carbon intensity ratio is determined by the services category (five-star hotels vs. hostels), the sophistication of equipment (Boing 777 vs. Boing A340), the energy type (solar power vs. coal), the operational and infrastructure efficiency, and the capacity utilization and daily operation (Gössling 2011; Peeters, Williams, and de Haan 2009; Upham, Tomei, and Boucher 2009). Tourism carbon intensity is generally found to be worse than the carbon-average ratio of a nation’s economy, with air transport as the key subsector that deteriorates the overall tourism environmental performance (Perch-Nielsen, Sesartic, and Stucki 2010; Sun 2014; Dwyer et al. 2010).

The third ability refers to the participation in GVCs to create the “trade-investment-services-know-how nexus” to provide a suitable environment that fosters a high value added tourism service and clean production technology (OECD-WTO-WBG 2014). These two desired objectives can be achieved through intermediary imports, the movement of capitals and ideas, and the demand for services. In the tourism context, knowledge and service spillovers in GVCs aid the key strategies that are noted above (e.g., the integration of ICT or the delivery of an international marketing campaign) to improve the value added of tourism services, allowing firms to continuously upgrade or improve their products to sustain competitiveness. On the other hand, the adoption of foreign technological sophistication facilitates the upgrading in energy intake among firms (e.g., the purchase of fuel-efficient aircraft). In essence, GVCs improve a firm’s capacity to reach ideas, services, and products that are not limited by domestic sources but are provided by suppliers across the globe. This allows firms to acquire capabilities that improve their economic and environmental performance, in turn reaching a better carbon efficiency status.

Countries that perform compatibly well on these two proposed measurements (such as Japan) reflect a desirable status toward sustainability. This outcome indicates that domestic tourism businesses and suppliers are keen to improve their value added in the service process while pursuing technological improvement in energy intake. In addition, imported services carry superior know-how, and imported products bear a high GHG content but low economic leakage.

Mitigation Strategy

The other advantage of this proposed analysis is that it highlights a potential perspective to mitigate tourism carbon emissions. One finding from our analysis that is consistent with other studies in the literature is the key role played by the air transport subsector because of its carbon-intensive nature (Peeters, Gössling, and Becken 2006; Smith and Rodger 2009; Perch-Nielsen, Sesartic, and Stucki 2010). Recognizing the significance of aviation emissions, two strategies have been proposed by the UN World Tourism Organization (UNWTO) to counter the growth of their carbon pressures: encouraging travelers to choose short-haul destinations with an increased use of public transportation and less aviation, and providing an incentive or punishment scheme for firms to accelerate their technological improvement in energy intake (WTO-UNEP-WMO 2008). Empirical observations, however, indicate pessimistic results on these two directions to date. There is a global trend of growing tourism demand, increasing long-haul travel, and greater reliance on aviation (Gössling et al. 2010; de Bruijn et al. 2014). In addition, the speed of aviation technological improvement lags far behind the rate of tourism expansion (Sun 2016). These factors all contribute to an increasing share of global carbon emissions contributed by tourism.

Through the analysis of GVCs, one potential approach to address the increase in tourism aviation emissions is to allow carbon-efficient carriers to gradually substitute for carbon-inefficient rivals in bilateral travel. The case of Taiwan and Japan presents a dramatic contrast between the economic and environmental performance of the two-side aviation sectors. Based on the WIOD database (Timmer et al. 2015), Japanese-registered airlines can convert one dollar of sales into 0.43 dollar of GDP, producing 0.75 kg of carbon, whereas Taiwanese-registered airlines yield 0.35 dollar of GDP with 1.11 kg of CO₂. The efficiency difference between these two-country carriers is approximately 50%. Under this condition, allowing Japanese-based carriers to enlarge their market share for the bilateral travel would enhance the carbon performance of the destination country as well as reduce the global carbon pressure.

A scenario analysis is adopted to present the relationship between market share, carbon efficiency, and global carbon pressure for the bilateral travel between Taiwan and Japan. Because of the open-sky policy, Taiwanese-based carriers currently occupy 54% of the bilateral flight services, whereas Japanese-based carriers and third-country carriers each capture approximately 25% and 21%, respectively. We hypothesize that Japanese-based carriers expand their market share to 54%, whereas Taiwanese-based carriers shrink to 25%. In the context of Japanese visitors to Taiwan, all of the travel volume is assumed to be the same because the air service capacity is not reduced but is served by different carriers proportionally. Based on the economic and environmental efficiency of Japanese-based airlines, the hypothesized scenario would promote a reduction of 71 kilotons of carbon emissions from the global carbon base, corresponding to a 13% reduction in the current status in air emissions (Table 3). This is achieved through a process in which Japan would increase emissions by 82 kilotons from the aviation sector whereas Taiwan would reduce emissions by 153 kilotons. Naturally, reducing international flights served by Taiwan-based carriers would cost Taiwan 48 million in total economic impacts, raising the tourism GDP leakage from 30% of the current status to 32% under the hypothesized scenario. However, the overall tourism carbon efficiency in Taiwan would improve 14% because the magnitude of GDP leakage would be outweighed by the level of CO₂ leakage (transferring to Japan).

Table 3.

A Scenario Analysis of Economic and Environmental Performance for Japanese Visitors to Taiwan.

For Japanese Visitors to Taiwan	Taiwan Tourism GDP Leakage	Taiwan Tourism CO₂ Leakage	Taiwan Carbon Efficiency(CO₂ kg/US$ Dollar)	The Global Air Carbon Footprint^c (Kilotons)	The Global Tourism Carbon Footprint^d (Kilotons)
The current status in 2011^a	30	41	0.60	560	1,597
The hypothesized status^b	32	48	0.52	489	1,526
Percentage of improvement			14	13	4

Taiwanese-based carriers and Japanese-based carriers have a market share of 54% and 25%, receptively.

Taiwanese-based carriers and Japanese-based carriers have a market share of 25% and 54%, receptively.

This includes the total carbon emissions for air transport services in Taiwan, Japan, and RoW.

This includes the total carbon emissions for all sectors in Taiwan, Japan, and RoW.

Allowing energy-efficient carriers to take a dominant market share in the bilateral travel flow is a possible direction to mitigate tourism carbon pressure without compromising the current travel patterns and frequencies. However, this seemingly simple strategy would require two conditions to facilitate a satisfying outcome. The first condition rests on whether the political authority can deregulate the control power over transport and air sovereignty that determines what types of air freedom rights are granted to which airline. The granting of aviation freedom to foreign carriers greatly concerns a country’s safety, technical standards, aviation security, and competition policy (Tan 2010). However, with the recent rise in the liberalization of traffic rights and an intention to increase competitiveness and cooperation among airlines, open-sky agreements are gradually being implemented among major regions, such as the European Union and the United States in 2008 and the ASEAN 10 countries in 2016 (ASEAN 2016; European Commissions 2015). After open-sky agreements are ratified, the supply-side structure of air transport is free from governmental regulation, with the routes, flight frequencies, airfares, and operational costs being up for a nearly free-market competition (Pitfield 2009). In essence, “open-sky” agreement allows those airlines with greater efficiency and competition to benefit from the new operating freedoms and increase market size⁵ (Winston and Yan 2015; InterVISTAS-EU Consulting Inc. 2009).

The second required condition is to position the energy performance of carriers as a strong and important attribute for consumers to deliberate in their purchasing process in addition to convenience, time efficiency, cost, and lifestyle. Clear and easy-to-understand information regarding the carbon emissions per passenger mile among airlines is a prerequisite to convey this message. Although airlines have begun to step up their information disclosure on their environmental responsibility, energy efficiency data are always embedded with other environmental indicators, such as water and waste treatments, and are displayed independently from the booking platform. Thus, we recommend that a clear disclosure of a carbon intensity indicator be placed along with other key information such as the departure/arrival time, airfare, and seat class in major booking platforms, such as Orbitz or Skyscanner, to facilitate consumers’ willingness for green product purchasing. Our simulation analysis confirms that even just 10% of air passengers perceive the energy performance of carriers as an important attribute in their purchasing process, this would make an impact.

Conclusions

Developing international tourism is recommended by the United Nations as one method of enhancing a country’s performance in mitigating carbon emissions while maintaining the economic output and prosperity of a country (UNEP 2013). This article builds on this perspective by analyzing both tourism economic and environmental performances in GVCs using the concepts of linkage and leakage. The linkage effect describes the production structures, quantifying the interrelationship between the tourism industry and suppliers, whereas the leakage effect explains the trade pattern, differentiating the ultimate benefits or pollution that the individual country receives. Based on the multiregional input–output model, the share of tourism GDP and tourism carbon emissions in global segments at the home country, the destination country, and the RoW can be calibrated.

The tourism competitiveness of a country is typically measured using indicators of the tourism carbon footprint (CF) and tourism carbon intensity. However, we observe that the distribution of economic welfare and environmental externality in GVCs also provides an objective measurement to gauge a country’s comparative advantage when tourism development is pursued. Destinations that capture a higher percentage of tourism GDP with a smaller share of carbon responsibility reflect three essential factors of competitiveness—the ability to convert tourism sales into value added, the ability to produce tourism services based on lower energy consumption, and the ability to leverage international trade to improve the agglomerated local tourism carbon efficiency. In the example of bilateral travel between Japan and Taiwan, Japan clearly outperformed Taiwan from this perspective because it secures 70% of the tourism GDP and shares 29% of its carbon footprint in GVCs. Taiwan, in contrast, secures 70% of the tourism GDP but bears 59% of total carbon emissions. In addition, the tourism carbon intensity of Japan is 55% more efficient than the performance of Taiwan. Although Taiwan receives more net inbound travel flow and positive tourism surpluses in this bilateral travel flow than Japan, using the linkage and leakage concepts demonstrates that Japan is the country with a comparative advantage in balancing economic and environmental consequences.

To leverage international trade in the tourism context, imports can be pursued at two different levels—direct tourism services, such as international aviation services and travel agency services, and intermediary products, such as the energy, ingredients, or marketing used by tourism businesses or their suppliers. The empirical results for Japan and Taiwan indicate that the best route for carbon mitigation is to allow energy-efficient airlines to take a dominant market share in the bilateral air market, even though they are foreign suppliers, as an act of importing air services. The scenario analysis confirms that the magnitude of domestic GDP leakage is outweighed by the level of CO₂ reduction. To facilitate the increase in carbon-efficient airlines in bilateral or multilateral travel, open-sky agreements and information disclosures on carbon performance are required conditions.

Participation in GVCs not only plays a critical role in the quality and quantity of tourism services but also can help reduce carbon emissions and improves tourism carbon efficiency both regionally and globally. To achieve this desirable outcome, three premises are required. First, the imported products and services are high in carbon contents but low in economic linkage, preventing the payments for imports from resulting in an excessive economic loss to the local economy. The proposed EEIO model can help destinations evaluate their current status and search for a combination of domestic and foreign-sourced products in order to improve their carbon intensity. The second premise concerns how imports can facilitate the transition of businesses toward better sustainability. This can be achieved through knowledge and service spillovers from GVCs to improve the value added of local tourism services or to adopt foreign sophisticated technology for better energy performance among firms, allowing them to continuously upgrade or improve tourism products. The third premise is that the imports are produced with a lower carbon intensity than the domestic production technology, which thus relieves the global carbon pressure, ceteris paribus. If the third premise is violated, the global carbon efficiency will not be improved.

To realize the benefits of GVCs in linking with national tourism carbon competitiveness, it is recommended to modify two aspects of the international trade system so that it can help to facilitate the above-mentioned three premises. First, national administers should give tax credits or free trade agreements to import items and services that are (1) high in carbon contents but low in economic linkage, and (2) crucial to the transition of businesses toward better sustainability. These actions would reduce trade barriers and the operation cost of importation. Second, a mandatory system that monitors, reports, and verifies the emission content of imports (e.g., carbon efficiency labeling) shall be implemented for international trade. This information of carbon performance can then be used to determine what items can be imported and at what quantity. Ensuring that imports are produced with a better energy efficiency will allow local firms to make informed decision as to which inputs to purchase and drive foreign producers to embrace emission reduction projects—reaching the goal of reducing the global emission level.

Footnotes

Acknowledgements

We thank three anonymous reviewers and Professor Geoffrey Crouch for their helpful comments to the previous version of this paper.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Financial support from the Taiwan Ministry of Science and Technology under MOST 103-2410-H-006 -092 -MY2 and the Sumitomo research grant under Reg. No.: 138619.

Notes

ORCID iD

Ya-Yen Sun

Author Biography

Ya-Yen Sun’s research interests are on the economic and environmental impacts of tourism development. Related research includes the tourism carbon emissions evaluation, tourism water footprint, and the interaction among travel behaviors and transport mode selection.

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