Happiness regimes and low-carbon tourism competitiveness: differentiated pathways for sustainable and resilient destinations

Abstract

Tourism competitiveness is increasingly shaped by how destinations respond to environmental pressures, governance challenges, and rising wellbeing expectations. This study introduces a low-carbon competitiveness index based on the embodied emissions of inbound tourism flows and integrates it with national happiness regimes, defined using long-run World Happiness Report scores, capturing destinations’ relative exposure to carbon costs, to explain cross-country differences in destination performance. Using balanced panel data for 78 countries from 1995–2023, the analysis applies dynamic PMG-ARDL modelling, FMOLS robustness checks, and structural break assessment to capture long- and short-run effects, including terrorism shocks. Results show that in high-happiness countries, inbound tourism is supported by demographic vitality but constrained by inflation, carbon intensity, and refugee inflows, reflecting visitor sensitivity to environmental quality and institutional capacity. In low-happiness countries, competitiveness relies more on foreign investment and resource-intensive growth, reinforcing ecological vulnerabilities. The study advances competitiveness theory by embedding wellbeing and low-carbon transitions into tourism analysis and offers differentiated policy strategies to support resilient, inclusive, and sustainable destination futures.