The Impact of Tourism on Solid Waste Generation and Management Cost in Madeira Island for the Period 1996–2018

Abstract

The tourism sector in Madeira represents 26.6% of the regional GDP and 16.7% of employment in the region. However, the sector is a source of adverse environmental impacts. One of the environmental repercussions of tourism, regarded as an externality, is the generation of solid waste. This paper aims to estimate the impact of tourist activities on solid waste generation in Madeira for the period 1996–2018. We used a fully modified ordinary least squares (FMOLS) model, including annual tourism inflows data. The results show that tourist activities are responsible for 41.9% to 46.6% of solid waste generation per resident in Madeira. The empirical results also support the hypothesis that there is a non-linear effect of tourism on the generation of solid waste. The importance of internalising this negative externality caused by tourism with the implementation of appropriate economic instruments and policies is the main policy implication of the study.