For the first time in the tourism and environment literature, this study investigates the CO2 emissions effect of the market diversification of tourist arrivals. Theoretically, tourism market diversification has two opposite potential effects on CO2 emissions, depending on its scale and composition effect. It may increase CO2 emissions by expanding the scale of tourism-related activities or decrease CO2 emissions by expanding the share of developed/less-polluted source countries in the destination. By utilizing the econometrics of time series data, we tested the impact of tourism market diversification on CO2 emissions in Australia over the period 1976–2019. Our findings show that tourism market diversification has pro-CO2 emissions effects in the long run for Australia. These findings contribute to our understanding of the environmental impacts of tourism market diversification and help in policy formulations in Australia.
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