Reflections on climate resilient tourism : evidence for the EU ETS-2 and voluntary carbon markets

The chapter discusses transition risk for tourism, addressing its relation with the Environmental Kuznets Curve and overtourism. Transition risk emerges when an economic model moves from carbon-intensive to carbon–neutral activities with market, technological, regulation, and reputational connotations. The EU is adopting mitigation policies to reduce the physical risks of climate change and introduce regulation and reputation risk with the Emission Trading System 2. We used an Ordinary Least Squares with Heteroskedastic and Auto-Correlated Robust Standard errors over a cross-section of more than 6000 municipalities in Italy. The beds in structures per squared kilometer proxied tourism intensity. We found that tourism drives local emissions ceteris paribus, contributing to regulation and reputational risk.