Assessing the economic and environmental consequences of the COVID-19 tourism collapse in Andalusia: what lessons can we draw for South-East Asian regions?

Abstract

This paper presents a simulation exercise undertaken with a newly available regional general equilibrium model for the Spanish region of Andalusia. The exercise is intended to assess the structural adjustment processes and impacts on the Andalusian economy directly induced by the dramatic fall in tourism expenditure which occurred in the year 2020, due to the prevention measures implemented because of the COVID-19 pandemic. We also undertake a preliminary evaluation of the impact on some environmental indicators, such as greenhouse gases emissions and air pollutants. The key insight emerging from our analysis is that the COVID crumbling of tourism demand reduces the environmental pressure but also generates very relevant distributional consequences. We believe that these insights are not peculiar to Andalusia but could be extended to many other regions in the world, especially those similar in terms of magnitude of the shock, economic structure, and labor market. We illustrate the latter point by contrasting Andalusia with a set of South-East Asian countries.

Fig. 1

Structure of the 2016 Andalusian SAM

Fig. 2

Tourism expenditure in Andalusia by international tourists. Source: Spanish National Institute for Statistics (INE)

Fig. 3

Largest changes in the prices of Andalusian goods and services. Source: authors’ simulation

Fig. 4

Largest changes in output volume of Andalusian goods and services. Source: authors’ simulation

Fig. 5

Change in employment by worker category. Source: authors’ simulation

Fig. 6

Change in factor income per type of factor. Source: authors’ simulation

Fig. 7

Correlation between consumption patterns and changes in price and output (“res” stands for resident and “nre” for non-resident households). Source: authors’ simulation

Fig. 8

Absolute changes in CO₂ related to domestic production, largest differences. Source: authors’ simulation

Fig. 9

Absolute changes in non-CO₂ emissions related to domestic production, per non-CO₂ gas. Source: authors’ simulation

Fig. 10

Relative changes in output compared to absolute changes in emissions of F-gases from domestic production, selected sectors. Source: authors’ simulation

Fig. 11

Absolute changes in air pollution related to private consumption, per type of pollutant. Source: authors’ simulation