How does urban air pollution affect China’s inbound tourism?

This paper seeks to uncover how air pollution affects China’s inbound tourism using the PSM-DID approach with data collected from 285 prefecture-level cities in China from 1999 to 2017. The findings include the following: (1) Various robustness tests and two-stage least squares (2SLS) analysis using the air flow coefficient as an instrumental variable reached relatively consistent conclusions that urban air pollution leads to a significant reduction in the number of inbound tourists and that for every increase of 1 μg/m3 in the PM2.5 concentration, the number of inbound tourists will drop by approximately 80,000. (2) The findings of the heterogeneity test also show that air pollution affects inbound tourism to a significantly lower degree in provincial administrative centers and cities with richer educational resources than in other cities; cities that are better at air purification also show a less negative impact of air pollution on inbound tourism. (3) Further estimates based on the PSM-DID model confirm that policies to establish star-rated tourist attractions and to build modern transportation facilities help increase the attractiveness of tourism resources to inbound visitors and contribute to the development of inbound tourism. However, air pollution reduces the appeal of 5A-rated tourist attractions, undermines the quality of modern transportation services, and will consequently lead to a decline in the scale of China’s inbound tourism.