Balancing Growth and Green Goals: How Tourism Shapes Malaysia’s Energy and Environment

A study carried out by researchers from Universiti Utara Malaysia, Universiti Malaysia Sabah, and Universiti Kebangsaan Malaysia dives deep into one of the country’s most pressing dilemmas: how to balance the economic benefits of tourism with the rising demands of energy consumption and the environmental costs of carbon emissions. Using a dataset that spans 1995 to 2020 and sophisticated econometric modelling, the authors unravel how tourist arrivals, expenditures, and receipts interact with Malaysia’s energy use, GDP growth, and environmental footprint. Their findings present a picture of a nation enjoying the fruits of its tourism boom but also paying an escalating ecological price.

The Boom That Powers the Economy

Tourism has become a cornerstone of Malaysia’s economy. In 2019, the country attracted nearly 26 million international tourists, almost equal to its population, and by 2023, the sector contributed nearly 15 percent of GDP and supported around 23 percent of total employment. This has made tourism indispensable to national prosperity, stimulating activity in hospitality, retail, entertainment, and transportation, while boosting foreign reserves. The study confirms that a one percent rise in tourist arrivals, spending, or receipts translates into GDP growth increases of between 0.26 and 0.54 percent, reaffirming the widely tested “tourism-led growth hypothesis.” For Malaysia, the inflow of tourists is more than leisure; it is a critical driver of jobs and economic resilience.

Energy Appetite of a Growing Industry

But prosperity carries a heavy energy bill. The analysis reveals that tourism directly fuels higher energy consumption. A one percent increase in arrivals or expenditures leads to a rise of 0.3 to 0.6 percent in energy use. The transport sector emerges as the single largest contributor, accounting for over a third of national energy consumption and close to 29 percent of fossil fuel combustion, well above the global average. Hotels, restaurants, and recreational sites also add substantially to the load, as visitors demand air conditioning, lighting, food services, and leisure facilities that are energy-intensive. The researchers warn that this trend risks locking Malaysia into a cycle of fossil fuel dependence at odds with its carbon neutrality ambitions.

Tourism’s Carbon Puzzle

The study delivers one of its most striking findings when it distinguishes between the volume of tourism and the quality of revenue generated. Tourist arrivals and expenditures are associated with higher carbon emissions, but tourism receipts, the actual income earned, are linked to long-term reductions in emissions. Specifically, a one percent increase in receipts is associated with a 0.1 percent decline in carbon output. The reasoning is that higher-value tourism generates greater fiscal resources that can be channeled into renewable energy projects, eco-friendly infrastructure, conservation programs, and waste management initiatives. In essence, what matters is not just how many tourists arrive, but how much they spend and how effectively that revenue is reinvested into sustainable practices. This insight gives Malaysia a unique policy lever: by prioritizing high-value tourism over mass tourism, the country can reduce the environmental costs while preserving economic gains.

Policy Pathways to a Greener Future

The authors put forward an ambitious set of recommendations that could help Malaysia reconfigure its tourism-energy nexus. Chief among them is the urgent need to reduce fossil fuel reliance in tourism. This means investing in renewable energy and incentivizing hotels, restaurants, and leisure facilities to adopt green technologies, from solar power to efficient cooling and waste-reduction systems. Sustainable mobility is another critical front, with calls for developing eco-friendly public transport, promoting bicycle-based tourism, and encouraging emission-free travel alternatives. At the same time, tourist destinations need to be equipped with green infrastructure, including water recycling systems, energy-efficient lighting, and renewable-powered amenities, which would cut both emissions and operational costs.

Equally important is a rethinking of the tourism model itself. The study suggests that Malaysia should push ecotourism, cultural tourism, and adventure tourism, which can deliver economic value while exerting less pressure on natural resources. By tying tourism revenues to conservation efforts in national parks, marine reserves, and heritage sites, Malaysia can ensure that its natural and cultural treasures are preserved for future generations. Regional cooperation within Southeast Asia is also highlighted as a strategic step, since neighboring countries face similar challenges in aligning tourism growth with environmental goals. Shared approaches to sustainable mobility, renewable energy integration, and eco-friendly tourism could amplify the positive outcomes across the region.

A Balancing Act for the Next Decade

The message from the study is clear: tourism in Malaysia is both a blessing and a burden. It generates jobs, income, and growth, but it also drives up energy consumption and carbon emissions. The future lies in finding the right balance, one where Malaysia continues to thrive as a global tourist destination while also meeting its commitments to climate action. By focusing on quality over quantity in its tourism strategy and reinvesting receipts into green infrastructure and conservation, Malaysia has the opportunity to turn tourism into a lever for sustainability rather than a liability for the environment. If pursued decisively, this vision could allow Malaysia to showcase not only its rainforests, beaches, and cultural heritage but also its determination to become a model of sustainable development in Southeast Asia.