When Disaster Hits, Governance Splits : Different Effects on Domestic and Inbound Tourism

Abstract

While natural disasters have the potential to disrupt tourism demand, evidence on their impacts is mixed. This study positions governance quality as a central factor in explaining these divergent outcomes, examining its moderating role in the relationship between natural disasters and inbound and domestic tourism. Using panel data from OECD countries, we show that governance quality reduces, and in many cases reverses, the negative effects of disasters on inbound tourism, with effects persisting into the following year. In contrast, domestic tourism increases upon disasters in countries with low-governance quality. This moderating effect for domestic tourism is evident only for geological disasters, suggesting that governance matters for sudden-onset events. Overall, our results indicate that governance quality reshapes the tourism-disaster relationship, sustaining inbound tourism when strong and resulting in increased domestic travel when weak, underlining the differential effects of governance quality across inbound and domestic tourism.