The Impact of Sustainable Tourism and Good Governance on

Abstract. The importance of forest in providing the natural habitat for plants and animals; storing hundreds of billions of tons of carbon; buffering against flood and drought; stabilizing soils, influencing climate change and providing food and home for the indigenous people has led the international community to protect them from further destruction in the future. In addition, the sustainable tourism is a key source of income and employment for local communities, which, in turn, provide strong incentives to protect biodiversity. For such reasons, and given the capacity limits of environmental resources coupled with the quantitative growth of tourism, there is an urgent need for the development of tourism to take biodiversity seriously. In this study we investigate the impact of sustainable tourism and good governance indicators on biodiversity loss in Malaysia for the period 1996 to 2012. In this study we employed the Ordinary Least Squares (OLS), Dynamic OLS (DOLS) and Fully-Modified OLS (FMOLS) which is efficient in small sample to estimate the long-run model of biodiversity loss (proxy by deforestation rates). Interestingly, our results found that good governance and sustainable tourism do contribute in mitigating biodiversity loss in Malaysia.