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The purpose of this paper is to explain the vital economic role of the travel and tourism industry in the Caribbean.

This paper reviews the literature on climate change impacts in small island developing states. Two key challenges to the development of a sustainable tourism industry in the region are discussed: managing tourism development within the socio‐cultural, ecological carrying capacity of the region and anticipating and adapting to the impacts of climate change on the Caribbean.

Climate change has significant implications for both rainfall and saline intrusion in ground water, which could directly threaten both the tourism industry and other local livelihoods. Water shortages will be particularly critical in the Caribbean islands that are already water‐stressed; at or near the limits of their available supplies.

This paper focuses particularly on the impact of hurricanes on the sustainability of regional tourism and the related socioeconomic consequences. Provides policy recommendations on the way forward to ensure the sustainable development of Caribbean region tourism.

Although it is a widely accepted fact that climate change can negatively impact on tourism demand and affect the economies at the socio-economic level, empirical studies on the climate change tourism development nexus has been quite scant, especially for the case of island economies that are heavily dependent on tourism. This study aims to supplement the literature on climate change and tourism by empirically assessing the relationship between climate change and tourist arrivals for the case of 18 small island developing states over the period from 1989 to 2016.

This paper uses dynamic panel data techniques, namely, a panel vector autoregressive framework, which accounts for dynamic and endogeneity issues.

The results from the analysis confirm the existence of a significant relationship between climate change and tourism demand in both the long-run and short run. Further analysis shows a bi-directional causality between climatic change and tourism demand while the study also confirms the tourism led growth hypothesis.

This research supplements the literature on the tourism-environment link, especially for tourism dependent island economies.

Results from this study are important to policymakers who should spare no effort to mitigate the effect of adverse climatic change in the context of tourism development.

This study is built on a unique data set for a sample of island economies and interestingly adopts dynamic panel data analysis to account for dynamics and endogenity in the climate change-tourism development nexus.