Quality of life and carbon emissions reduction: does digital economy play an influential role?

ABSTRACT

Relying on the digital economy may help reconcile contradictions between the need to improve quality of life (QoL) and the need to reduce carbon emissions. Yet, previous research has not systematically explored the correlation between the digital economy, QoL, and carbon emissions. This paper explores the influence of the digital economy and of changes in QoL on carbon emissions, using a system Generalized Method of Moments (GMM) model. To do this we first use principal component analysis to calculate an objective QoL and a digital economy index using provincial panel data in China from 2006 to 2018. The results demonstrate that both the digital economy and QoL exhibit inverted U-shaped effects on carbon emissions. Our results also show that the growth of the digital economy improves QoL while mitigating the influence of QoL on carbon emissions. Thus, these findings illustrate that policymakers can rely upon the digital economy to help reconcile potential conflicts that arise between QoL and carbon emission reduction goals. Overall, these findings add a new dimension to carbon reduction policies. We propose that policymakers can improve QoL and reduce carbon emissions by coordinating the scale and efficiency-enhancing effects of developing the digital economy. In addition, regions that rely on energy industries should consider the efficiency-enhancing effect of the digital economy when formulating provincial and national emission reduction policies.

Key policy insights

• China aims to improve the QoL of its citizens while achieving carbon peak and neutrality goals in the coming decades. This study demonstrates how the digital economy can both improve QoL and reduce carbon emissions.

• Given the non-linear impact of QoL on carbon emissions, policymakers should not be concerned that climate mitigation policies will deter or damage efforts to generate to QoL improvements.

• Countries should develop digital economies to improve QoL while simultaneously paying attention to its efficiency improvement effect, which can reduce carbon emissions.

• Policymakers should focus on the enhanced efficiency improvement effect of the digital economy on the allocation of resources, particularly in regions with energy-intensive industries as economic pillars.

KEYWORDS:

• Digital economy
• quality of life
• carbon emissions
• system GMM
• China

Funding details

This research was supported by the Ministry of Education of China Humanities and Social Sciences (22YJC790147) and the Key projects of Humanities and Social Sciences in Colleges and Universities of Anhui Province (SK2021A0237).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The expansion of the digital industry represents the information and communication industry. It specifically includes the electronic information manufacturing, telecommunications, software, and information services sectors. The internet industry is the digital transformation of traditional industries, i.e., the output increase and efficiency improvement brought about by the application of digital technology in traditional industries, including industrial internet, smart manufacturing, vehicle networking, platform economies, and other convergent new industries as well as new models and new business models. Digital governance, characterized by digital technology and governance as defining features, includes digital public services. The valuation of data encompasses data collection, data validation, data pricing, data trading, and data protection (CAICT, 2022).

2 The study sample included 22 provinces, four minority autonomous regions, and four municipalities directly under the control of the Central Government. For simplicity, we use “province” rather than “province, municipality, or minority autonomous region directly under the control of the Central Government.” The same applies below.

3 The eastern region included Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan; the central region comprised Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, and Hunan; and the western region consisted of Inner Mongolia, Guangxi Zhuang, Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang.