Digital Governance and Carbon Impact: Threshold Dynamics in Emission Reductions for High-Income Economies

Abstract

Understanding the carbon impact of e-government is essential for addressing climate change in the digital age. This study investigates the nonlinear effects of e-government and its core components on carbon emissions over the period 2003–2020 for a panel of 54 high-income countries. Using the Panel Smooth Transition Regression (PSTR) approach, the results identify statistically significant threshold effects, indicating that the environmental impact of digital governance varies across regimes. Specifically, e-government exerts a positive effect on carbon emissions below the estimated threshold, while beyond the threshold level, further improvements lead to a measurable reduction in emissions, confirming a nonlinear adjustment process. The estimated thresholds are systematically lower in major oil-producing countries, implying that relatively modest improvements in digital governance generate larger marginal emission-reduction effects in these economies. Robustness checks using GMM and fixed-effects estimations confirm the magnitude, direction, and statistical significance of the main results. These findings suggest that surpassing identified digital governance thresholds is critical for policymakers seeking to leverage e-government as an effective tool for environmental sustainability in developed economies.