Document Type : Research Paper

Authors

• Narges Salehnia ¹
• Najmeh Souri Naseri ²
• Vahid Rezaei ²

¹ Associate Professor, Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran

² Ph.D. Candidate in Economics, Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran

Abstract

Environmental pollution is one of the most pressing challenges of our time, manifesting in various forms that pose significant risks to both human health and the planet. In this context, the Internet, and institutional economics indexes like government services, and the democratic process— as three key pillars of modern society—play a crucial role in addressing pollution and conserving the environment. Each of these factors, both directly and indirectly, influences the level of pollutant emissions and environmental degradation, making it essential to understand their effects in order to adopt effective solutions. The advent of the Internet has transformed communication, information dissemination, and governance structures across the globe. At the same time, the democratic process is evolving, with a growing emphasis on transparency, citizen participation, and accountability. Moreover, government services delivery, now increasingly facilitated by digital technologies, has undergone significant improvements aimed at enhancing productivity and providing easier access to government services. Despite these improvements, the environmental consequences—particularly in terms of CO₂ emissions—have gained attention. Therefore, in this study, using the institutional economics approach, the impact of the Internet, democratic process, and government service provision on CO2 emissions in 63 countries during 2000 to 2020 is examined through the quantile panel method. The results showed that increased internet penetration globally had a positive and significant effect on CO₂ emissions at all quantile levels, except for the 0.95 level. The index of government services delivery exhibited a negative relationship with CO₂ emissions only at the 0.25 and 0.5 quantile levels. Finally, the democratic process showed no meaningful relationship with CO₂ emissions at any quantile level.

Introduction

Today’s world faces a multitude of environmental challenges, including climate change, water scarcity, air pollution, and biodiversity loss. Climate change, particularly global warming driven by carbon dioxide emissions from fossil fuel combustion, is widely recognized as one of the most significant threats to sustainable development. It not only causes environmental damage but also imposes substantial economic and health costs. In this context, transitioning to a low-carbon economy is essential, and it is of utmost importance to understand the determinants of carbon emissions. Over the past three decades, the global spread of information and communication technologies (ICT) has accelerated dramatically, becoming a key driver of transformation, growth, and innovation. The Internet, as a flagship outcome of the scientific and technological revolution, has gradually ushered human society into the digital age.
Despite these advancements, the role of social structures, governance frameworks, and the delivery of public services remains critical in managing environmental issues. Democratic processes, which emphasize transparency, citizen participation, and accountability can help shape informed environmental policies. Moreover, efficient and digitalized delivery of government services can reduce environmental footprints by decreasing paper consumption and unnecessary travel, whereas inefficient systems may exacerbate pollutant emissions. Consequently, strong political commitments, combined with stringent environmental regulations and improved governmental efficiency, are essential to achieving sustainable development and controlling climate change. In light of these challenges, the present study aimed to examine the simultaneous effects of the growth of the Internet, efficiency of government services delivery, and democratic governance on CO₂ emissions in 63 countries during the period 2000–2020. The objective was to provide a comprehensive understanding of the structural differences and heterogeneous effects of macroeconomic and institutional factors on pollutant emissions, while offering policy recommendations for effective environmental regulation.

Materials and Methods

To accurately assess the effects of the variables, this study employed a panel quantile regression model with fixed effects—a sophisticated econometric tool that allows for the analysis of effects of explanatory variables across the entire distribution of the dependent variable, in this case, CO₂ emissions. Collected from authentic international sources (particularly the World Bank), the data included key economic indicators such as GDP growth, urbanization rates, the proportion of renewable energy consumption, fossil fuel consumption, and the net flow of foreign direct investment. Additionally, the analysis relied on the indices measuring the quality of democratic governance and government services delivery. While the former is based on criteria such as freedom of expression and political stability, the latter encompasses administrative efficiency, regulatory quality, the rule of law, and corruption control. Before model estimation, the dataset underwent rigorous statistical testing, including checks for normality, correlation, and cointegration. Moreover, the variables were transformed into their natural logarithms to ensure homogeneity and consistency. One of the advantages of using the panel quantile regression model is its robustness to outliers and its ability to capture the differential effects of variables at both the lower and upper quantiles of CO₂ emissions. In other words, the effects of Internet penetration or the efficiency of government services delivery may differ between countries with relatively low versus high emission levels. Therefore, the chosen model proved to be well-suited to identify structural differences and heterogeneous effects across nations, yielding statistically robust estimates of the key drivers of pollutant emissions.

Results and Discussion

The empirical findings from the panel quantile regression model revealed that an increase in Internet penetration was associated with a statistically significant and positive effect on CO₂ emissions across most quantiles. In particular, at the lower quantiles of emissions, the rise in Internet usage—driven by the energy demands of digital infrastructure and data centers—leads to a marked increase in energy consumption and, consequently, in carbon dioxide emissions. This finding aligns closely with previous research, which suggests that while advancements in ICT improve economic efficiency, they also considerably increase energy consumption. In contrast, the index of government services delivery exhibited a negative relationship with CO₂ emissions in certain quantiles. This implies that improvements in the efficiency and quality of government services deliver—achieved through institutional reforms and enhanced transparency—can help reduce energy consumption and mitigate pollutant emissions. In effect, policies aimed at streamlining government operations appear to play a vital role in counteracting the adverse environmental effects associated with technological expansion.
Moreover, while the democratic governance index tends to reduce emissions, its effect was not statistically significant. This indicates that merely having democratic structures, without comprehensive institutional reforms, may be insufficient to generate meaningful improvements in environmental quality. Furthermore, control variables such as GDP growth and urbanization rates were found to have a positive and significant effect on CO₂ emissions across most quantiles. This finding reinforces the idea that economic growth and concentrated urban development, when not managed with environmental considerations, can drive increased energy consumption and higher levels of greenhouse gas emissions. In contrast, the share of renewable energy consumption consistently demonstrated a negative effect on emissions, highlighting the critical importance of transitioning to clean energy sources to mitigate environmental degradation. As anticipated, fossil fuel consumption had a strong positive effect on CO₂ emissions across all quantiles.
A key finding of the study is the observed heterogeneity in the effects of economic and institutional variables on CO₂ emissions. For instance, in countries with relatively low emission levels, an increase in Internet penetration tends to have a more significant negative effect on the environment, whereas in countries with higher emission levels, this effect is diminished. These variations highlight the importance of tailored regional policies, as uniform policy measures may not produce equally effective outcomes across different contexts.

Conclusion

According to the findings, in the digital age, the growing use of the Internet is a significant driver of increased energy consumption and higher CO₂ emissions. Yet, improvements in the quality and efficiency of government services delivery can effectively counterbalance this trend by reducing overall emissions. From a policy perspective, the research suggests that a comprehensive strategy—one that promotes clean technologies, optimizes energy use within the ICT sector, and implements institutional reforms to enhance public service delivery—is essential for achieving substantial reductions in carbon emissions and fostering sustainable development. The study demonstrated that countries experiencing rapid growth in Internet penetration should prioritize investments in renewable energy infrastructure and energy consumption optimization. Additionally, improving government performance through increased transparency, accountability, and stringent environmental regulations can significantly reduce pollutant emissions. In other words, environmental policies should be crafted to support both technological and economic progress while simultaneously mitigating adverse environmental effects. Moreover, the research highlights the importance of considering structural heterogeneity among countries. Uniform policy measures may not be equally effective across different national contexts, making it essential to develop region-specific, tailored strategies that account for each country’s unique economic, institutional, and environmental conditions. Ultimately, the study offers valuable insights for policymakers and economic decision-makers, providing a foundation for the development of long-term strategies aimed at reducing emissions and building a resilient, green economy.
In sum, the present study suggests that addressing contemporary environmental challenges requires aligning technological progress with institutional reforms and improved public service efficiency to achieve sustainable development and protect the environment. Policymakers are encouraged to incorporate environmental considerations into their broader development plans and to leverage green technologies as essential tools for reducing pollutant emissions. By doing so, a coherent and integrated approach to economic and environmental policy can be established, balancing the demands of growth with the imperative of environmental protection.

Keywords

• Internet
• Democratic Process
• Government Services Delivery
• CO2
• Panel Quantile

Main Subjects

• Energy Economy