Digital Economy and Environmental Quality: Insights from the Spatial Durbin Model

Abstract

Recent developments in attaining carbon peaks and achieving carbon neutrality have had enormous effects on the world economy. Digitalization has been considered a viable way to curtail carbon emissions (CE) and promote sustainable economic development, but scant empirical studies investigate the link between digitalization and CE. In this context, this study constructs the digitalization index using the entropy value method and spatial Markov chain, and the spatial Durbin model is employed to analyze its impact mechanism and influence on urban CE in 265 prefecture-level cities and municipalities in China from 2011 to 2017. The results indicate that: (1) The overall development level of the digital economy (DE) posed a significant spatial effect on urban environmental pollution. However, the effect varies according to the different neighborhood backgrounds. (2) The DE impedes urban environmental deterioration directly and indirectly through the channels of industrial structure, inclusive finance, and urbanization. (3) The development of the DE significantly reduces pollution in cities belonging to urban agglomerations, while the development of the DE escalates emissions in nonurban agglomeration cities. Finally, based on the results, important policy implications are put forward to improve the environmental quality of cities.