The Criticality of the Digital Economy in Environmental Sustainability: Fresh Insights from a Wavelet-Based Quantile-on-Quantile Approach

Xiaoqing Wong, Wenhao Kang, Jisu Kim (), Yingying Xu and Ankang Wang
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Xiaoqing Wong: School of Business, Wuchang University of Technology, Wuhan 430223, China
Wenhao Kang: Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, Hong Kong 999077, China
Jisu Kim: School of Applied Economics, Renmin University of China, Beijing 100872, China
Yingying Xu: School of Public Administration, Beihang University, Beijing 100191, China
Ankang Wang: School of Economics, Zhejiang University, Hangzhou 310058, China

Sustainability, 2025, vol. 17, issue 2, 1-17

Abstract: Achieving environmental sustainability has become an urgent priority in the era of rapid digital economic expansion, which presents both opportunities and challenges for environmental sustainable development. This study investigates the impact of digital economy (DIE) on environmental sustainability (ENS) through the dual dimensions of digital industrialization (DII) and industrial digitalization (IND), employing the wavelet-based quantile-on-quantile regression method to capture both quantile dependencies and temporal variations. The results reveal that DIE positively impacts ENS in the long term, while its short-term effects are mixed, with positive effects at lower and higher quantiles but negative impacts at mid-range quantiles of [0.35–0.45] and [0.65–0.7]. Specifically, DII exerts a predominantly negative short-term effect on ENS due to the environmental costs of digital infrastructure expansion, but turns positive in the long term as digital industrialization matures, especially in [0.85–0.95]. IND, conversely, exerts a consistently positive impact on ENS in both short- and long-term scenarios, highlighting its role in enhancing industrial efficiency and reducing emissions. These results emphasize the need for targeted policies, including prioritizing industrial digitalization, developing green infrastructure, and adopting phased digital development strategies to maximize environmental benefits.

Keywords: digital economy; environmental sustainability; industrial digitalization; digital industrialization; wavelet-based quantile on quantile method (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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