Has the digital economy improved the ecological environment? Empirical evidence from China

The main objectives of this study incorporate the ecological environment index (ENV) and the digital economy index (DIG) into the environmental Kuznets (EKC) model and examine the income effects, scale effects, structural effects, technology effects, and government expenditures on the ecological environment, collating panel data for 31 provincial administrative regions in China over the period 2011-2019. The panel entropy value method was first applied to calculate the ecological environment index (ENV) and the digital economy composite index (DIG). Secondly, a threshold effect test is conducted with the digital economy as the threshold variable, and it is found that there are two threshold values in the model. From the threshold regression results, the impact of the digital economy on the ecological environment shows a positive "U" shape. At this stage, except for individual years in each province, most of the provinces are in the second half of the positive "U" curve. The coefficients of the income effect and scale effect are not significant, while the coefficients of structural effect and technology effect and government expenditure are significantly positive. From the results of the study, it is clear that the digital economy has a significant contribution to the improvement of the ecological environment in China at this stage. Policymakers should go further to promote the development of the digital economy while encouraging regional industrial structure optimization and increasing technological input support to ensure that the environment and economic development are coordinated in the digital economy era.