Balancing Digital Growth and Ecological Limits: Environmental Taxation and Ecological Stability under the Load Capacity Curve Framework

Authors

https://doi.org/10.48313/iee.v2i1.60

Abstract

As the global economy rapidly shifts toward digital transformation and sustainable development, understanding the environmental consequences of technological and financial expansion has become increasingly important. This study investigates the impact of Artificial Intelligence (AI) innovation, environmental taxation, and financial accessibility on environmental sustainability in Nordic economies within the framework of the Load Capacity Curve (LCC) hypothesis. Using balanced panel data covering the period from 1990 to 2022, the analysis also incorporates economic growth and urbanization as additional determinants of ecological sustainability, measured through the Load Capacity Factor (LCF). To address Cross-Sectional Dependence (CSD) and heterogeneity across countries, the study employs advanced panel econometric techniques, including second-generation unit root tests, panel cointegration analysis, and the Panel Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run relationships. The findings validate the LCC hypothesis by revealing a U-shaped relationship between income and environmental sustainability. Moreover, AI innovation and environmental taxation significantly enhance ecological capacity, whereas financial accessibility and urbanization intensify ecological pressure. Robustness tests further confirm the reliability of the results, offering important policy insights for achieving sustainable and technology-driven economic development.

Keywords:

Artificial intelligence, Environmental taxation, Financial accessibility, Load capacity factor, Nordic economies

References

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Published

2026-03-10

Issue

Vol. 2 No. 1 (2026): Innovations in Environmental Economics (IEE)

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Articles

How to Cite

Balancing Digital Growth and Ecological Limits: Environmental Taxation and Ecological Stability under the Load Capacity Curve Framework. (2026). Innovations in Environmental Economics , 2(1), 32-44. https://doi.org/10.48313/iee.v2i1.60

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