DIGITALIZATION AND SUSTAINABLE AGRICULTURE: A PATH TO CARBON-NEUTRAL FARMING IN E7 ECONOMIES

Abstract

This study explores the dynamic relationship between key macroeconomic factors Consumer Price Index, digitalization, financial development, human development, and carbon dioxide emissions (share of agriculture) in the E7 economies. Using data from 1991 to 2022 and applying the Pooled Mean Group Autoregressive Distributed Lag model, the research examines both the direct effects of these variables on CO₂ emissions and the moderating role of digitalization in mitigating inflationary pressures. The results highlight a positive correlation between CPI, digitalization, and financial development with increased CO₂ emissions, whereas the interaction of digitalization and CPI offers a potential avenue for emission reduction. The study emphasizes the need for sustainable agricultural practices, such as precision farming and renewable energy adoption, to counteract the environmental impact of economic growth. The findings underscore the need for policies promoting technological efficiency and sustainable growth to combat climate change, emphasizing digitalization’s role in balancing economic progress with environmental sustainability.