Environmental Degradation and Subjective Well‐Being in Major Emitters: The Moderating Roles of Governance Quality and Technological Innovation

ABSTRACT

Unlike previous studies, this research provides a novel contribution by analyzing both the direct and indirect effects through which governance quality and technological innovation moderate the adverse impacts of CO ₂ emissions on subjective well‐being (SWB). Analyzing panel data from 2010 to 2023 for top 20 emitters, this study employs the novel technique of Nonlinear Dynamic Panel Data Model using System Generalized Method of Moment (NDPD‐SGMM). Furthermore, Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) methods are employed for robustness. The findings indicate that: (i) environmental degradation negatively impacts SWB; (ii) governance quality contributes to the enhancement of SWB, although its effect is relatively small; (iii) technological innovation significantly enhances SWB; and (iv) the moderating impact of governance quality and CO ₂ emissions on SWB is negative, meaning that governance does not mitigate the adverse effects of CO ₂ emissions on SWB. However, the moderating impact of technological innovation and CO ₂ emissions on SWB is positive, indicating that technological innovation could be used as a policy variable that moderates the negative impact of CO ₂ emissions on SWB. Finally, the study identifies critical threshold levels. Specifically, governance quality contributes positively to SWB through environmental sustainability only when CO ₂ emissions remain below the threshold value of 8.1. Similarly, technological innovation enhances SWB through environmental sustainability only when CO ₂ emissions do not exceed the threshold value of 2.5.