Chapter 15: Can Artificial Intelligence Investments Drive Environmental Sustainability? Insights from OECD Countries

This study empirically examines the effect of private investments in artificial intelligence (AI) on environmental sustainability (ES). The analysis focuses on a sample of 32 Organization for Economic Co-operation and Development (OECD) countries over the period 2013–2021. To analyse the long-term dynamics among variables, Pedroni panel cointegration tests are employed. Furthermore, dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) estimation methods are utilized to estimate the long-run coefficients. The findings reveal a positive and statistically significant relation between AI investments and ES in the long run, indicating that increased investments in AI contribute to enhanced environmental quality. These findings emphasize that AI investments serve as a crucial instrument for advancing both technological progress and ES, thereby facilitating the simultaneous achievement of eco-friendly development objectives. To this end, policymakers are encouraged to foster sustainable AI investments through targeted incentives and supportive regulatory frameworks.