The Impact of Technological Innovation, Good Governance, and Green Energy on Water Stress in Developed and Developing Economies

Abstract

The global community is making efforts to achieve sustainable development to address the menace of climate change and its associated impacts. One of the major challenges faced by the modern world is the sustainable management and use of water resources. Water stress and land degradation are the major concerns as they pose threats to environmental sustainability. The ongoing rapid drive of technological innovation has also contributed to climate change mitigation and adaptation efforts. Therefore, it is imperative to explore how technological innovations influence water resource management and conservation. This study examines the impact of technological innovation on water stress. For this purpose, it uses a large panel dataset covering the period from 2001 to 2022 across 85 developed and developing economies. Based on the statistical properties of the data, the Method of Moments Quantile Regression (MM‐QR) is employed for analysis. The results reveal that technological innovations (INNOV) increase water stress at lower quantiles but reduce it at higher quantiles. Agricultural output contributes to increased water stress, while good governance and green energy (GE) show a reducing effect on water stress. These results remain consistent across quantiles and are further validated through robustness analysis using Bootstrapped Quantile Regression (BS‐QR). The findings provide useful guidelines for policymakers and governments to align technological innovation policies with water management strategies.