Effect of agricultural fiscal incentives on agricultural carbon intensity in China

Abstract

Few studies provide direct evidence that agricultural fiscal affects agricultural carbon intensity, we try to fill this gap. Using panel data of 30 provinces in China from 2005 to 2019, we conclude that agricultural fiscal expenditures significantly reduce agricultural carbon intensity. The result is still robust after employing the provincial agricultural leaders’ birthplace information as an instrumental variable. Further study shows that the negative effect of agricultural fiscal expenditures on agricultural carbon intensity is more pronounced in regions with less corruption, and is also more visible in central, western and inland regions than other areas. For this effect, agricultural technological improvement and structure optimization are possible channels, but not operation scale expansion. Interestingly, although agricultural fiscal expenditures reduce the local agricultural carbon intensity, other regions' carbon intensity is increased due to fiscal rivalry.

Sustainable agricultural management: How to achieve carbon neutrality in agriculture – evidence from China agricultural sustainable development plan

“…The DID model necessitates that the treatment and control groups satisfy the assumption of parallel trends (Zhang et al, 2023). Figure 2 reveals no noteworthy divergence between these groups before policy implementation.…”

“…The emissions result from various agricultural input factors(Liu & Yang, 2021), and data is sourced from the China Agricultural Statistical Yearbook, China Livestock Yearbook, and China Forestry and Grassland Statistical Yearbook. We utilize the agricultural carbon emissions to GDP per capita ratio for measuring agricultural carbon neutrality in tons/dollar(Zhang et al, 2023). This technique mitigates the population size induced bias.…”