Analyzing the mechanism among rural financing constraint mitigation, agricultural development, and carbon emissions in China: A sustainable development paradigm

Abstract

Agricultural development in developing countries generally faces increasingly severe financing constraints, and China's practice provides a model for other countries. This article investigates the impact of the policy to alleviate rural financing constraints on agricultural carbon emissions in developing countries by using a quasi-natural experiment, the “Incremental Incentives for Agricultural Loans from County Financial Institutions,” implemented in China, with data from 2005 to 2018, and with a DID approach. It is found that under the influence of this policy, the alleviation of agricultural financing constraints will significantly generate an increase in the intensity of agricultural carbon emissions, which is triggered by the fact that the alleviation of financing constraints increases the production factors invested per unit area in the agricultural production process, while the increase in the mechanization and scale of agriculture will assist to reduce the contribution of the alleviation of financing constraints to carbon emissions. The impact of financing constraint alleviation on agricultural carbon emissions may differ among places with different economic and social development and agricultural bases. Additionally, the alleviation of rural financing constraints can promote agricultural development and increase farmers' income, enabling other developing countries to adjust their policy orientation when adopting such policies, thus promoting agricultural development while controlling agricultural carbon emissions and contributing to the global emission reduction cause.