Fiscal support and carbon productivity of agriculture—Empirical evidence from China

Abstract

In the context of global climate change, improving agricultural carbon productivity is an important channel to cope with climate change, reduce agricultural carbon emissions and maintain agricultural growth. For a long time, agricultural development in China mainly depends on the government's fiscal expenditure. However, does fiscal support helps to promote carbon productivity of agriculture? This question remains to be answered. Using a set of panel data covering 31 provinces and cities from 2003 to 2019, this study empirically explores the impact of agricultural fiscal support on agricultural carbon productivity in China. Benchmark regression results indicate that after controlling other influential factors, regional fiscal expenditure on agricultural has a significantly positive impact on agricultural carbon productivity. In addition, the promotion impacts of fiscal support on agricultural technological innovation and scale operation efficiency are two effective channels by which to help promote agricultural carbon productivity. By using a panel threshold regression model, we find that there exists a nonlinear relationship between fiscal support and agricultural carbon productivity. The input of agricultural machinery and chemical fertilizer are two threshold variables. Further, this causal linkage between fiscal support and agricultural carbon productivity exists differences because of the different levels of agricultural carbon productivity and regions. Our research provides Chinese theoretical basis and practical reference for improvement of agricultural carbon productivity from the perspective of fiscal expenditure.