Impacts of Energy Price on Agricultural Production, Energy Consumption, and Carbon Emission in China: A Price Endogenous Partial Equilibrium Model Analysis

Yongxi Ma,Lu Zhang,Shuao Yu,Shixiong Song

doi:10.3390/su14053002

Abstract

Energy market volatility will have systemic effects on agricultural production, energy consumption and carbon emissions. This paper aims to evaluate the impacts of energy price on agricultural production, energy consumption, and carbon emission in China. To achieve the objective, this paper, firstly, constructed a price endogenous partial equilibrium model, and then designed four scenarios of energy price fluctuations, finally evaluating the impacts of energy price fluctuations on agricultural production and its energy consumption and carbon emission. The results revealed that: (1) The impacts on agricultural production are very limited, but higher energy price will result in producers’ welfare loss by 0.6% to 1.4%, under different scenarios. (2) Energy price drives negative impacts on agricultural energy consumption and carbon emission, 1.6%/3.2% and 1.3%/2.6%, respectively, in low/high amplitude scenarios. (3) Heterogeneous impacts are confirmed in the regional analysis; South China is simulated to be the most sensitive area. To mitigate the impacts from energy price and reduce carbon emission in agriculture, several policy implications have recently been proposed, including strengthening supervision of the energy market, constructing an energy saving price-setting mechanism, launching policy instruments to improve energy efficiencies and facilitate cleaner farming techniques, and formulating specific measurements of energy saving and emission reduction for different regions.

Highlights

Along with the development of agricultural modernization and mechanization, energy consumption in the Chinese agriculture sector, including diesel, electricity and fertilizer, has been growing rapidly, since the rural reform began in the 1980s [1]
Non-renewable energy consumption created the largest amount of carbon emissions (27.2%, higher than that of other sources) in the Chinese agriculture sector; 237 million tons of carbon emissions were generated from agricultural energy consumption in 2018, which was almost eight times higher than that of the early 1980s
This paper aims at evaluating the systematic impacts of energy price fluctuation on agricultural production, energy consumption and related carbon emissions under different scenarios

Summary

Introduction

Along with the development of agricultural modernization and mechanization, energy consumption in the Chinese agriculture sector, including diesel, electricity and fertilizer, has been growing rapidly, since the rural reform began in the 1980s [1]. Inputting energy resources, especially under the fluctuation of energy prices, will affect the farming cost of agriculture, but will influence farmers’ planting decisions as well. The proportions of diesel expenditure in the total material and service cost of China’s rice, wheat and corn production in 2018 were 15.7%, 12.5%, and 12.4%, respectively, while those of fertilizers are 6.8%, 7.4%, and 8.4% [2]. Due to the foreseeable trend and strategy of promoting modernization and mechanization, the Chinese agriculture sector is supposed to be equipped with more machines and a generate

Objectives

Methods

Discussion

Conclusion