Tracking factor substitution and the rebound effect of China’s agricultural energy consumption: A new research perspective from asymmetric response

Abstract

With the rapid popularization of China’s agricultural mechanization, energy consumption in China’s agricultural activities has been increasing significantly. Based on the agricultural sample data from 2000 to 2017, this study explores the substitution effect and rebound effect of China’s energy consumption in agricultural sector. In order to characterize the asymmetric response, this paper applies asymmetric price decomposition method and seemingly unrelated regression model to conduct the research. Some important results are found as follows. First, own-price elasticity of energy, labor and capital in China’s agricultural sector are −0.25, −0.23, and −0.33 during the study period, showing all the inputs are lacking of price elasticity of demand. Second, the substitution rate of capital for energy is 0.21 while the substitution rate of energy for capital is 0.17, which indicates that reducing capital cost is a more effective way than raising energy price for agricultural energy-saving goal. Second, the rebound rate of energy consumption is 74.78%, meaning that the improvement of energy efficiency relying on technological progress can only achieve 25.22% of energy saving effect. Fourth, the energy rebound rate of China’s agricultural sector is much higher than those of other sectors and presents certain regional characteristics over the study period. Based on these research results, measures such as accelerating market-oriented reform of input factors, increasing agricultural subsidies, optimizing agircultrual energy structure, and weeding out backward agricultural machineries are put forward for the development of China’ agricultural sector.