Suppression of carbon emissions by agricultural financial investment: A study based on provincial panel data in China

Abstract

As China pursues carbon peak and carbon neutrality goals, the low‐carbon economy and energy conservation have become essential components of high‐quality economic development. Although agriculture plays a fundamental role in a country, the relationship between agricultural development, investment, and carbon emissions is often overlooked in existing research. This study aims to address this gap by examining the impact of financial investment in agriculture on carbon dioxide emissions and the underlying mechanisms driving this relationship. Employing panel data from mainland China's provinces between 2007 and 2020, the study also investigates the regional heterogeneity in the effect of agricultural investment on carbon dioxide emissions. Our findings reveal that increasing financial investment in agriculture effectively reduces carbon dioxide emissions, primarily through optimizing industrial structure and fostering technological innovation. Heterogeneity tests indicate that the inhibitory effect of agricultural investment on carbon dioxide emissions is more pronounced in eastern regions, provinces with a higher degree of marketization, and provinces with a substantial proportion of primary industry. These results provide a theoretical basis for leveraging agricultural financial investment to restrain carbon dioxide emissions and highlight the unique contributions of our study to the existing body of research.