On the impacts of agricultural subsidies on agricultural carbon emissions in China: empirical evidence from microdata of rice production.

ABSTRACT

China's agricultural subsidy system has increased the investment on the agricultural production factors such as energy and chemistry, which caused an increase of agricultural carbon emissions. Based on the Thousand-Village Survey data from Shanghai University of Finance and Economics in 2013, the focal paper uses ordinary and two-stage least squares (OLS and 2SLS) to systematically investigate the impact and mechanism of agricultural subsidies on agricultural carbon emissions in China. Results show that China's current agricultural subsidy system has a promoting effect on agricultural carbon emissions. Four types of agricultural subsidies, namely, direct grain subsidies, subsidies for improved varieties, comprehensive subsidies for agricultural materials, and agricultural machinery purchase subsidies, impact the agricultural carbon emissions in ascending order. The agricultural subsidies increase the agricultural carbon emissions directly and indirectly. The findings indicate that a new type of agricultural subsidy system should be constructed, which mainly includes subsidies for farmers' out-migrating for work and land transfer, direct subsidies for grain, and subsidies for improved seed varieties. Among them, the direct grain subsidies should be implemented on the size of planting area and subsidies for improved seed varieties on the size of farmland to reduce the agricultural carbon emissions.