Carbon trading and agricultural green total factor productivity: evidence from China’s pilot carbon market and the mediating role of mechanization

Abstract

Agriculture is both a major source of greenhouse gas emissions and highly vulnerable to climate-related risks, yet the implications of carbon pricing for agricultural sustainability remain insufficiently understood. This study examines the effect of China’s carbon trading pilot policy (CTPP) on agricultural green total factor productivity (AGTFP) using a difference-in-differences (DID) model and panel data covering 30 provinces from 2005 to 2022. AGTFP is measured using the SBM–GML index, with agricultural carbon emissions treated as an undesirable output. The baseline results show that the CTPP increases AGTFP by 0.1351 units, equivalent to 18.3% of the sample mean. Given the staggered adoption of the policy, the robustness of this finding is further assessed using the heterogeneity-robust Callaway–Sant’Anna estimator. The resulting estimate remains positive and statistically significant, although cohort-specific pre-treatment variation warrants cautious interpretation. The mediation results suggest that agricultural mechanization, measured by the comprehensive mechanization rate of crop plowing, sowing, and harvesting (AMR), may constitute a potential transmission channel. The Sobel test provides marginal evidence of an indirect effect at the 10% significance level. Regional estimates are positive and statistically significant in eastern and western China but statistically insignificant in central China. These findings provide new evidence that carbon pricing directed at industrial emitters may generate spillovers to agricultural productivity and highlight the importance of coordinating carbon-market development with sustainable agricultural policy.