Environmental regulation and green transformation of agriculture in China: help or resistance?

Strict and appropriate environmental regulations are a crucial guarantee for promoting the green transformation of agriculture. In recent years, the Chinese government has stepped up the construction of agricultural environmental regulations in response to increasing agricultural non-point source pollution; however, it remains uncertain whether these regulations can fully realize their intended effects. Using provincial panel data from 2005 to 2022, this paper uses green total factor productivity (TFP) as a measure to assess the degree of agricultural green transition. It empirically examines the impact of environmental regulations on agricultural green transition from the perspective of regulatory intensity, while also exploring the heterogeneity of this impact and its underlying mechanisms. The results show that: 1) Environmental regulation exerts a significant positive “U”-shaped effect on agricultural green transformation; specifically, as the intensity of environmental regulations increases from weak to strong, there is a nonlinear effect on agricultural green TFP — initially inhibiting growth before eventually promoting it. This conclusion holds true after addressing endogeneity concerns and conducting various robustness checks. 2) Calculations indicate that the intensity of environmental regulations in most provinces has not yet crossed the “U” inflection point necessary to promote agricultural green transition, suggesting that policy constraints remain relatively lenient. 3) Environmental regulation enhances overall green TFP growth primarily through improvements in green technical efficiency, and green technical efficiency can surpass the “U” inflection point earlier than green TFP. 4) The mechanism test indicates that environmental regulation promotes agricultural green transformation via both a nonlinear mechanism of stimulating agricultural substantive green technology innovation and a linear mechanism of reducing the misallocation of labor factors within agriculture. 5) The heterogeneity analysis indicates that environmental regulation has a significant positive “U”-shaped impact on agricultural green transformation exclusively in the central and western regions, while its impact is insignificant in the eastern regions. In provinces characterized by medium and high levels of agricultural green development, environmental regulation demonstrates a significant positive “U”-shaped influence on their agricultural green transformation, while the effect is insignificant in provinces with low levels of agricultural green development. The research conclusions of this paper imply the following policy implications. Firstly, it is essential to moderately increase the intensity of agricultural environmental regulations within reasonable limits. This approach aims to force producers to enhance their awareness of green agriculture, actively participate in green production, and reach the turning point of the ‘U’-shaped curve swiftly. Secondly, improve the environmental regulation policy oriented to green technology innovation, so as to encourage and support entities engaged in technological innovation to actively develop green agricultural production technologies, and guide farmers to accept and apply green production technologies, thereby forming a closed cycle of for green technology innovation in agriculture as soon as possible. Finally, the intensity of environmental regulations should be adjusted according to the degree of agricultural non-point source pollution and the actual situation of green agricultural development in different regions. For regions with more severe agricultural non-point source pollution and lower levels of green agricultural development, the intensity of environmental regulations should be increased appropriately. For regions with higher levels of green agricultural development and relatively lighter agricultural non-point source pollution, under the premise of maintaining sufficient regulatory strength to ensure good environmental quality, the intensity of environmental regulations can be appropriately reduced so as not to hinder the agricultural green transition due to excessively high levels of environmental regulation.