Impacts of Energy Price on Agricultural Production, Energy Consumption, and Carbon Emission in China: A Price Endogenous Partial Equilibrium Model Analysis

Abstract

Energy market volatility will have systemic effects on agricultural production, energy consumption and carbon emissions. This paper aims to evaluate the impacts of energy price on agricultural production, energy consumption, and carbon emission in China. To achieve the objective, this paper, firstly, constructed a price endogenous partial equilibrium model, and then designed four scenarios of energy price fluctuations, finally evaluating the impacts of energy price fluctuations on agricultural production and its energy consumption and carbon emission. The results revealed that: (1) The impacts on agricultural production are very limited, but higher energy price will result in producers’ welfare loss by 0.6% to 1.4%, under different scenarios. (2) Energy price drives negative impacts on agricultural energy consumption and carbon emission, 1.6%/3.2% and 1.3%/2.6%, respectively, in low/high amplitude scenarios. (3) Heterogeneous impacts are confirmed in the regional analysis; South China is simulated to be the most sensitive area. To mitigate the impacts from energy price and reduce carbon emission in agriculture, several policy implications have recently been proposed, including strengthening supervision of the energy market, constructing an energy saving price-setting mechanism, launching policy instruments to improve energy efficiencies and facilitate cleaner farming techniques, and formulating specific measurements of energy saving and emission reduction for different regions.