Can Digital Finance Contribute to Agricultural Carbon Reduction? Evidence from China

Abstract

The existing research covers digital finance’s carbon reduction impacts in industrial and urban settings, however, leaving a gap in understanding its effects in agriculture. This study addresses this gap by examining the relationship and mechanism between digital finance and agricultural carbon reduction. Two hypotheses are proposed to guide the study: (1) The development of digital finance could reduce agricultural carbon emissions; (2) The development of digital finance could significantly promote agricultural green innovation, empowering agricultural carbon emission reduction. By employing panel data spanning 31 provinces from 2011 to 2020, we empirically investigate the relationship between digital finance development and a reduction in agricultural carbon emissions. The results indicate that digital financial development significantly reduces agricultural carbon emissions. Mechanism analysis further elucidates the pivotal role of digital finance in facilitating agricultural green innovation, resulting in a decline in agricultural carbon emissions. Additionally, heterogeneity analysis reveals that the impact of digital finance on agricultural carbon emission reduction is particularly pronounced in regions with higher income levels and greater educational attainment. The study offers empirical evidence on the nexus between digital finance and agricultural carbon emissions, from a developing country perspective. It could provide innovative ideas and experiences from China for global agricultural low-carbon development practices.