Impact assessment of agriculture, energy and water on CO2 emissions in China: untangling the differences between major and non-major grain-producing areas

Due to the use of abundant fossil and non-fossil fuels, the agricultural sector has contributed to large amounts of carbon dioxide (CO2) emissions in China. Meanwhile, the agricultural sector is the largest consumer of water in China. To investigate the effects of agricultural output, energy consumption and water use on CO2 emissions in China, a panel of 30 provinces for 2004–2017 is utilized. Also, to control the potential endogeneity, the orthogonal-difference Generalized Method of Moments (GMM) is used as the benchmark estimation method. Moreover, the Dumitrescu and Hurlin (D-H) panel causality test is employed to discover the causal relations among all the variables. Considering the differences in various agricultural areas in China, the 30 provinces are further divided into major and non-major grain-producing areas. The empirical results indicate that CO2 emission is responsive to economic growth, energy consumption, agricultural output and water use with positive elasticities in China. However, at the regional level, agricultural output only has significant impact on CO2 emissions in major grain-producing areas. Also, major and non-major grain-producing areas provide mixed directionality of causality among the variables. Finally, several policy implications are highlighted for the Chinese government with respect to mitigating CO2 emissions and promoting growth in the agricultural sector.