CAN CARBON TRADING CATALYZE ECOLOGICAL CIRCULAR AGRICULTURE? QUASI-EXPERIMENTAL EVIDENCE FROM CHINA’S REGIONAL POLICY PILOTS

Abstract

Ecological circular agriculture is a necessary choice for sustainable agricultural development. It is crucial for alleviating resource-environmental pressures and balancing ecological and economic progress. Within this context, the role of carbon trading policy is significant, as it acts as a catalyst in promoting the vitality of ecological circular agriculture. However, there is a dearth of research on how carbon trading affects the development of ecological circular agriculture. Therefore, this study aims to fill this gap by examining the impact of carbon trading policy on ecological circular agriculture and its underlying mechanisms. Panel data from 30 provincial-level administrative regions in China spanning 2006–2021 was used to construct a multidimensional index for ecological circular agriculture and apply a difference-in-differences (DID) approach. The findings reveal that carbon trading policy can enhance ecological circular agriculture in pilot provinces (municipalities) by 3.5 %, primarily through improved ecological technology and agricultural carbon productivity to drive the green transformation of agriculture. The effects are most pronounced in the western Chinese region and areas with stronger agricultural labor productivity. This research improves the understanding of carbon trading mechanisms in agricultural systems and provides insights for designing effective carbon trading mechanisms.