Environmental Total Factor Productivity and the Cost-Effectiveness of GHG Emission Reduction: The Case of Crop Production in China

Abstract

China's diversified agricultural policies have effectively improved both the yield and environmental performance of the crop sector. Quantifying productivity trends and their drivers is key to formulating strategies for high-quality and low-carbon crop development. This study uses input–output panel data of crop products to examine changes in the environmental total factor productivity (ETFP) of the crop sector and its major sub-sectors across 30 Chinese provinces from 2001 to 2020. The results show that the ETFP of the crop sector exhibited a wavelike growth pattern, mainly driven by technological progress. In addition, reducing greenhouse gas (GHG) emissions can significantly improve the ETFP and shows considerable potential. Over the entire study period, the crop sector could mitigate up to 35.5% of GHG emissions to reach the frontier target value. The average marginal abatement cost is 4106 yuan/tonne CO₂e. Spatially, the GHG emission mitigation potential and cost-effectiveness in the western and central regions are higher than those in the eastern region. Therefore, inter-regional cooperation can leverage regional differences to optimise total reduction costs and establish a carbon market, which would positively impact both the crop economy and the environment.