An Empirical Study on the Impact of Environmental Taxation Policies on the Transition to Low-Carbon Agriculture: Opportunities and Challenges

Abstract

This paper investigates how environmental taxation policies influence the shift toward low-carbon agriculture, focusing on both opportunities and challenges arising in various regional contexts. By analyzing agricultural producers' decision-making processes, we highlight the role of tax instruments in reducing carbon-intensive practices and promoting sustainable land management. We posit that strategic environmental taxation can stimulate the adoption of cleaner technologies, drive investment in research and development, and foster inter-sectoral collaboration to minimize the environmental footprint of food production.Employing a multi-regional dataset, we examine the dynamic interplay between policy interventions and farmers' economic incentives. Our empirical analysis explores key determinants of low-carbon practices, such as input substitution, resource efficiency, and soil carbon sequestration. We also incorporate a theoretical model to capture the complexities of environmental tax-induced technology diffusion, supported by relevant linear algebraic representations to characterize economic interactions.Findings suggest that carefully calibrated environmental taxes can not only reduce greenhouse gas emissions but also improve long-term economic resilience in the agricultural sector. However, policy design complexities, regional disparities, and unintended market distortions pose significant hurdles. The results underscore the necessity of holistic policies, enhanced risk management strategies, and public-private partnerships to fully harness the benefits of environmental taxation. This research contributes to a deeper understanding of how tax-based mechanisms can catalyze the transition to low-carbon agriculture while minimizing the associated trade-offs.