Do new agricultural business entities reduce the marginal abatement cost of agricultural carbon emissions? Evidence from China

Abstract

The development of new agricultural business entities has become an important driver of agricultural modernization and rural transformation. Their growing role in promoting green agricultural development and carbon mitigation highlights the need to assess not only their emission-reduction potential but also the economic costs of carbon mitigation. However, whether these entities can reduce the marginal abatement cost of agricultural carbon emissions remains unclear. Using panel data from 30 provinces in China from 2011 to 2023, this study empirically examines the impact of new agricultural business entities on the marginal abatement cost of agricultural carbon emissions and its underlying mechanisms by employing a two-way fixed effects model, mediation analysis, and spatial econometric models. The results show that the development of new agricultural business entities significantly reduces the marginal abatement cost of agricultural carbon emissions. Further analysis indicates that farmer cooperatives and family farms play a particularly important role in reducing carbon abatement costs, with stronger effects in major grain-producing regions and areas with greater governance capacity. Mechanism tests suggest that new agricultural business entities reduce marginal abatement costs by easing agricultural credit constraints, improving land allocation efficiency, and promoting agricultural technological progress. In addition, the spatial econometric results reveal significant spatial spillover effects, indicating that the development of new agricultural business entities in neighboring regions also contributes to lower local agricultural carbon abatement costs. These findings provide new evidence on the economic mechanisms through which new agricultural business entities contribute to agricultural carbon mitigation and offer policy implications for promoting the low-carbon transformation of agriculture in China and other developing countries.