<p>Crop production is both a major source of agricultural greenhouse gas emissions and an important channel of carbon fixation, so the net carbon sequestration outcome is central to China’s carbon peaking and carbon neutrality agenda. Using a balanced panel of 30 Chinese provinces over 2000–2022, this study examines the association between agricultural insurance development and net carbon sequestration in crop production within a spatial framework. Spatial Durbin Model (SDM) estimates show that greater agricultural insurance is associated with lower net carbon sequestration and significant negative spillovers to neighbouring provinces, with the indirect effect exceeding the direct effect in magnitude. Further disaggregation reveals that agricultural insurance reduces carbon emissions but decreases carbon fixation by more, implying that the net effect is dominated by weakened carbon uptake. Mechanism tests suggest two behavioural channels. First, insurance participation is linked to lower agrochemical input intensity, consistent with cost-saving behaviour under moral hazard. Second, insurance is associated with a modest contraction in crop sown area, and this land-adjustment channel exhibits a negative spatial spillover, consistent with market-mediated price and competition effects that induce neighbouring regions to scale back planting intensity. Heterogeneity analysis reveals that the negative association is pronounced in Production-Consumption Balanced Regions and Major Consumption Regions, whereas the effect is statistically insignificant in Major Production Regions, consistent with their grain-security mandate and more rigid production scales. These findings suggest that policy-based agricultural insurance should be more tightly aligned with ecological objectives, including incorporating green conditions into premium subsidies, expanding environmentally oriented index and agri-environmental insurance products, and adopting region-specific designs that jointly safeguard farm incomes and sustain net carbon sequestration.</p>

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Does agricultural insurance hinder net carbon sequestration in Chinese crop production? Evidence from spatial spillovers

  • Sijing Zheng,
  • Wei Zhang

摘要

Crop production is both a major source of agricultural greenhouse gas emissions and an important channel of carbon fixation, so the net carbon sequestration outcome is central to China’s carbon peaking and carbon neutrality agenda. Using a balanced panel of 30 Chinese provinces over 2000–2022, this study examines the association between agricultural insurance development and net carbon sequestration in crop production within a spatial framework. Spatial Durbin Model (SDM) estimates show that greater agricultural insurance is associated with lower net carbon sequestration and significant negative spillovers to neighbouring provinces, with the indirect effect exceeding the direct effect in magnitude. Further disaggregation reveals that agricultural insurance reduces carbon emissions but decreases carbon fixation by more, implying that the net effect is dominated by weakened carbon uptake. Mechanism tests suggest two behavioural channels. First, insurance participation is linked to lower agrochemical input intensity, consistent with cost-saving behaviour under moral hazard. Second, insurance is associated with a modest contraction in crop sown area, and this land-adjustment channel exhibits a negative spatial spillover, consistent with market-mediated price and competition effects that induce neighbouring regions to scale back planting intensity. Heterogeneity analysis reveals that the negative association is pronounced in Production-Consumption Balanced Regions and Major Consumption Regions, whereas the effect is statistically insignificant in Major Production Regions, consistent with their grain-security mandate and more rigid production scales. These findings suggest that policy-based agricultural insurance should be more tightly aligned with ecological objectives, including incorporating green conditions into premium subsidies, expanding environmentally oriented index and agri-environmental insurance products, and adopting region-specific designs that jointly safeguard farm incomes and sustain net carbon sequestration.