Agricultural Producer Service Subsidies and Agricultural Pollution: An Approach Based on Endogenous Agricultural Pollution

Agricultural producer services are indispensable link in promoting agricultural modernization in developing countries, while agricultural pollution has become the largest source of pollution in many developing countries. Given that agricultural pollution is different from the industrial pollution for its endogenous characteristic, we linked agricultural pollution with labors’ human capital level and propose an endogenous model that reflecting agricultural pollution path, which is different from the traditional path. We studied the effects of government price subsidy, interest subsidy, and wage subsidy to agricultural producer service on agricultural pollution and other economic indicators by constructing a four-sector general-equilibrium model including agricultural producer service. And we found that the rise of price subsidy for the agricultural producer service and the wage subsidy of the agricultural producer service sector would increase the output of agricultural sector and reduce the output of agricultural producer service under certain conditions, but aggravate agricultural pollution; at the same time, the rise of interest subsidy of the agricultural producer service sector would decrease the output of agricultural sector, enhance the output of agricultural producer service conditionally, and decrease the agricultural pollution. Preconditions of the three subsidies to improve national welfare have been obtained.