The Nexus Among CO2, Renewable Energy, Agricultural Production and Financial Development: Empirical Evidence From China and India

Abstract

This study examines the relationship between CO2, Renewable Energy, Agricultural Production and Financial Development for the 30-year period of 1993-2022 in China and India. The data for our variables, CO2 and Renewable Energy, were obtained from the official website of the World Bank, the Agriculture data from the official website of the Food and Agriculture Organization of the United Nations, and the Financial Development data from the official website of the International Monetary Fund. Our article was evaluated by empirical analyzes examining long-term and short-term relationships, as well as Multiple Regression Analysis, ADF and PP unit root tests, Johansen Cointegration test, VAR Analysis, Impulse Response analysis, Variance Decomposition analysis, FMOLS, DOLS and CCR analyzes. According to the analysis results, the model has a strong explanatory power of 99.48% in China and 99.54% in India. In addition, it was determined that agricultural activities increase CO2 emissions, while the use of renewable energy reduces emissions. It was observed that the effect of financial development on CO2 emissions was not statistically significant, but it could have indirect effects. Analyses conducted specifically for China and India revealed the strong effect of the agricultural sector on carbon emissions and emphasized that sustainable agricultural practices and green financing projects should be encouraged. In line with these results, supporting financial development with environmentally friendly policies, prioritizing green financing projects, and implementing incentives that will increase renewable energy use will contribute to controlling CO2 emissions in the long term. © 2025, Econjournals. All rights reserved.