Farming under pressure: land rent, financial risk, and nutrient over-application in China

Whether high fixed costs, such as land rents, compel risk-averse smallholders to use excess nutrients as a financial safety net is a critical concern for food policy. Therefore, this study investigated how rising land rents influence on-farm nutrient management using data from 71,380 Chinese maize farmers spanning 2004–2022. To identify the causal effects and address endogeneity, we used a two-way fixed-effects model and Bartik instrumental variable strategy. We validated this instrument via Conley sensitivity analyses and placebo tests. Moreover, we applied Heckman two-step models and doubly robust inverse probability weighted regression adjustment to correct for self-selection bias from observable and unobservable factors. Notably, rising land rents first serve as a financial risk amplifier, considerably increasing nutrient surplus for both nitrogen (N) and phosphorus (P). Second, this effect is behaviorally amplified for farmers with a history of major financial losses. Third, farmers’ nutrient decisions are a complex outcome of dual pressures from market risk, driven by high rents, and natural risk, such as floods. Farmers rationally adjust their input strategies based on the distinct biophysical properties of different nutrients, including N and P, to balance yield security and cost control. Therefore, building sustainable and resilient food systems requires policies extending beyond technology dissemination to include institutional support systems mitigating farmers’ economic risks and self-selection constraints.