IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/122723.html

Impact of the green transition on the production of cereals in the European Union. New insights based on the FGLS panel data model

Author

Listed:
  • Suproń, Błażej

Abstract

Aim: The aim of this study is to econometrically assess the long-term impact of Green Deal-related regulatory areas on cereal crop production in European Union countries. Methods: The study is based on an analysis of panel data for 21 European Union countries for the period 1995–2021. The FGLS, PCSE and CCEMG models, which are robust to heteroskedasticity and cross-sectional dependence, were used to determine the impact of agricultural CO2 emissions, agricultural area, food production volumes and fertilizer consumption on cereal production. In addition, a robust test of the Westerlund ECM panel test model was applied to confirm cointegration. All models were bootstrapped to strengthen the results. Results: The results show that, in the long run, a 10% increase in CO2 emissions from agriculture leads to an average decrease in cereal production of 0.5%. A 1% increase in cultivated area leads to a 1.1% positive change in the value of cereal production, and a 1% increase in fertilizer use per hectare leads to a 0.38% increase in cereal production. The value of the food production index also shows a positive effect on cereal production. If the index increases by 1 p.p., cereal production increases by 1.13% in the long term. The study also found a positive relationship between an increase in the share of renewable energy and the volume of cereal production. If the share of renewable energy increases by 1%, the volume of cereal production in the EU countries increases by 0.11%. Conclusions: Overall, it can be concluded that the green transformation brings both negative and positive aspects of change to agriculture. The decrease in cultivated land and reduced use of artificial fertilizers may negatively impact farm productivity in crop production areas. On the other hand, the improvement of climatic conditions and the development of renewable energies could be beneficial for agriculture in the long term. The study is original in the sense that it fills an empirical and theoretical gap related to the verification of the impact of the Green Deal on the cereal production sector and thus on agriculture in the European Union.

Suggested Citation

  • Suproń, Błażej, 2024. "Impact of the green transition on the production of cereals in the European Union. New insights based on the FGLS panel data model," MPRA Paper 122723, University Library of Munich, Germany, revised 27 May 2024.
    • Handle: RePEc:pra:mprapa:122723
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/122723/1/MPRA_paper_122723.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Baltagi, Badi H. & Feng, Qu & Kao, Chihwa, 2012. "A Lagrange Multiplier test for cross-sectional dependence in a fixed effects panel data model," Journal of Econometrics, Elsevier, vol. 170(1), pages 164-177.
    2. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    3. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    4. Justus Wesseler, 2022. "The EU's farm‐to‐fork strategy: An assessment from the perspective of agricultural economics," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 1826-1843, December.
    5. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    6. Xiaojing Li & Xianli Xia & Jiazhen Ren, 2022. "Can the Participation in Quality Certification of Agricultural Products Drive the Green Production Transition?," IJERPH, MDPI, vol. 19(17), pages 1-16, September.
    7. Nico, Gianluigi & Christiaensen, Luc, 2023. "Jobs, Food and Greening: Exploring Implications of the Green Transition for Jobs in the Agri-food System," Jobs Group Papers, Notes, and Guides 32579593, The World Bank.
    8. Beckman, Jayson & Ivanic, Maros & Jelliffe, Jeremy L. & Baquedano, Felix G. & Scott, Sara G., 2020. "Economic and Food Security Impacts of Agricultural Input Reduction Under the European Union Green Deal’s Farm to Fork and Biodiversity Strategies," Agricultural Economic Reports 307277, United States Department of Agriculture, Economic Research Service.
    9. Jeffrey M. Wooldridge, 2001. "Applications of Generalized Method of Moments Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 87-100, Fall.
    10. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    11. Konrad Prandecki & Wioletta Wrzaszcz & Marek Zieliński, 2021. "Environmental and Climate Challenges to Agriculture in Poland in the Context of Objectives Adopted in the European Green Deal Strategy," Sustainability, MDPI, vol. 13(18), pages 1-25, September.
    12. Jushan Bai & Sung Hoon Choi & Yuan Liao, 2021. "Feasible generalized least squares for panel data with cross-sectional and serial correlations," Empirical Economics, Springer, vol. 60(1), pages 309-326, January.
    13. Mihaela Simionescu & Yuriy Bilan & Stanisław Gędek & Dalia Streimikiene, 2019. "The Effects of Greenhouse Gas Emissions on Cereal Production in the European Union," Sustainability, MDPI, vol. 11(12), pages 1-24, June.
    14. Isaac Korku Dorgbetor & Gabrijel Ondrasek & Hrvoje Kutnjak & Ornella Mikuš, 2022. "What If the World Went Vegan? A Review of the Impact on Natural Resources, Climate Change, and Economies," Agriculture, MDPI, vol. 12(10), pages 1-14, September.
    15. Roman Rudnicki & Łukasz Wiśniewski & Mirosław Biczkowski, 2021. "A Spatial Typography of Environmentally Friendly Common Agricultural Policy Support Relevant to European Green Deal Objectives," Land, MDPI, vol. 10(10), pages 1-19, October.
    16. Dogan, Eyup & Seker, Fahri, 2016. "Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy," Renewable Energy, Elsevier, vol. 94(C), pages 429-439.
    17. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Usman, Muhammad & Makhdum, Muhammad Sohail Amjad, 2021. "What abates ecological footprint in BRICS-T region? Exploring the influence of renewable energy, non-renewable energy, agriculture, forest area and financial development," Renewable Energy, Elsevier, vol. 179(C), pages 12-28.
    2. Zahed Ghaderi & Behnaz Saboori & Mana Khoshkam, 2023. "Revisiting the Environmental Kuznets Curve Hypothesis in the MENA Region: The Roles of International Tourist Arrivals, Energy Consumption and Trade Openness," Sustainability, MDPI, vol. 15(3), pages 1-18, January.
    3. Soto, Gonzalo H & Martinez-Cobas, Xavier, 2024. "Green energy policies and energy poverty in Europe: Assessing low carbon dependency and energy productivity," Energy Economics, Elsevier, vol. 136(C).
    4. Obaid Ullah & Zia Ur Rahman & Aijun Guo & Ali Zeb, 2024. "Disaggregated Public Spending, Income Inequality and its Effect on Economic Growth: Empirical Evidence from Developing Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 20823-20850, December.
    5. Muhammad Shafiullah & Vassilios G. Papavassiliou & Muhammad Shahbaz, 2021. "Is There an Extended Education-Based Environmental Kuznets Curve? An Analysis of U.S. States," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(4), pages 795-819, December.
    6. Gangopadhyay, Partha & Jain, Siddharth & Bakry, Walid, 2022. "In search of a rational foundation for the massive IT boom in the Australian banking industry: Can the IT boom really drive relationship banking?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    7. Francisco García-Lillo & Eduardo Sánchez-García & Bartolomé Marco-Lajara & Pedro Seva-Larrosa, 2023. "Renewable Energies and Sustainable Development: A Bibliometric Overview," Energies, MDPI, vol. 16(3), pages 1-22, January.
    8. Predrag Petrović, 2023. "Economic sustainability of energy conservation policy: improved panel data evidence," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(2), pages 1473-1491, February.
    9. Chakraborty, Saptorshee Kanto & Mazzanti, Massimiliano, 2021. "Renewable electricity and economic growth relationship in the long run: Panel data econometric evidence from the OECD," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 330-341.
    10. Aladejare, Samson Adeniyi, 2023. "Economic prosperity, asymmetric natural resource income, and ecological demands in resource-reliant economies," Resources Policy, Elsevier, vol. 82(C).
    11. Taimoor Arif Kiani & Samina Sabir & Unbreen Qayyum & Sohail Anjum, 2023. "Estimating the effect of technological innovations on environmental degradation: empirical evidence from selected ASEAN and SAARC countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6529-6550, July.
    12. Khan, Zeeshan & Haouas, Ilham & Trinh, Hai Hong & Badeeb, Ramez Abubakr & Zhang, Changyong, 2023. "Financial inclusion and energy poverty nexus in the era of globalization: Role of composite risk index and energy investment in emerging economies," Renewable Energy, Elsevier, vol. 204(C), pages 382-399.
    13. Abdelaziz Boukhelkhal, 2022. "Energy use, economic growth and CO2 emissions in Africa: does the environmental Kuznets curve hypothesis exist? New evidence from heterogeneous panel under cross-sectional dependence," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(11), pages 13083-13110, November.
    14. Angeliki N. Menegaki, 2021. "Towards a Global Energy-Sustainable Economy Nexus; Summing up Evidence from Recent Empirical Work," Energies, MDPI, vol. 14(16), pages 1-16, August.
    15. Angeliki N. Menegaki, 2019. "The ARDL Method in the Energy-Growth Nexus Field; Best Implementation Strategies," Economies, MDPI, vol. 7(4), pages 1-16, October.
    16. Jian Xue & Zeeshan Rasool & Raima Nazar & Ahmad Imran Khan & Shaukat Hussain Bhatti & Sajid Ali, 2021. "Revisiting Natural Resources—Globalization-Environmental Quality Nexus: Fresh Insights from South Asian Countries," Sustainability, MDPI, vol. 13(8), pages 1-19, April.
    17. Yuan, Shengjun & Musibau, Hammed Oluwaseyi & Genç, Sema Yılmaz & Shaheen, Riffat & Ameen, Anam & Tan, Zhixiong, 2021. "Digitalization of economy is the key factor behind fourth industrial revolution: How G7 countries are overcoming with the financing issues?," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    18. Tiwari, Sunil & Mentel, Grzegorz & Si Mohammed, Kamel & Rehman, Mohd Ziaur & Lewandowska, Anna, 2024. "Unveiling the role of natural resources, energy transition and environmental policy stringency for sustainable environmental development: Evidence from BRIC +1," Resources Policy, Elsevier, vol. 96(C).
    19. Huang, Lingyun & Zou, Yanjun, 2020. "How to promote energy transition in China: From the perspectives of interregional relocation and environmental regulation," Energy Economics, Elsevier, vol. 92(C).
    20. Wang, Zhaohua & Bui, Quocviet & Zhang, Bin & Nawarathna, Chulan Lasantha K. & Mombeuil, Claudel, 2021. "The nexus between renewable energy consumption and human development in BRICS countries: The moderating role of public debt," Renewable Energy, Elsevier, vol. 165(P1), pages 381-390.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:122723. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.