Carbonomics of Japan's agricultural output: causality and long-run sustainability

Abstract

This study investigates the causality and long-run sustainability between carbon emission and agricultural output in Japan using the long time series data and employing advanced econometric techniques of unit root test, nonlinear least-square estimation, vector error correction estimation, and Granger causality test. The results reveal that Japan's agricultural output does not Granger-cause the country's carbon emissions and its carbon emissions do not Granger-cause its agricultural output and hence the relationship between the two is proven to be not sustainable in the long run. The results also reveal that any disequilibrium between the two variables could take approximately 116 years to converge to their long-run sustainability. The adjustment rate for Japan's agricultural output is positive and quite slow at the rate of 27% per year. Since the current carbon emission in Japan vis-à-vis its agricultural output is below the long-run sustainability level, Japan's agriculture sector is expected not to face any stricter carbon emission controlling policies and regulations in the near future.

Keywords:

• CO₂ emissions
• agricultural output
• causality
• long-run sustainability
• Japan

Acknowledgment

This research was funded by the Centre for Asian Business, School of Commerce, University of South Australia.