Fiscal and Tax Policy Incentives for Agricultural Green Development in Chongqing: A Dynamic CGE Simulation

Abstract

Agricultural green development has become a critical policy objective for reconciling agricultural productivity with ecological sustainability, especially in environmentally fragile and topographically constrained regions. However, existing studies have mainly focused on micro-level behavior or single-policy evaluations and have paid insufficient attention to how fiscal and tax incentives affect agricultural green development through intersectoral linkages, price transmission, and fiscal constraints at the macro level. This study develops a dynamic computable general equilibrium (CGE) model to examine how fiscal and tax policy incentives affect agricultural green development across three dimensions: green production, green consumption, and green innovation. By simulating production subsidies, production tax incentives, and their combinations, the analysis evaluates their effects on input use, carbon emissions, technological innovation, and macroeconomic performance. The simulation results show that moderate subsidies help reduce chemical fertilizer and pesticide use, whereas production tax incentives and high-intensity policy packages tend to generate rebound effects through scale expansion. Similar patterns are observed for carbon emissions, with reductions occurring only when efficiency gains outweigh expansion effects. An increase in demand for innovation services does not necessarily improve environmental outcomes unless it leads to efficiency gains and technological substitution. At the macro level, most scenarios generate contractionary effects because of fiscal constraints. Overall, policy effectiveness depends not simply on policy intensity, but on how well environmental objectives, agricultural performance, and fiscal sustainability are aligned.