Path to sustainable development of livestock: does environmental protection tax matter in livestock green total factor productivity?

Purpose Environmental regulations are essential for promoting the sustainable development of the livestock sector. However, few studies have empirically examined how these policies affect livestock green total factor productivity (LGTFP). This paper addresses this research gap by investigating the relationship between China’s environmental protection tax (EPT) and LGTFP, providing valuable insights for policy formulation. Design/methodology/approach The paper employs Global Malmquist–Luenberger (GML) productivity index to measure LGTFP and empirically investigates the impact and mechanism of EPT on LGTFP, utilizing China’s provincial panel data spanning from 2011 to 2021 with difference-in-differences (DID) model. Findings (1) EPT has significantly enhanced LGTFP. (2) The positive effect of EPT on LGTFP is more pronounced in regions with high pollution levels, greater industrial agglomeration and areas in central and western China. (3) The EPT reform has improved LGTFP primarily by promoting large-scale livestock farming and effective manure utilization. (4) Additionally, the policy reform has boosted revenue from by-products for medium- and large-scale livestock farms. Originality/value This study makes three contributions to existing literature. First, it is the first to empirically examine the relationship between EPT and LGTFP. Second, it enriches the limited research investigating the mechanisms and regional heterogeneity underlying the impact of EPT on LGTFP. Third, extending previous research, this paper explores the influence of EPT on the cost-benefit structure of livestock production.