Moderating role of globalization in agriculture–environment nexus: insights from the inverted load capacity factor

Abstract The impact of agricultural production, which is indispensable for humanity, on the environment is controversial. The increase in agricultural production can trigger rapid depletion of natural resources by increasing resource utilization. However, agricultural productivity has a major role in limiting the negative efects of agricultural activities on the environment. Hence, the productivity increase can contribute to environmental protection by improving resource utilization. Therefore, the consequences of agricultural activities on the environment are not apparent. Moreover, the indirect effects of globalization on the agricultural productivity-environmental degradation nexus are ignored in the literature. Globalization can be a catalyst for accelerating agricultural productivity growth by increasing access to finance and improving technological advances. On the contrary, globalization can escalate resource consumption of agricultural activities by increasing mass production. This study aims to scrutinize the consequences of globalization and agricultural productivity on environmental degradation and the moderating effect of globalization in Türkiye, which has followed an agriculture-based growth policy in the past, over the period 1990–2022. Unlike many previous studies, this study considers the Inverted Load Capacity Factor, which considers the demand (resource consumption) and supply-side (biocapacity) of environmental degradation. The Inverted Load Capacity Factor, calculated as the inverse of Load Capacity Factor, is a more comprehensive indicator than carbon dioxide emissions and ecological footprint. In the current study Augmented Autoregressive Distributed Lag, Fully Modified Ordinary Least Squares and Canonical Cointegrating Regression are utilized to scrutinize the non-obvious effects of agricultural productivity on environmental degradation and to reveal the indirect consequences of globalization. The Fully Modified Ordinary Least Squares and Canonical Cointegrating Regression analyses show that globalization and agricultural productivity directly reduce environmental degradation, but the moderating effect of globalization causes the impact of agricultural productivity on environmental degradation to turn negative. The Dynamic Ordinary Least Squares analyses also support these findings. Accordingly, while agricultural productivity growth and globalization directly reduce environmental degradation, globalization indirectly supports mass production in agricultural activites and thus increases environmental degradation.