Multifactor analysis of Australia's agricultural sustainability: Dynamic ARDL modeling of value-added production

Australia's agricultural sector faces uncertainty over the key drivers of value-added production amid climate change, evolving trade dynamics, and sustainability demands. This study aims to identify and assess the factors influencing agricultural value added (AVA) in light of these growing challenges. Hence, the main purpose of this research is to investigate the dynamic relationships between AVA and key determinants—agricultural land (AL), agricultural raw materials exports (ARME), agricultural raw materials imports (ARMI), research and development (R&D) expenditure, and the climate-adjusted agricultural productivity index (CAAP) using annual data from 1990 to 2022. Its novelty lies in the application of an augmented and dynamic Autoregressive Distributed Lag (ARDL) model to comprehensively analyze both short-run and long-run effects of agricultural land, trade, innovation, and climate-adjusted productivity on AVA, offering a holistic perspective previously underexplored in literature. Empirical findings reveal that AL, ARME, and R&D expenditure significantly enhance AVA in the long run, with elasticity coefficients of 0.192%, 0.331%, and 0.970% respectively, while ARMI exerts a negative impact of -0.118%. However, the climate-adjusted productivity index shows an insignificant effect in regression analysis but a positive contribution in simulations, and in the short run, only R&D expenditure demonstrates a significant, albeit negative, influence. The findings offer critical insights for sustainable agricultural policy design, demonstrating how climate adaptation, innovation investment, and strategic trade management can collectively enhance long-term agricultural sustainability.