Examining the effects of government subsidies on farmer's livelihoods for agricultural sustainability in the context of climate change: Evidence from 8,089 farmers in China

• Persistent disaster shocks reinforce farmers’ “path dependence,” forcing them to rely on passively maintaining agricultural livelihoods, which traps them in a “low-level dependency trap” characterized by subsistence farming. • Government subsidies play a significant role in enhancing the sustainability of agricultural livelihoods, but their effectiveness is moderated by both agricultural production scale and disaster contexts. • Agricultural production scale defines the boundaries of policy impact: Large-scale farms experience more substantial benefits from subsidies, highlighting the scale-dependent nature of policy effectiveness. • Disaster frequency affects the dynamics of policy outcomes: In areas prone to chronic disaster shocks, subsidies yield diminishing returns (reflecting a “passive persistence” approach to livelihoods), while in regions facing acute shocks, subsidies have a more pronounced effect, indicating the adoption of “active adaptation” strategies. Climate change and disaster shocks pose significant challenges to global agricultural sustainability and food security. Despite their crucial role, the effectiveness of government agricultural subsidies, a key policy instrument, remains insufficiently understood. Grounded in the Sustainable Livelihoods Framework (SLF) , this study develops an extended model to investigate the complex interactions between disaster shock frequency, government subsidies, and farmers’ livelihood strategies. Utilizing three waves of panel data (2014, 2016, and 2018) from 8,089 rural households across 586 villages in 25 Chinese provinces, drawn from the China Family Panel Studies (CFPS) , we present three key findings: (1) Disaster shocks destabilize livelihoods, and prolonged exposure traps farmers in a “low-level dependency trap,” impeding agricultural sustainability; (2) Government subsidies significantly improve the sustainability of agricultural livelihoods, although their effectiveness is moderated by the scale of agricultural production; and (3) Disaster frequency further complicates the relationship between subsidies, agricultural production scale, and livelihood outcomes. By clarifying the role of agricultural subsidies amid climate change and agrarian transition, this study provides strategic policy insights for reforming subsidy systems in the Global South.