The Role of Rural Infrastructure in Reducing Production Costs and Promoting Resource-Conserving Agriculture

The development of rural infrastructure plays an essential role in improving rural livelihoods and enhancing sustainable and environmentally friendly agricultural production. However, little is known about whether rural infrastructure enables the promotion of resource-conserving agriculture and reduces production costs. Understanding the relationship between rural infrastructure and production costs can provide significant information for policy-makers in their efforts to promote resource-saving agriculture that is beneficial to environmental performance. This study contributes to the literature by analyzing the heterogeneous effects of irrigation infrastructure and standard and substandard roads on agricultural production costs, using an unconditional quantile regression model and provincial data from China for the period 1995-2017. The empirical results show that the effects of rural infrastructure on production costs are mixed. In particular, irrigation infrastructure affects production costs positively in the lower quantiles, but it negatively affects production costs in the higher quantiles. In the higher 80th and 90th quantiles, standard and substandard roads affect production costs both negatively and significantly. Our findings suggest that improving rural infrastructure enables the promotion of resource-conserving agriculture and enhances environmental performance, especially for those paying high production costs.