Energy-Water Consumption and Food Yield: An Empirical Dual Sectors Dynamic Equilibrium Model

This paper develops a dual sectors dynamic equilibrium model and introduces agricultural energy consumption and agricultural water consumption in a growth model that tested by using a panel data set from 2004 to 2016 in China. It presents a theoretical prediction on the interactions between agricultural energy consumption, agricultural water consumption, and food yield. Consistent with this prediction, agricultural electricity consumption and agricultural water consumption by themselves appear to have significant effects on food yield. The fixed-effects models verify that agricultural electricity consumption, agricultural water consumption, and food yield have long-run equilibrium relationships. The results of weather-based robustness checks reveal that food yield is positively correlated with agricultural electricity consumption. Also consistent with theory, agricultural water consumption is positively associated with food yield. These results are generally stable and hold with tests of panel data unit roots, with alternative estimation strategies, and with or without controlling for covariates.