Can Certification of Geographical Indication Agricultural Products Promote Agricultural Green Total Factor Productivity? Moderation and Threshold Effects from China

1. Introduction

The green transformation of agriculture is a central pillar of China’s agricultural modernization agenda. At the end of 2024, the Ministry of Agriculture and Rural Affairs officially issued the Guiding Opinions on Accelerating the Comprehensive Green Transformation of Agricultural Development and Promoting Ecological Revitalization in Rural Areas, marking a new, more systematic phase of China’s agricultural green transformation [1]. The Plan for Accelerating the Construction of an Agricultural Powerhouse (2024–2035) further emphasizes the need to enhance total factor productivity in agriculture and to build a modern production system that is both resource-efficient and environmentally friendly [2]. This policy momentum, however, contrasts sharply with the persistent challenges that remain in practice.

Despite this policy momentum, the gap between policy ambition and practical implementation remains substantial. According to the China Agricultural Green Development Report 2024, total agricultural fertilizer application nationwide reached 49.88 million metric tons in 2024. This figure indicates continued pressure on agricultural pollution control and, correspondingly, considerable room for improvement in Agricultural Green Total Factor Productivity (AGTFP). It also suggests that technological progress and increased use of inputs alone are insufficient to achieve a fundamental breakthrough in agriculture’s green transformation. Institutional mechanisms that combine regulatory constraints with market-based incentives are equally indispensable.

Against this backdrop, a notable tension has emerged in China’s agricultural sector. The number of registered Geographical Indication (GI) products reached approximately 82,000 in 2024, a year-on-year increase of 7% [3]. Yet agricultural non-point source pollution continues to impose a heavy environmental burden. The Outline of the 15th Five-Year Plan for National Economic and Social Development explicitly identifies green and branded agriculture as strategic priorities for agricultural modernization, calling for the vigorous development of GI products and distinctive agricultural brands [4]. This juxtaposition raises a question of both theoretical and practical urgency: can GI certification—an institution originally designed to protect origin-specific product quality—simultaneously boost agricultural output and reduce pollution, thereby contributing to AGTFP improvement? Addressing this question is the central motivation of the present study.

A substantial body of literature has examined the determinants of AGTFP, which can be broadly grouped into four strands. The first strand focuses on digital technology and financial innovation. Studies show that digital village construction [5], digital inclusive finance [6], and agricultural technological innovation and modernization [7] enhance AGTFP by improving information accessibility, resource allocation efficiency, and innovation capacity. The second strand examines policy and institutional factors, including environmental regulation [8], fiscal support for agriculture [9], agricultural insurance [10], and farmland transfer rights [11]. These studies consistently find that the effectiveness of such policy instruments varies considerably across regional and institutional contexts [12,13]. The third strand investigates industrial development and factor endowments, including agricultural industrial agglomeration [14], agricultural product trade [15], rural population aging [16], and agricultural socialized services [17,18]. This research shows that structural transformations in the agricultural economy can affect AGTFP through multiple pathways, with some studies reporting positive effects and others reporting negative or insignificant effects [19,20]. The fourth strand considers macroeconomic factors, such as market conditions and urbanization, which also shape AGTFP at the aggregate level [21]. Collectively, this literature has identified diverse technological, institutional, structural, and macroeconomic drivers of AGTFP, though most studies examine these determinants in isolation, leaving the role of market-based quality certification schemes such as GI largely unexplored.

Research on GI agricultural products has predominantly focused on the economic effects of certification. A substantial body of research confirms that GI certification raises farm household income, primarily through price premiums and improved market access [22]. Other studies link GI certification to rural industrial development [23] and county-level economic growth [24], emphasizing the roles of brand value and agritourism in stimulating local economies [25]. A smaller but growing body of literature examines the link between GI certification and environmentally sustainable production at the farm level. Several studies find that certified producers adopt environmentally friendly inputs and practices significantly more often than non-certified producers [26]. These findings suggest that GI certification has meaningful implications for sustainable production. However, few studies have systematically examined the effects of GI certification on AGTFP specifically, and the conditions under which its potential environmental benefits are realized remain underexplored.

Integrating these two research streams reveals a critical blind spot. Although existing research has established that GI certification shapes producer behavior and that structural and institutional factors drive AGTFP, no systematic framework has yet been developed to examine whether GI certification can function as an institutional driver of green productivity improvement. Three questions remain unanswered. Does GI certification, as a formal institutional arrangement, exert a meaningful effect on AGTFP? If so, under what regional conditions is this effect realized—and why does it appear to vary so markedly across contexts? And is the relationship between certification and green productivity truly linear and homogeneous, or might it exhibit threshold-dependent non-linearities that prior studies have been unable to detect? Accordingly, this study draws on provincial panel data from China spanning 2012 to 2023 and employs a two-way fixed-effects model, a moderation model, and a panel threshold regression model to conduct a systematic empirical analysis.

This study offers three principal contributions to the existing literature. First, we integrate Geographical Indication (GI) certification into the analytical framework for AGTFP determinants. Unlike prior research that primarily focuses on command-and-control policy instruments such as environmental regulations [8,9], this study conceptualizes GI certification as a market-based institutional mechanism. From an institutional economics perspective, we show that GI certification functions as a governance tool that embeds environmental constraints into production standards, thereby extending the institutional dimension of AGTFP research beyond conventional policy instruments [20].

Second, we move beyond aggregate-level analysis to explain regional heterogeneity in certification outcomes by introducing agricultural industrial agglomeration as a moderating variable. We theorize that industrial agglomeration amplifies the green productivity effects of GI certification through two interrelated channels: improved factor supply conditions and the diffusion of green technology. This helps explain regional variations in policy effectiveness and offers empirical grounding for coordinating GI promotion with industrial policy.

Third, this study identifies non-linearities in the certification effect that prior empirical studies have largely overlooked. Using a panel threshold regression model, we identify a critical agricultural development threshold: below this threshold, GI certification has a statistically significant negative effect on AGTFP, whereas above it, the effect reverses and becomes statistically significant and positive. This finding challenges the implicit assumption that certification effects are linear and homogeneous across regions and provides evidence supporting more targeted, region-specific design of agricultural green transformation policies.

2. Theoretical Framework and Research Hypotheses

2.1. The Direct Effect of GI Agricultural Product Certification on AGTFP

Geographical Indication (GI) certification is more than a market label; it is an institutional system with a built-in green development orientation, typically requiring products to originate from a specific region and adhere to traditional ecological production standards that limit chemical inputs and protect the production environment. Because this green transformation occurs at the source, Agricultural Green Total Factor Productivity (AGTFP)—which integrates traditional inputs such as land, labor, and machinery while accounting for reductions in fertilizers, pesticides, and plastic mulch—provides an suitable indicator for capturing the resulting environmental and economic performance.

As illustrated in the “direct effect” section of Figure 1, this study identifies three interrelated channels through which GI certification affects AGTFP: standard constraints, market incentives, and collective organization.

Figure 1. Mechanism framework of GI agricultural products and AGTFP.

First, the certification standards system imposes binding constraints on production inputs at the source. GI certification is governed by national standards and local regulations covering the production environment, cultivation techniques, and input use, with core requirements including pollutant limits and maximum pesticide residue levels [27]. Through the credible-commitment mechanism of granting and revoking certification status, producers who violate input standards face certification disqualification and the loss of premium revenues, creating endogenous incentives for compliance. This constrains the use of pesticides and fertilizers, directly regulates pollution-generating behavior, and improves the coordination between origin-environment protection and factor-use efficiency—collectively driving AGTFP improvement.

Second, market price premiums provide sustained economic incentives for green production. Because information asymmetry prevents consumers from independently verifying product quality and ecological attributes—a problem long recognized in the signaling literature on quality uncertainty [28]—GI certification serves as an officially endorsed quality signal that reduces search costs and raises consumers’ willingness to pay, generating stable premiums. When the long-term returns from retaining these premiums exceed the short-term gains from non-compliance, producers rationally reduce chemical inputs and adopt greener production methods, directly improving AGTFP. This mechanism’s effectiveness, however, depends on consumers’ ability to identify green attributes and on the maturity of market-based reputation systems.

Third, drawing on the theory of collective action and knowledge spillovers [29], the collective certification application process fosters coordinated constraints on green production at the regional level. Because GI applications are submitted on behalf of regional producers by cooperatives or industry associations, dispersed farm households, cooperatives, and agribusinesses must adopt unified production standards. This common regulatory framework accelerates the diffusion of green technologies, enables centralized processing of agricultural waste, and internalizes externalities that arise from fragmented, decentralized management—reducing redundant resource use and promoting AGTFP growth through improved technical efficiency and regional factor allocation. Based on the above analysis, we propose the following hypothesis:

H1.

GI agricultural product certification has a positive and significant effect on agricultural green total factor productivity.

2.2. The Moderating Role of Agricultural Industrial Agglomeration in the Relationship Between GI Certification and AGTFP

The direct channels discussed in Section 2.1 do not operate in isolation from the broader industrial environment. As illustrated in the moderating-effect component of Figure 1, the extent to which certification’s green incentives translate into actual productivity gains depends critically on the level of agricultural industrial agglomeration surrounding certified producers. Two interrelated channels underlie this moderating role: a factor supply channel rooted in agglomeration economies, and a technology diffusion channel rooted in knowledge spillover theory.

From the factor-supply perspective, agglomeration economy theory suggests that the spatial concentration of production activities improves factor market efficiency by lowering transaction costs and enhancing resource matching [30,31]. Realizing the productivity effects of GI certification requires not only willingness but also the capacity to comply: producers need adequate financial resources, technological inputs, and human capital to implement certification standards effectively. In regions with higher industrial agglomeration, factor markets are more developed and resource acquisition is more accessible, providing the resources needed to convert certification compliance into genuine efficiency gains. Conversely, where agglomeration is low, factor market segmentation and restricted mobility create binding financial and technological constraints, leaving certified producers unable to implement green production standards in practice and diminishing certification’s net effect on AGTFP.

From the technology-diffusion perspective, knowledge spillover theory holds that geographic proximity facilitates the transmission of tacit knowledge, which attenuates rapidly with distance [32,33]. Green agricultural production relies heavily on tacit, hard-to-codify knowledge—such as site-specific cultivation techniques and input management experience—that spreads primarily through direct interaction. Industrial agglomeration reduces information transmission costs and provides an effective channel for such knowledge to diffuse between certified and non-certified producers. In regions with higher agglomeration density, more frequent interaction among producers lowers the marginal cost of adopting new green technologies, amplifying the overall effect of GI certification on AGTFP. In regions with lower agglomeration density, by contrast, dispersed producers weaken learning and demonstration effects among producers, leaving green production knowledge localized and adoption costs high, such that the spillover benefits fail to materialize.

Taken together, these two channels indicate that industrial agglomeration does not merely provide a favorable context for GI certification—it actively amplifies certification’s green productivity effects through both factor supply and knowledge diffusion. The moderating role of agglomeration is therefore structural rather than incidental: it determines the extent to which the institutional incentives embedded in GI certification are converted into realized productivity gains. Based on the above analysis, we propose the following hypothesis:

H2.

The positive effect of GI agricultural product certification on AGTFP is strengthened as agricultural industrial agglomeration increases.

2.3. The Non-Linear Effect of GI Agricultural Product Certification on AGTFP

The direct and moderating effects discussed in Section 2.1 and Section 2.2 suggest that the green productivity effects of GI certification are neither universal nor uniform. As illustrated in the threshold-effect component of Figure 1, this relationship may also exhibit structural non-linearity that varies with the level of regional agricultural development, giving rise to two distinct regimes: a sub-threshold regime in which certification suppresses AGTFP, and a supra-threshold regime in which its positive effects are activated. This pattern reflects institutional complementarity: GI certification cannot generate green productivity effects in isolation but requires complementary conditions—adequate infrastructure, functioning market access, and accessible factor supply—to activate its embedded incentives [34]. These conditions do not accumulate gradually but form in a threshold-dependent manner; below a critical level of agricultural development, key complementary conditions remain absent and the certification system’s incentive structure breaks down, whereas above it, these conditions become sufficiently developed to unlock the institution’s full potential.

Below the threshold, the inhibitory effect operates