The Association Between Agricultural Financing Instruments, Greenhouse Gas Emissions, Ecological Footprint, and the Transition Toward Cleaner Food Systems: Evidence from Developing Countries

The rapid increase in greenhouse gas emissions poses a major threat not only to environmental sustainability but also to the long-term resilience of global food systems. In developing countries, where conventional agricultural financing instruments remain dominant, understanding how these financing channels are associated with cleaner food system indicators is particularly important. This study examines the associations between credit to agriculture (CA), foreign direct investment (FDI), and development flows to agriculture (DFA) and greenhouse gas emissions (CO 2 , CH 4 , and N 2 O) as well as ecological footprint across 13 developing countries from 2000 to 2023 using panel data techniques. The findings indicate that both CA and FDI are positively and statistically significantly associated with greenhouse gas emissions and ecological footprint, suggesting that these financing channels may be linked to higher input use, mechanization, and environmentally intensive production expansion. In contrast, DFA does not display a statistically significant association with agricultural greenhouse gas emissions, but it remains negatively and significantly associated with the ecological footprint. This suggests that this financing channel has a stronger linkage with resource-efficient and cleaner food production systems. Overall, these findings reveal that the composition of agricultural finance is closely associated with the transition toward cleaner food systems, especially in developing economies where green finance instruments remain limited.