Trade-Environment-Agriculture Nexus in India: Evidence from Structural Equation Modelling

The intersection of trade liberalisation, environmental pressures, and domestic economic shifts is increasingly shaping the agricultural sector in India.This study provides SEM-based evidence on how trade and liberalisation policies under WTO frameworks interact with domestic economic factors and environmental conditions to influence agricultural value-added.It examines the period from 1995 to 2024 through a Structural Equation Modelling (SEM) framework that captures the complex, interdependent relationships among variables.The Final consumption expenditure contributes the most (68.6%),emphasising the role of rising domestic demand.The agricultural export share increases by 21.1%, reflecting the benefits of global market integration.Fertiliser use accounts for 15.8%, showing moderate but positive effects.Conversely, a rise in CO emissions reduces agricultural value by 0.614%, underscoring the environmental trade-offs of growth.The novelty of this study lies in quantifying the trade-environment-agriculture nexus using standardised SEM paths.Policy recommendations emphasise promoting consumption-led growth, enhancing input efficiency, and aligning trade openness with environmental sustainability.These insights provide a timely foundation for designing climate-resilient and economically inclusive agricultural strategies that align with India's development and global commitments.