Agroforestry, Climate Resilience, and Land Degradation in OECD Economies: Roles of Innovation and Finance

Despite the growing prominence of agroforestry practices in environmental research, its specific impact on climate‐induced land vulnerability, land degradation, and territorial carbon dioxide emissions is insufficiently explored in OECD economies. This study investigates how nonlinear effects of agroforestry practices, financial markets, innovation, environmental taxes, along with final consumption expenditure, determine territory‐based carbon emissions in OECD countries over the period 1994–2021. This study applied the second‐generation Driscoll–Kraay technique to analyze the data, while quantile regression serves as a nonparametric approach as a robustness check. The results show that agroforestry has inverted‐U shaped curve underlying that agroforestry in the initial stages may cause land degradation while at the later stages, it supports the climate resilience practices and land restoration in OECD economies. Moreover, financial development exerts heterogeneous effects in both models, suggesting differing channels of support for financial development. Green innovation and environmental taxes significantly reduce territorial carbon emissions, while final consumption expenditure, as theoretically expected, increases it. The results show robustness through nonparametric quantile regression with the role of income. Policy implications emphasize the adaptive framework of financial mechanisms, innovation, and environmental taxation to support agroforestry practices in a customized yet constantly focused manner on the reduction of emissions while supporting the development of climate resilience strategies in OECD economies.