Signal of Sustainable Agriculture! Nonlinear Impact of Climate Policy Uncertainty: New Evidence From China's Agricultural Sector

ABSTRACT Effective climate governance and sustainable agriculture constitute pressing global issues. Although extensive research addresses climate policy uncertainty (CPU) in financial and industrial contexts, its effects on the agricultural sector remain insufficiently understood. Drawing on balanced panel data from 30 provinces and municipalities in China, we employed a two‐way fixed effects model to investigate the nonlinear relationship between CPU and agricultural green development (AGD). Results demonstrate a clear inverted U‐shaped pattern, with CPU exerting a positive impact on AGD up to a threshold of 2.887, beyond which the signal effect diminishes and a waiting effect emerges. Furthermore, the hierarchical prioritization of climate policies moderates this nonlinear relationship, and economic policy uncertainty attenuates the impact of CPU on AGD. As anticipated, pronounced regional heterogeneity is observed, while spillover effects of CPU from neighboring regions on local farmers' decisions are minimal. These findings underscore the necessity for governments to develop forward‐looking, valuable, and differentiated climate policies and emphasize the importance for agricultural sector stakeholders to strategically harness the signal effect to accelerate the transition toward sustainable agriculture.