Ploughing productivity into sustainability: Assessing the short- and long-run relationships among crop production, labour productivity and environmental performance in Australia

Labour productivity and environmental performance are closely linked in the context of solid waste management. An efficient workforce management system can lead to improved waste handling processes and reduced environmental impacts. However, improving environmental performance, including pro-environmental behaviour among workers, may have a negative impact on labour productivity. Implementing better waste management or pro-environmental practices may initially disrupt operations, requiring time, training, or adjustments that could reduce productivity. This study investigates the dynamic relationships between labour productivity, environmental performance, agricultural output, and capital intensity within the context of sustainable agricultural practices. In Australia, measured environmental performance includes controlled solid waste, including collected food waste, linking it directly to agri-food waste reduction. The results from Spectral Density Analysis of 33 years data show that all agricultural indicators exhibit high spectral power at low frequencies, indicating that their variations are primarily driven by persistent, long-term structural factors rather than short-term cyclical changes. Using an Auto-Regressive Distributed Lag (ARDL) model, we analyse the short- and long-term interactions among key variables, including Labor Productivity, Crop Production Index, Capital Intensity, Agricultural Value Added, and Environmental Performance Index (focusing on controlled solid waste). The study employs two complementary ARDL specifications, one centred on economic drivers and the other integrating environmental economics dimension, to jointly assess the productivity–sustainability nexus in Australian agriculture. Among the two ARDL specifications, the environmental-economics–focused model was further subjected to robustness checks, as it most closely aligned with the study’s objective of analysing the eco-productivity nexus in Australian agriculture. The results reveal a significant long-run relationship between these variables, specifically, past labour productivity has a positive impact on current productivity. Notably, the Environmental Performance Index exhibits a negative impact on productivity, suggesting trade-offs between sustainability and economic performance in the agricultural sector. Capital intensity shows mixed effects, with short-term increases benefiting productivity, but past capital intensity negatively affecting long-term output. The findings also align with global sustainability targets, particularly SDG 2, SDG 8, and SDG 12, by linking productivity improvements with responsible resource use and waste reduction. The findings emphasize the need for balanced agricultural and environmental policies to promote sustainable productivity. However, integrating environmental efforts with economic goals in the agriculture sector requires careful planning. This study provides valuable insights for policymakers by examining the factors influencing labour productivity in agriculture.