Navigating sustainability transitions in China's dairy sector: Insights from a multi-dimensional driver analysis

China's demand for animal-sourced foods has risen quickly as dietary patterns shift, which has added to environmental pressure. Sustainable dairy production depends not only on natural resource endowments but also on macro-level socio-economic development, meso-level market mechanisms, and farm-level industrialization and resource investment. However, few studies have examined how these drivers interact with one another. In this study, we employ structural equation modeling (SEM) and panel data from 29 Chinese provinces (2006–2022) to build a framework of multidimensional drivers and analyze the spatiotemporal changes in milk production and its associated environmental costs. We find that growing regional gaps in milk output and environmental impacts are driven mainly by socioeconomic growth and dairy industrialization, rather than by natural endowments. Fresh milk supply also remains highly uneven: in more developed regions, demand has grown much faster than local production. For most drivers, increases in milk production are larger than the extra environmental burdens they create. Resource investment is the main exception: its pollution effect is about 1.5 times its production benefit. Although technological and managerial progress has slowed the rise in environmental costs, industrialization has not fully offset the pressure caused by more intensive use of feed and energy. These findings suggest that future policy should focus on improving feed and energy efficiency, better balancing regional supply and demand, and promoting cleaner industrialization with joint carbon–nitrogen management. Overall, the study provides evidence for more sustainable dairy development and context-specific policy design, offering insights into improving agricultural sustainability and resource efficiency in line with the Sustainable Development Goals.