The Digital Fix: Overcoming Monitoring Constraints in Agricultural Environmental Regulation

ABSTRACT This study analyses the effects of environmental regulation and rural digitalisation on circular economy practices in agriculture, focusing on straw return to the field. We construct a theoretical model to explain how regulation drives farmers' behavioural change, accounting for spatial heterogeneity and the moderating role of digitalisation, and test the predictions using Chinese farm‐level survey data and text‐based measures of regulatory intensity. The results show that stricter regulation significantly promotes straw‐return adoption, with heterogeneous regional impacts, while digitalisation reduces these disparities. Beyond confirming the Porter and Pollution Haven Hypotheses in agriculture, the study highlights digitalisation as a novel policy lever that enhances regulatory effectiveness and mitigates regional disparities.