Agricultural productivity plays a vital role in ensuring food security, rural livelihoods, and environmental sustainability, particularly in regions facing ecological stress and institutional variation. This study offers a comparative analysis of South Asian and Southern European countries from 2000–2022, investigating how environmental quality, economic investment, and governance influence agricultural output. Using secondary panel data and the Driscoll–Kraay (DSK) estimator, the analysis addresses the challenges of cross-sectional dependence (CSD), heteroskedasticity, and autocorrelation. The findings show that in South Asia, gross fixed capital formation (GFCF) (β = 0.577, p < 0.01) and fertilizer use (β = 0.113, p < 0.01) are significant drivers of productivity. Crop residue burning (CRB), despite its environmental drawbacks, also has a positive association with productivity (β = 0.227, p < 0.01). However, stricter air quality regulations appear to constrain productivity (β = –0.228, p < 0.01), likely due to disruptions in conventional farming practices. Governance and surface air temperature (SAT) were not statistically significant in this region. In Southern Europe, productivity is positively linked with GFCF (β = 0.362, p < 0.01), fertilizer use (β = 0.203, p < 0.10), and SAT (β = 0.238, p < 0.05), suggesting a potential benefit from moderate warming. No significant effects were observed for governance, air quality performance (AQP), or crop burning, likely reflecting stronger institutions and regulatory stability. The model explains a greater proportion of the productivity variation in South Asia (R² = 0.8744) than in Southern Europe (R² = 0.1456). These results highlight the importance of region-specific strategies. South Asia requires policies that reconcile environmental regulation with agricultural output, whereas Southern Europe should prioritize climate adaptation and ecological safeguards. Aligning agricultural policy with public health, governance, and sustainability goals is essential for resilient food systems.