EU milk quota abolition, dairy expansion, and greenhouse gas emissions

Abstract

This article explores therelationship among farm-level productivity growth, scale, and greenhouse gas (GHG) emission intensity during a time period of significant agricultural policy change affecting Ireland's dairy industry. Specifically, we focus on the 2015 EU milk quota abolition, which initiated major dairy expansion in Ireland. We use a representative sample of Irish dairy farms from 2000 to 2017, that includes data on farm specific GHG emissions. Based on this detailed farm level panel data set, we estimate productivity with a control function approach. We then apply fixed effects and dynamic panel data methods to explore the implications of productivity and scale on GHG emission intensity. Our findings indicate that increased productivity is negatively associated with GHG emission intensity, which changes with distinct milk quota abolition phases. Overall, our findings are important for understanding the relationship between policy reforms and GHG emissions in agriculture, and how to improve agricultural mitigation strategies.