Should I stay or should I go? The impact of nature reserves on the survival and growth of dairy farms

Abstract

Special Areas of Conservation (SAC) are part of the EU's nature protection network Natura 2000. SAC often protect nitrogen-sensitive flora and fauna. This is challenging for livestock farmers because they have to meet strict requirements for emission reduction and need to implement costly environmental protection measures. Therefore, SAC could limit farmers' chances to grow or even to survive. This article aims to determine the effects of SAC on dairy farmers by using a Heckman sample selection model. The model explores i) the factors that are relevant to the decision to maintain the farm's existing structure, increase dairy production, exit dairy, or exit agriculture altogether, ii) an OLS regression to analyse the factors that determine the amount of growth in dairy numbers. The analysis was performed for two periods and is based on annual financial statements and regional data such as information about SAC locations. In the first step, the results confirmed the initial hypothesis, finding that farms in districts with more land under nature conservation had a smaller probability of growth. For one of the two periods analysed, higher probabilities of exiting dairy were observed. The second part of the analysis showed that the amount of growth was not affected by SAC protection. The results indicate that SAC protection is indeed challenging for dairy farmers. Further research on the topic is necessary as the area under protection will increase. Since the protected species also depend on (extensive) farming practices, it might be necessary to provide development prospects to farmers that better align with biodiversity objectives.