Spatial Dynamics of the Livestock Sector in the United States: Do Environmental Regulations Matter?

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The US hog and dairy sectors are increasingly shifting production toward western states away from more traditional production regions in the east. In contrast, production levels in the fed-cattle sector have increased over the last three decades only in the three main producing states. One possible reason for the shifts in production areas is that a state may introduce or keep less stringent environmental regulations relative to neighboring states as a means to cope with inter-jurisdictional capital competition. Such differences might create pollution havens. This study examines the factors affecting the annual growth rate in inventory for each of the hog, dairy and fed-cattle sectors using data from 48 states for 1975 to 2000. The results indicate that environmental regulatory stringency is generally not as important as other economic variables in the location choices of livestock producers. In the two sectors (hog and dairy) where significant regional production shifts have occurred, major drivers appear to be relative prices and business climate. Inventories are rising in more remote areas and regulatory stringency appears to increase ex post as a response to increasing livestock production levels. Thus, with the exception of the fed-cattle sector, regional differences in environmental regulations appear not to have a significant influence on livestock production decisions and consequently regional comparative advantage