The Economic Impact of Climate Risk on Extensive Livestock: The Case of Lamb Production in Extremadura, Spain

Esteban Thomasz,Ismael Pérez-Franco,Agustín García-García

doi:10.3390/su12187254

Esteban Thomasz, Ismael Pérez-Franco + Show 1 more

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https://doi.org/10.3390/su12187254

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Abstract

This paper presents an evaluation of the economic cost of precipitation shortage in the production of lamb in Extremadura. Given that the production strategy is based on maintaining a productivity target by supplementing natural pastures in contexts of water scarcity, the approach will be based on the analysis of the cost structure of the sector. A monetized cash flow model will be presented, which allows us to evaluate economic impacts through a financial perspective. The study focuses on a set of 1583 farms associated into the cooperative EA Group. These members have a total of 804,000 animals, which represents more than 40% of total sheep in Extremadura. Results shows a relation between precipitation minimums and feed quantity maximums of the series analyzed. Mayor direct impact is represented by an increase in feed supplementation needs, with an economic estimation of 54 million euros over two years for the whole sector. At the farm level, there is an average reduction of profits of 50% in the case of owned land, and bankruptcy in the case of renting land. In the context of data-driven policy making, this estimate provides a tool for European Policy funding negotiation a in sector which is considered as highly strategic because of its positive impacts on the environment, the generation of employment and maintenance of rural populations in marginal areas and for the production of high-quality food with a minimal use of natural resources.

Highlights

One of the effects of climate change is the exacerbation of the land degradation process, within a context of the increasing frequency and intensity of drought events [1]
An empirical study was presented to evaluate the impact of precipitation shortages over the cost structure of meat lamb production in Extremadura
There is a relation between precipitation minimums and feed quantity maximums of the series analyzed

Summary

Introduction

One of the effects of climate change is the exacerbation of the land degradation process, within a context of the increasing frequency and intensity of drought events [1]. The activity is important in the Autonomous Community of Extremadura, with the highest concentration of sheep livestock in Spain (it has around 22% of the country’s total animals and the largest number of producers dedicated to the production of lamb meat, with a total of 15,799 farms in 2018 [6]). The maintenance of this extensive livestock exploitation system implies the existence of an economic activity that produces quality food and creates jobs in economically marginal territories [5]. There is a co-existence of traditional producers with enterprises that invest in research and development, with an export-oriented product to high quality markets, such as halal and kosher meat [7]

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