Trade, sustainability and environmental linkages in Finnish dairy production

Case Study 3: Trade, sustainability and environmental linkages in Finnish dairy production

What are the environmental and climate impacts of dairy production?
How can Finnish (regional) dairy products compete if the EU redesigns trade agreements in a way that environmental externalities of dairy production are accounted for?
What are the economic repercussions and income effects of these policy changes on the regional dairy production and agricultural households?

The relative (negative) impacts of the carbon tax on agricultural industries, in terms of agricultural outputs, household incomes and agricultural capital incomes, were prominent in comparison with the attained emission reductions.
Yet, reductions in cattle numbers and thus animal manure, fertilizers and plant protectants would have climate, water and soil -improving effects. However, the cultivated landscapes, fallows and thus natural plant- and animal species would disappear if the released land areas would be completely out of agricultural uses, for example forestry or settlements.
In terms of emission mitigation, tax on agricultural industry proved to be clearly more efficient in comparison with the tax on dairy exports.
In terms of just transition, more effective policy instrument instead of carbon tax on agriculture may be the reformulation of the EU Common Agricultural Policy towards climate and environmental performance-based support.

EU legal framework and national legislation on agriculture and environment

European Green Deal and EU Common Agricultural Policy

Quantification of environmental and climate impacts: how would it affect the competitiveness of Finnish dairy production (connection with WP3 T3.4).

System of Environmental-Economic Accounting for Agriculture, Forestry and Fisheries (SEEA AFF), environmentally extended SAM (social accounting matrix), and SAM multiplier analysis.

Secondary data from Statistics Finland, Finnish Natural Resources Institute and previous Finnish research, GTAP database.

Producing concrete economic and environmental effects of imposing carbon tax on agricultural production in a northern European region that faces natural constraints.
Contributing environmental and agricultural policy development