Environmental Regulation and Location of Industrialized Agricultural Production in Europe

This paper analyzes empirically the extent to which environmental regulation influences production location in the pig industry. The analysis is based on a general empirical location model that captures interactions between region and sector characteristics in determining production location, and data on pig production in 43 European regions. We find that while environmental regulation may not have a measurable effect on the E.U. pig industry location per se, it is a strong influence on the sectoral composition of the industry. Relatively highly polluting sectors of the pig industry are attracted to relatively lax jurisdictions, which become pollution havens (hot spots of hog waste). (JEL Q58, R38)