Some German regions are characterized by specifically intensive livestock production. This production not only contributes to economic prosperity in these regions; it also causes massive environmental problems due to pollution of land, air and water.
In the project ReTiKo the Thuenen-Institute analyses the economic consequences of a potential reduction of livestock in regions with concentrated livestock production. This reduction is considered inevitable by many experts if standards for the protection of land, air- and water are to be met again. Nevertheless, we do not yet know how strongly the local economy depends on livestock production, and how well it adapts to structural changes in the short, medium or long term.
It is essential to have an understanding of the specific structural conditions in the regions concerned before drawing any conclusions concerning their future after livestock reduction. To achieve this goal, qualitative and quantitative models are developed that replicate the stylized facts that characterise the regional economies. These models explain economic structures based on economic agents' decisions. They additionally consider the institutional environment and the specific labour market conditions in the regions concerned. Concepts of “knowledge” and “innovation” play a distinct role in these evolutionary models.
On the basis of these models, the ReTiKo project compares different regional development dynamics quantitatively with each other. Building on these insights, we qualitatively analyse and explain the development of the selected case study region. The case study region West Lower Saxony has the highest livestock density German wide.
Both approaches examine how the agriculture and food sector and with it the wider economic environment evolve in times of sudden or accelerated structural change. The determinants of different adaption processes are identified and then applied to derive scenarios for possible developments in the regions that would be most affected by livestock reduction. These scenarios are then discussed with regional stakeholders and experts in order to reach final assessments.
The empirical analysis consists of a combined approach to quantitative and qualitative data:
(1) The combined effect of regional production structures and capabilities as well as of primary sector structural change on rural development is predominantly determined quantitatively. In these quantitative analyses, labour market data and other data from general regional statistics are applied as well as micro data on firms and employees.
These data are deployed for econometric analyses in order to identify model parameters and for the calibration and testing of the structural models.
(2) Reaction patterns, strategies and governance approaches are being analysed in comparative regional case studies based on qualitative data. Analyses are based on information from expert and stakeholder interviews as well as from historic and contemporary documents.
Information from expert interviews is used to determine the relationships between individual agents, firms, and industries of the regional value chain. Stakeholder interviews are utilised to identify key actors' strategies and to assess their individual and collective influence.
The approaches complement and mutually validate each other. Together, the qualitative and quantitative models create understanding of agents' decision making processes and strategies in their regional context. Based on this, potential paths of development are derived for the event of a change in the status quo. Models and scenarios will then be interpreted and discussed with regard to the specific regional circumstances.
ReTiKo addresses the following research questions:
(1) What is the significance of livestock production for the regional agriculture and food industries as well as for the wider economic environment and its development?
(2) What are the adaptation capabilities and response strategies of agents involved in the regional livestock production system and its upstream and downstream sectors?
(3) How do regional actors beyond the livestock-based value chains react towards changes in the agriculture and food industries and what are the consequences of these reactions for the overall economic development of livestock intensive regions?
The results of this study enable the derivation of development scenarios for times of accelerated structural change and afterwards. With regard to the status quo, from which the scenarios are derived, two rival expectations can be devised that should be separated analytically:
(1) "Cluster case": Viable rural economies consist of a system of interdependent institutions, industries, firms and capabilities. A sudden reduction in livestock production would cause the loss of a range of relevant capabilities and synergies with considerable negative consequences for the regional economy. The agents from the local production system therefore strive to preserve these advantages by the cooperative a non-cooperative implementation of adaption strategies.
(2) "Separation case": The agriculture and food industries used to be of vital importance for the economic development of livestock intensive regions. Nowadays, however, the development of food-processing is just as separated from agriculture as the development of the wider regional economy from the agriculture and food industries. The impact that a possible decline in livestock production has on the regional economy then depends on the adaptability of this sector towards shocks as well as on the viability of other sectors of the regional economy, and specifically of their most productive and innovative industries and firms. Beyond the directly affected firms, little effort is invested to consolidate the livestock production with its specific production capacities.
6.2019 - 5.2022
Project status: ongoing