Academic journal article Agricultural and Resource Economics Review

Variation in Environmental Regulations in California and Effects on Dairy Location

Academic journal article Agricultural and Resource Economics Review

Variation in Environmental Regulations in California and Effects on Dairy Location

Article excerpt

In recent decades, urban encroachment and increasing environmental regulation have impacted California's dairy industry. A complicated set of environmental legislation affects dairies in the state, and can differ depending on location, creating the possibility for within-state pollution havens. This article details the regional, state, and federal environmental regulation of California's dairy industry, and examines data to see if it matches a hypothesis of regulation affecting dairy location. Using county-year data, we show evidence of changing dairy location within the state matching times of local legislative action. The Central Valley gained production, while the more regulated and urban-affected Los Angeles area lost. Large dairies have increased by 150 percent in the Central Valley, even as the number of small farms in the region declined by 40 percent. More rigorous analysis is necessary to discern the relative impacts of land prices and regulation on dairy location.

Key Words: pollution haven, California, dairy, environmental regulation

Pollution havens occur when one region has less environmental regulation than another region, leading "dirty" industries to grow in more pollution- friendly locations. Generally, pollution havens are associated with international trade, with localized pollutants accruing in less-regulated countries. Unifying agreements are necessary to regulate pollution across regions. In the United States, cross-state pollution havens are thought to be mitigated by federal policy. Likewise, localized pollution havens within states can be mitigated by state-level standards. While a burgeoning literature has examined international pollution havens and the effects of cross-state differences in environmental regulations, little has examined the effects of within-state variation in regulations.

California has witnessed a number of legislative changes surrounding environmental regulation of dairies. While the entire state is subject to specific state and federal regulatory action, there is variability in rules at the regional level as well. This variation in regulatory activity has been chronicled in the press, as it encourages dairies to move from areas with more stringent regulation to areas with less. However, little empirical evidence examines the changes in dairy production within the state as these regional regulations are adopted.

In this article, we examine the legislative variations over time and region within the state of California to discern whether this variation could have contributed to industry location changes within the state. We provide a detailed description of the environmental regulations of dairies between 1970 and 2007. To get a basic understanding of how this regulatory activity impacted dairy location within the state, we examine several measures of dairy location and production. With county-year data, we examine basic trends of where cattle are located in California over time in order to discern trends pre- and post-regulations. We hypothesize that if we can discern noticeable trend breaks at the time of regulation, regulatory activity has had a significant effect on cattle location. Additionally, we examine data from several Censuses of Agriculture to provide a more detailed understanding of how regulation has impacted dairy location.

We find that there is significant variation within the state and over time with respect to not only total number of milk cows but also density of cows per square mile. Trend breaks in where milk cows are located occur at times of regional legislative action, suggesting that these activities had an impact on where dairying occurred within the state. Between 1982 and 2002, the Chino region saw declines in the number of dairies, while the Central Valley saw increases in the number of dairies with over 500 head but declines in the number of dairies with fewer than 100 head. Both regions also saw declines in the amount of land in farms, although Southern California's declines were greater. …

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