Subsidizing extensive cattle production in the European Union has major implications for global agricultural trade and climate change

Pastureland maintenance is seen as a land-based measure to reduce dependency on feed concentrates and mitigate greenhouse gas (GHG) emissions from livestock production in the EU, while providing other ecosystems services. This paper assesses potential market-mediated impacts, including global Land Use Change (LUC) and GHG emissions, from increased subsidies to pastureland-based livestock sectors in the EU. A tax recycling strategy (TRS) is simulated against a baseline up to 2030 under the shared socioeconomic pathway 2 (SSP2). This implies a budget neutral increase in the level of pastureland subsidy rates in different Member States by decreasing land subsidies to other cropping activities. We employ the computable general equilibrium (CGE) model GTAP in its recursive-dynamic version, GTAP-RDEM, extended with a multi-regional input-output (MRIO), called FABIO MRIO to disaggregate agri-food sectors from 21 to 31. This approach allows considering price- and income-dependent feedbacks when assessing long-run changes in the global economy, improving the sectoral resolution relative to GTAP v10. The policy increases pastureland areas and cattle production in almost all EU Member States, whereas cropland and crop production decrease, causing significant changes across EU agri-food markets. Crop prices increase, leading to the reduced output of intensive animal production sectors, mainly pig and poultry. Cropland areas decrease and most EU countries increase imports of grain, oilseeds, and cakes, essentially soybean cake from Brazil and North America. While GHG emissions decrease in those EU countries where pasturelands expand mainly at the cost of croplands, GHG emissions increase in those countries where pastureland expansion comes with forest loss. As a result, net GHG emissions increase in the EU-27 in 2030 (+2.49 Mt CO2eq). Emissions from LUC in other outside-EU major grain and oilseed-exporting countries increase by 102.52 Mt CO2-eq in Brazil and by 129.17 Mt CO2-eq in North America. The simulated policy shows that promoting extensive livestock per se does not meet the objectives of the Common Agricultural Policy and the EU Green Deal. The tax recycling strategy (TRS) should be complemented with policies to foster crop diversification and promote the use of domestic feed sources (e.g., legumes) to effectively ensure feed self-sufficiency and that extensive cattle production in the EU does not lead to deforestation in carbon-rich countries.