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Abstract
The agricultural policies shift gradually from EU-level organised market interventions
to local organised environmental policies. This paper explores the growth possibilities of the
Flemish dairy sector with the outlook of a quota abolishment as a case study of this policy
shift. The dairy quota policy seems very restrictive for the highly profitable Flemish dairy
sector, but the environmental restrictions from the manure regulation can limit the growth of
the dairy sector as well. The paper uses a spatial multi-agent simulation model applied to a
sample of 40.000 farms to estimate price development of emission rights and their possible
impact on the growth of the dairy production. The results show that a higher milk production
leads to higher prices for emission rights. However, the increased cost of manure emission
rights is not expected to impede dairy farm growth because the current milk quota rent
estimates go far beyond the cost of manure emission rights.