Evaluating Enteric Fermentation-Driven Environmental Kuznets Curve Dynamics: A Bayesian Vector Autoregression Comparative Study of the EU and Least Developed Countries

Global warming and climate change, primarily driven by human activities, with agriculture playing a significant role, have become central topics of scientific research. Livestock production, especially enteric fermentation, is a major source of greenhouse gas emissions, making it a focal point for both climate change adaptation and mitigation strategies. Both the European Union (EU) and Least Developed Countries (LDCs) are highly dependent on agriculture, particularly livestock, which plays a key role in their economic growth. In developing countries, livestock systems are evolving rapidly due to various factors, while in the EU, the livestock sector remains economically and socially significant, representing 36% of total agricultural activity. This study explores the environmental impact of enteric fermentation in livestock production, alongside the economic value it generates in both the EU and LDCs. The analysis utilizes a Bayesian Vector Autoregression (BVAR) methodology, which provides a more robust performance compared to traditional models like Vector Autoregression (VAR) and the Vector-error Correction Model (VECM). This research identifies significant relationships between the variables studied, with structural breaks quantified to reflect the impact of initiatives undertaken in both regions. Interestingly, the results challenge the environmental Kuznets curve, which hypothesizes an inverted U-shaped relationship between economic growth and environmental degradation, as proposed by Stern. This suggests that stronger economic incentives may be necessary to enhance policy effectiveness and promote eco-efficiency. The distinctive characteristics of livestock production in the EU and LDCs should be carefully considered when shaping agricultural policies, with a strong emphasis on farmer education as a critical factor for success. Additionally, corporate management practices must be tailored to address the unique needs, strengths, and challenges of livestock businesses in these two diverse regions.