The dynamics of European agri-food sector and environmental challenges in Europe: An economic perspective

Abstract Agriculture’s environmental footprint is sustainably challenging in terms of environmental footprint, a context in which the main focus of our research lies on identifying directions for specific sustainable practices in the EU27 for the period 2011–2022 using the SEM (structural equation model), GMM (generalized method of moments) system and orientative forecasting to 2027, starting from a VAR (vector autoregression) model. The SEM results show that the agri-food production is the outcome of the interaction between agriculture, demographics and sustainability. Agricultural land plays a central role, with positive direct effects on the cultivated land and negative indirect effects on the environment. The increasing consumption of fertilizers favors production, less the environment. The GMM system confirms the negative direct effects of cultivated land and food production on the environment and the negative indirect effects of the population. European agri-food production, in conjunction with the change in population behavior, is slowly advancing toward sustainability and thus certifying the effectiveness of common environmental measures, even if not at the desired pace and adequate level. The forecast shows the trend of reducing total emissions and increasing those in the agricultural sector. The paper highlights the need for a compensation between the efficiency of European production and sustainability, providing arguments for policies focused on agricultural innovation and sustainability. This paper furthers the understanding of the interactions among factors specific to the agri-food sector, identifies unexpected relationships among them (decreasing emissions at the same time as expanding agricultural areas, fertilizer consumption and demography) and provides recommendations for public policies and sustainable sector optimization.